I'm currently researching an essay on housing bubbles, and I came across a blog that lead to other articles, which all said that Texas has managed to weather the housing bubble crash much better than other states. Here's the initial site that pipped my interest: http://blogs.wsj.com/developments/2...aws-prevent-texas-housing-bubble/tab/article/ When I read it, I realised that there was a great website for Rockets fans which happened to be full of Texans, and what I really want to know is what you guys think of Texas being able to hold out against housing crash, and anybody had any personal experiences in it?
Just yesterday the wife sent me a link to some statistics on my neighborhood. Foreclosures ballooned, but property values increased too. Not sure how to explain that one, but I'd say I have faired reasonable well. Owning an older home, I worry how the glut of cheap new houses will impact my ability to (eventually) sell. I'm also not an idiot with my money.
Thanks rhadamanthus, I started this thread because on some of the comments sections, some people had little anecdotes about how Texans would warn other people about buying inflated property, or people saying 'Property is overvalued at X, Y, Z' during the bubble. Thought that the BBS would be the best place to unearth any Texan's experience.
Lets be honest would you rather live in san diego or houston? I just don't think house value ever went up that much.
I don't know of anyone who has experienced the "overextension" type of epic fail a la CA or FL here in TX - maybe thanks to the law mentioned in your OP. Poorer families I think have had a hard time maintaining - but that's epidemic all over the US. I know plenty of younger folks who have made out like bandits on new homes thanks to desperate home-builders + tax credits.
Here's a semi-related article about the insulated Texas banking and home market. http://www.nytimes.com/2010/04/12/opinion/12krugman.html?ref=opinion
In Jan 2009 we sold our townhouse that we had owned since 2000. We did not buy in the height of the bubble so that helped and even though we did not make a huge profit, we still made penty over our original investment. It took a while to sell it since it was a townhouse but I feel we made out well because we still got almost 94% of our asking price (I think at the time 90-92% was standard and we never reduced our asking price). For our new house we worked out a good deal in a much desired neighborhood (we get letters from realtors asking if anyone wants to sell because they have clients wanting to get in...it is odd) where the land is crazy valuable. We bought for 89% of the asking price (and the price had been reduced once) so we felt good about that as well. All told, it was about a 7 month ordeal because it took a long time to sell but also a long time to find a house. Even with the bubble popping there were still a lot of people that overvalued what they had or bought when the bubble was high, did some work, and now didn't want to lose their money. So that made for a lot of unrealistic or difficult sellers. That was the biggest challenge we saw with the collapse. Otherwise I would say we took advantage of it. In a better market we might have made more on our sale but what we bought probably would have been a greater percentage higher. Hope that helps.
I bought 3 and sold 2 houses during the bubble in or around Baltimore. We made a lot of money on the first two sales. We currently live in the 3rd house that was purchased near the height of the bubble and we'll be selling it this summer to move near Sacramento. If we break even on that sale we'll be doing good. However, we should be able to get a great value on the house we buy in Sacramento because prices really, really crashed there and are still going down.
I think there were three primary factors: 1.) Lack of Inflation in Housing - Our runup was much less severe as we still had modest returns since the Oil bust. 2.) Strong Unemployment Rates - Unemployment is one of the largest contributors to foreclosures and defaults. The energy industry/healthcare have fared well. 3.) Governmental - As we don't have a state income tax our property taxes are around 3X higher then California. This limited speculation as there were higher carrying costs for real estate. Also in California there is a significant "walk-away" affect. As in California when a house is foreclosed the bank can only go after one's credit record and the asset regardless of if they have millions in the bank. Therefore if one is underwater for $500,000 on a townhouse in San Francisco why wouldn't they walk away? Their credit record will clear in 7 years and they save the difference. In Texas they can go after other assets, investment accounts etc. These lack of housing inflation and taxation was prohibitive to speculative buying and the unemployment rates and 'walk away' goofy California laws contribute to why we don't have as many foreclosures.
The rules might be a good idea, but right now they are blocking me from refinancing my mortgage. One rule is keeping me from refinancing because the debt is too small. But, I can't gross up to the minimum with a cash-out because I would run afoul of the 20% equity rule.
I read some old 1800's statute that prevented people from cashing home equity was responsible for it. Great to know it's a model for other states to look into...
