Houston - rent or buy

That market isn't going to collapse anytime soon but it is a bubble and no one knows how much more that bubble will push up prices. There is no 100% correct answer as to buy or wait because of this.

As 81 said though I just don't see it collapsing anytime soon. If price do drop it would probably be a soft landing unless a huge energy market crash happens.

Where does the kid work? People want to live in the Loop if they work in the Loop, because the drive in from the suburbs is damn near inhumane.

Absent another major national recession... I would not worry too much about a collapse in prices. They could trend downward at some point. But they are not making any new land inside the loop. As long as they continue to build new office towers downtown, and as long as the TMC continues to grow... prices will be there.

I will say that Houston has really diversified their econony since the oil bust. And if they keep having 100K people move there each year... they can't build fast enough to keep up the demand.

Why not buy a townhouse? I bought one for $350k five years ago. I can easily sale it for $475k now. I bought a 29,000 square foot lot inside the loop last month. Going to sit on it and wait for the developers to make an offer.

Well I'm speaking from a market in Florida, lol. So many damn townhouses here that it just doesn't pay to buy one. I'm sure the Texas and Louisiana markets are much better than here though.

Supply will catch up to demand.
There is a housing shortage right now in Houston. But in the next two years there will be many brand new apartments/townhomes built.

A lot of the people buying in loop are young married couples, they will sell for more space/yards in the next 5 years(subburbs). Oil and gas companies are attracting a lot of young talent, but hiring will slow down from its current pace.

A lot of the people buying right now is because rents are stupid. The kids buying (with help from mom and dad) most work for oil and gas and some may be here in us for a couple years before getting reassigned outside the Country. They will then rent out the property. With a lot of apartments being built in the city, rents will decrease. Making the value of what is now an investment property decrease. What I'm saying here is that their original attitude to buy was built off of turning the property into an investment piece because of high rents in the city. But most believe rents will decrease with the glut of new apartments coming online. Lower rents decrease value of investment property.

People need to remember that Houston has benefitted from a reputation of good paying jobs for young college graduates during a time when a lot of the country was trying to recover from the Great Recession. That reputation will wane over time, as other cities get their shite together.

If you drive through the heights/eado you will see a lot of space still left to develop townhome lots. You add those properties to the market in the next few years and current properties will be less marketable/lower prices. City of Houston is trying to push development towards UH. The area between the city and campus has always been a proverbial no mans land. Very ghetto. There are now jogging trails that young professionals are using cutting right through the area. The perception is changing and that allows for more development.

Houston also does not take part in zoning. This allows anything to be built next to your townhome. I have a friend with midtown townhome that had a bar built next to their place. Sounds great if your A 20 something but the noise and people is not attractive to most of your good buyers. His value is down 20% from market.

There are a few condo buildings coming online in the next year as well. More supply....

Couple all that with higher rates, and you have a recipe for a deflating bubble .

I have friends that bought about a year (off Dallas st) ago that are looking to sell right now, to capture the high. They are coming out way ahead, but part of the reasons they are selling are mentioned above.

Spring valley is pretty much a burrio with homes all ripe to be bought up from the low income Mexicans and redeveloped into single family homes. Not a bad place to buy but not attractive to 20 something's wanting to impress friends/ladies. Perceptions will change tho.

If there are major changes to the energy industry(doubt it) then watch out.

I'm not saying it will crash. But it will deflate a bit. Property taxes can be high in Houston and if you want to raise kids in the loop the HIsD schools can be very meh or miss. Private schools rival out of state college tuition costs.

Just my opinion sorry for the rambling.

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But if O&G long term demand forecast starts to wane, this place will be a ghost town (being a bit over dramatic).

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But you are talking years upon years from now. There isn't going to be a collapse within the next few years, as I believe the OP was eluding to.

To the OP I would recommend your son looking to rent out a townhome with friends(new or old).

That's the best way to get cheap rent while also being in the city.

Forgot to mention that there is a lot of California and New York/south of the border money coming in for developments. (I work in banking) they are a lot of the people buying these properties and investing.

It is pretty normal for properties in Cali and NYC to fluctuate wildly in price every few years and they are used to bill and bear real estate markets. They are part of the formula for this expensive market. Once that spigot stops then demand/prices will go down.

I'm not saying it's going to suck here. But it bugs me when everyone around me is saying prices will continue to rise. Someone needs to be bearish....

Also Some of these townhomes are built so quickly that they are poorly built. It really makes me wonder.

Texas also has Dallas/San Antonio/Austin. All have Fortune 500 companies.

Houston has most of them but let's keep this in perspective. Texas is very business friendly but it's also very big. A lot of space available for developers