If you’re young and recently became a homeowner, you need to talk.
A new concern has arisen in addition to the usual list of concerns. Home prices could actually fall.
Yes this means you.The value of the your The house may decline.
actually, data Home prices likely peaked in May, according to Texas A&M’s Texas Real Estate Research Center. And it’s been down in every major Texas city since.
This is new if you have purchased a home in the last few years. You only know the joys of homeownership. Maybe even homeownership ecstasy.
If you bought a house for four times your yearly income, you’re much more likely to be making as much money as you were when you were working at home while sleeping. If your house’s value increased by 25% in his 12 months (and many do), the valuation was as high as your salary!
Other than getting married successfully or winning the lottery, making money is not so easy.
But the homeowner’s other side isn’t so grand.
Mortgage rates are now nearing 7%, and the housing market is in an ugly row. Fewer qualified buyers. Many owners will find themselves trapped. Believe me, a pre-2022 interest rate mortgage will quickly become a valuable asset as the mortgage interest rate is his 7%.
But take it easy. Take courage. do nothing. This too shall pass.
Time passes. A lot will be said. But if you can stick with it, pay the bills, clean the gutters, and enjoy the outdoor grill and walk-in closet, owning a home can be a good investment again.
I can confidently say this from two sources: personal experience and statistics.
In the early 1960’s I bought my first house. It was his four-story townhouse in Boston’s South End, a rough neighborhood at the time. I sold his 1966, luxury Brookline townhouse to ride a better horse. At the time, mortgage bankers were worried that life as we now know it was coming to an end. why? Mortgage interest rates have reached a staggering 6%.
Home prices struggled for several years, but life continued.I wrote it a few years back column About how I bought an entire Southend townhouse for the same price as a sub-zero refrigerator in one of the newly created million dollar condos on the 4th floor of a Southend townhouse.
On the other side of the country, one of my younger brothers played who wanted to have a home in Los Angeles in the early 1990s. A game of catching falling knives. He bought a house in a declining market. He was upside down for over 3 years. But that house, or the land under it, is now worth about five times the price he paid.
You can lose money on residential real estate, but if you stay home long enough, the results can range from OK to great.
of statistics Please bear this for Texas.
Dallas home prices peaked in 1986 and bottomed out in 1989 following the great Texas oil crash of the 1980s. Eleven years later he did not recover to his previous highs until 1997. Same for San Antonio, but from 1984-1995.
Houston was the first city to collapse in the oil crash, peaking in 1983 and bottoming out in 1987.
Austin, like Dallas, peaked in 1986. He didn’t bottom out until 1991, but by 1994 he had fully recovered. It was “only” eight years.
That bust was far worse than the recent housing ‘bubble’. It took nearly a decade to go from peak to decline to full recovery nationwide. But Texas fared much better. It took him just under six years in Dallas and about 3.5 years in Houston and San Antonio. Austin took 4.5 years. Since his full recovery, house prices in all four cities have more than doubled.
If history repeats itself, Texas’ decline won’t be as bad as its East and West Coast cities.
Let’s hope so.
Is this pie in the sky?
perhaps. As the investment boilerplate says, “Past results may not be indicative of future performance.” This is a trend that could ruin the Texas growth miracle. They can all be debated, quipped, or dismissed, but I’m concerned. Here’s my Hobgoblin list:
The Great Texas Migration may be over. We have benefited greatly from net immigration from other states. It has continued to grow our workforce and provided the knowledge capital we need. It also pushed up house prices.
The quality of public education in Texas may decline. That would make it impossible to meet the employment needs of Texas. With housing costs rising in Texas, fewer people can afford to be teachers. Larger class sizes can lead to lower quality teaching. Equally bad, we now have a non-academic board that dictates history and bans books in libraries. It may not have been done.
The Texas energy grid could weaken again. State governments claim that “everything is better” after the 2021 freeze, but public confidence is low. Skeptics should check how long it takes to install a home generator. The last thing you want Texas to do is become Puerto Rico of the 48 mainland US states.
Pro-business conservatism in state governments is pushed aside. A move by state governments from business-oriented economic conservatism to religiously-driven conservatism could reduce both worker and corporate immigration. The Texas Legislature can say as much as it likes about being pro-business, but a government (state or nation) governed by religion is neither pro-business nor pro-libertarian.