Seems like there is a level of construction here in Houston that we haven't seen since before the recession. I know the general perception is that Houston has been immune to much of rest-of-the-country's job problems, but I can physically see a rebound in construction. This is especially true inside 610 in places like the Heights, Rice Military and San Felipe/River Oaks. This town's economy is heavily reliant on the price of oil, no? So, oil is trading around $92 here for WTI. But there are recessions in Europe and possibly now in China. Are we in the beginning of a bubble here in Houston?
The construction market has improved in much of the country. Even in CA which suffered badly during the recession construction has picked up sharply.
I just bought my home in April of 2011, new home in Logan Park, and not even lying...I've had notes put in my mailbox, people dropping by to ring my doorbell to ask if I'm willing to sell, and this has happened at least 6 times in the last 3 months. Inner loop, next to Memorial Park, and not a lot of homes for sale, especially a new one = win I guess, although I have zero plans to move unless I was knocked out but some high bid.
Construction is exploding in New York City. Especially Long Island City and Brooklyn. Then there's the 2nd ave subway line, the extension of the 7. The LIRR East Side Access project. Tons of construction going on in the city.
Did you catch on Mad Men that the real estate agent told Peggy her apartment would double in value as soon as they finished the Second Ave. Line? The Second Avenue Subway has been a plan and occasional construction project since 1929. http://en.wikipedia.org/wiki/Second_Avenue_Subway It's like the Gulf Freeway of New York. Cheap money Cheap Money everywhere.
Yeah, that's pretty funny. But it is a reality. The first leg from 125th street to 96th street is 80% complete and the next phase (42nd to 96th) has started the dig. A cool slide show http://www.nytimes.com/slideshow/2012/08/05/magazine/second-avenue-subway.html?ref=magazine#1
My guess is yes, we are in a bubble locally. It feels like 2007/2008 here. Houston is being propped up by high oil prices, which have resulted from the ineffective leadership in Washington which prefers to let the Fed print money rather than coming up with fiscal solutions to the budget deficit. An effect of this is higher commodity prices. Houston's cheering it, but the rest of the country is paying for it at the pump, and it holds back the US economy, serving as an additional tax.
Oil prices expanded a hell of a lot more and peaked a holy hell of a lot higher when Bush was in office; then and now due to domestic and global inventory and demand factors. This is almost as bad as the gas station gouging myth. If anything Houston is being propped up by shale gas and NGL dementia.
I think part of this is forget about how construction came to a standstill for a few years. Couple that with the fact that we see a lot of apartments under construction now/recently given how weak the single housing market has been. Now that the housing market in Houston is in a solid recovery, you should expect to to see the apartment construction slow down. Of course you probably won't and that is when the try bubble begins to form. I think we're just fixing the supply/demand imbalance right now (particularly when you factor in population growth)...but I do think supply is on the verge of getting out of hand and of course if the oil economy falters, then demand will shrink and the imbalance will be pretty devastating.
Houston is propped up by the fact that we have a new Saudi Arabia to drill on our very door step (not to mention the Bakken and every other shale play in the world that we will supply with equipment). I think I read it will take 16,000 well just for the Eagle Ford, plus all the new pipelines and the billions of dollars for increased refining capacity. There are no less than 10 new office buildings under construction on I 10 right now, plus the Exxon campus up North and a couple of downtown scrapers. I always love reading the OTC section in the Chronicle. http://fuelfix.com/blog/section/otc/
What Dubious said is right. I live and work in the Energy Corridor and the activity is what it was before 2008...it just took some time off. Houston isn't wildly overvalued..nowhere close. I don't think we're looking at a bubble. I think we're looking at a justifiable economic engine. Go to a hotel on the West side of town out I-10 during the week...they're at 90-100% occupied all work week long. The buildings out here are all over 90% full. We don't have buildings being built that aren't already "occupied" before they're built.
