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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: davidrmm who wrote (75)	7/5/2001 5:30:59 PM
From: C.K. Houston	Read Replies (1) \| Respond to of 306849

<My wife wants to buy or build a new home NOW and I am trying to hold her off. What trends are you seeing for now? In Houston, TX, apartments have been going up like crazy and behind every rock and tree there seems to be a new real estate development. That trend is very much like the early 80's. > One thing I’ve noticed about Houston, is that when home-building finally picked up after the recession, those 'newly-built post-recession' homes have continued to steadily appreciate in price since they were originally built. However, many homes that were built in early ‘80’s, during the peak of the building boom ... have still not fully recovered in price, or have done so only in past year or two. It happened with a place I was leasing on Nantucket @San Felipe. It was originally built for $315,000 in early 80’s. Three years ago I saw it was up for sale @$259,000. BTW – I know someone [a stockbroker] who bought a new luxury townhome in the old Ritz-Carlton/Mid-Lane area. (I don’t know what the Ritz is called now, I don’t live in Houston anymore.) Anyway, he paid $469,000 in ’99. He’s leveraged to the hilt. Has a nice townhome, but can’t afford furniture. Apparently there’s been a rash of construction in that area. They’ve been tearing down old apartments/homes, and building lots of similar luxury townhomes. The new places are comparable in size and amenities to what he has now … and are starting at around $400,000 ... $69,000 less than what he paid 2 years ago. He’s already looking at a loss. He’s not a happy pup. Plus he put all his cash back in NASDAQ a couple of months ago. Things don’t look good for him at all. You really have to watch out when overbuilding is going on. And when the general economy isn’t doing well, you have to be careful, in spite of what’s going on locally. Recessions start with specific industries, regionally, and then expand. Keep your eye on the price of crude. Last week price of crude started to go down, and now I just heard CNBC talk about a possible oil glut. [Actually one of my oil-related friends told me about 2 weeks ago that price of crude was going down.] Overbuilding, coupled with plummeting oil prices is what caused all those problems back in Houston in late ‘80’s. Maybe it will happen again. Maybe it won’t. I think the cycle will repeat itself. But I don’t know when, or how deep. I'm no expert. Here's the time-line that paints the picture of how long it takes things take to unwind. Message 16033799 Good luck with your wife. Whatever you two decide to do. Cheryl