I don’t think they’ll go that low but I do think a bubble is about to burst. Houston says they’re not totally dependent upon the energy business but that’s not completely true. And the energy companies are laying off left and right.
In 2007 there was a bust and builders were going under every day. Within two years it was going crazy again and new builders were popping up all over the place and the builders that survived were, and still are, growing.
The boom around her is crazy. You can go to a part of Houston you haven’t been to in six months and you won’t recognize the place. There are new roads being built, existing roads being widened, overpasses, new subdivisions everywhere. Houses being sold as quick as they can be built. But not many in the “affordable” range of less than $200,000.
There used to be a “rule” that the land could only cost a certain percentage of the house and land cost combined. Now it doesn’t matter. I know of houses that cost $500,000 being built on land that cost $500,000. A million dollar deal and half of the cost is the land. And they appraise.
And land prices around here are out of sight. We looked for several years and finally gave up. I live in a 1700 sq. ft. house. I can’t buy land and build a 1300 sq. ft. house without it costing more than what I’m living in.
Anyone who pays $500,000 for a home in the Houston area is a damn fool. Texas is a big state, and Houston has very loose zoning restrictions — so the cost of buying land and building a new house is very low compared to any other major metropolitan area. That’s a recipe for disaster if you pay a fortune for a home.