Maybe I am being overdramatic with the title of this post, but several factors have led me to believe that the housing crisis is so deep that we need to address the housing problems in this city, while also focusing on areas where foreclosures are more prevalent. If you have read blogs or news feeds during this past year, you may have seen articles that dealt with the fact that Houston has a great market for real estate, so where are the sales?
Consider the real estate market in Houston. Our home values are steadily increasing (we had a downturn in the late eighties, so we did not experience such a housing bubble). The energy industry is expanding, which means we have an influx of workers into the town to either be employed by such firms or to start businesses which cater to these firms. The city has programs in place to encourage homeownership. In fact, we have a large community that probably would love to live in homes, but who do not as a group have high homeownership rates (I am referring to Latinos, who now are the largest ethnic group in our city). An additional fact that bodes well is that immigrants do not take national economic factors into consideration when buying a home, because it is such a part of the American dream (although, I should point out that the immigrant portion of the Latino community would be only a fraction of the whole).
With these positives, why are sales declining more than expected? The mantra from Realtor Associations this year has been “all real estate is local”. Now the association in Houston is telling Realtors should take the local mantra down to the neighborhood level. Meaning that maybe we cannot say Houston is alright, but we should say that Westchase is alright. Here are factors that I feel are preventing sales in Houston:
Personal financial habits of buyers- to live a certain life style, we consumers chose to take on various degrees of debt, but we looked for ways to live that did not require an effort on our part, like saving money towards our goals. We simply do not have the savings to make the down payments to obtain affordable mortgages. This will not be resolved till we consumers adjust our life styles so that we can save.
Our dream homes- home sizes (square footage) have been becoming ever larger. To accommodate this trend we have been building homes further out of the city. Square footage will be coming down to make houses more affordable. We are currently near 2600 sq ft, and I think that we will head down to around 1800 sq ft. Houston and Harris county have plans for improving public transportation systems, but they may need to expand the scope of these routes, and they will have to develop means that can be quickly implemented to meet current needs (such as busses that move people from transit area to transit area only, and more transit areas). We will also have to look at viable townhomes in the city center.
Rules ensuring that lenders behave- there are difficulties in obtaining mortgages. Yes, lenders are still providing loans, but they are increasingly hard to obtain. We need a temporary plan to allow borrowers some leniency in obtaining affordable loans that will produce a benefit to both lender and borrower, but I think this means that lenders cannot expect to make profits from the borrower at every turn, while borrowers must realize that they will be vetted.
These are three basic steps that need to evolve, and they are meant to compliment ideas on how to resolve the economic downturn. What do you think should be added to this list? Green homes for reducing utility costs. We will see.