When you live in a state heavily influenced by oil, saddle up and hold on for the ride. What comes up must come down and real estate has room on the downside. The real question is really just how much. When I visit with nine out of ten of my clients, who are all energy professionals, they have one thing in mind, housing pricing in Texas. They buy out of need, but wait, didn’t most people already buy when Texas was booming?
Demand poured in and buying was frenzy. Now, demand is leveling off and prices will too. Where you purchased will dictate whether it’s a reward or will be at risk. If you think you’ll find a goldmine this time around, think again. The last time I saw a foreclosure in Tanglewood, Houston people were lined up for showings and that was when banks weren’t even lending money. Now, Texas has more money pouring into the economy from all parts of the globe and a “deal” might be just being happy with current pricing.
Considering the square foot of residential pricing is not at $2500.00, yet, there are lots of deals out there. It’s all relative to what you’re used to. Getting something that’s already discounted isn’t such a bad deal even though it doesn’t have a sale tag on it. But watch out for those new high rises. Now that crude is at $50.00 a barrel, you may want to think twice about buying that new penthouse. If you already have, when crude was priced at $100.00, well, let’s just say you might just have to wait for the next merry-go-round. High-rises take about as long to build as a boom, so by the next time we see $80.00 oil, buyers will be back at those doorsteps again too.
Texas is a rare breed when it comes to real estate. It’s a prize in itself. It’s my job to convince clients to keep their eyes on the prize and be prepared for price fluctuations in real estate until the price of crude levels. Although it’s still too early, be prepared. If you snooze, you lose and what may have been considered a deal, may already have been a deal closed by someone else. For $120,000.00 you can get a fully renovated 740 sq. ft. condo in a desired neighborhood. If that’s not a deal, look at the $850,000 price tag for a 30-year old, 650 sq. ft. condo-type coop in Chelsea, New York. It seems some builders in Texas are striving for the $2500.00 Tribeca, New York square foot prices, but now they may need to put on the breaks. The boom was great but Texas pricing still hasn’t neared Manhattan’s.
Being savvy with Texas real estate can be a talent or a curse. It doesn’t take a genius to figure out the correlation between oil and real estate. When one goes down you can’t expect the other to go in the opposite direction. This is not the East Coast or California and even though jobs flourish here, real estate boundaries stretch far and wide and demand will not hold the same as when oil was priced at $100.00 a barrel.
What goes up must come down and real estate will come down. If you bought in one of those areas where builders picked up the last scraps of land, hold on to your saddle ‘cause it too will rebound the next time around.
>*Michele Marano is a licensed Real Estate Profesional and the Director/Founder of Real Estate for the Energy Professional, Champions Real Estate Group.*