The REAL Real Estate Appreciation Rate

[Rustic23]

If we are looking at appreciation of the Houston market, and I would imagine most of Texas, using 1990 as a starting point, then a healthy increase would not surprise. I began as a residential appraiser in 1987 in Houston. One of my first assignment was five townhouses near Sharpstown. (a subdivision in Houston).

I went to the books and got the values of the properties when built and last appraised. $87,000 each, for two bedroom, two bath units. When we were finished with the appraisals the units appraised at $15,000 each, and there were no buyers as you could not finance them. The last sales I saw on those units was $49,000 in 1997! There were other units, condos with inside hall ways that were built for $65,000 and appraised for $7,000 each!

[honobob]

Quote:

Originally Posted by REWahoo I couldn't get your link to work or find the data you quoted. Can you give us a specific location/page where the information is located onhttp://www.fhfa.gov?

http://www.fhfa.gov/webfiles/2402/1q09hpi.pdf Check page 27.

[honobob]

Yeah, I thought actual property values would support the data. Thanks! Aren't you on the lake where they built the HGTV dream home? Your values have probably done much better than the average appreciations.

Quote:

Originally Posted by Rustic23 If we are looking at appreciation of the Houston market, and I would imagine most of Texas, using 1990 as a starting point, then a healthy increase would not surprise. I began as a residential appraiser in 1987 in Houston. One of my first assignment was five townhouses near Sharpstown. (a subdivision in Houston). I went to the books and got the values of the properties when built and last appraised. $87,000 each, for two bedroom, two bath units. When we were finished with the appraisals the units appraised at $15,000 each, and there were no buyers as you could not finance them. The last sales I saw on those units was $49,000 in 1997! There were other units, condos with inside hall ways that were built for $65,000 and appraised for $7,000 each!

[Rustic23]

Just so it is not too misleading, we purchased a home in 1987 for $115,000. We sold it in 1993 for $115,000 and it was on the market for over a year! Condos and Townhouses were almost an exception when it came to very low prices, and as I stated, it had to do with finance more than anything.

We are now on Lake Livingston. I am pretty sure the HGTV dream home was not built in our sub-division. Our subdivision was developed in 1976 with about 2,000 lots. Since that date, about 65% of the lots are individually owned, and there are about 400 houses! To say the subdivision took a hit in the 80's is a understatement. The golf club has closed three times. The original developer, and at least three other developers have come and gone. There is currently no developer and the last group to buy lots in bulk are said to be turning them back to the bank. The last group was out of CA., they made a slick commercial and sold properties to CA residents looking for a cheap place to retire. They bought lots for $5,000 and priced them at $20,000+. Waterfront properties have increased in value since 2000. $55,000 to $185,000. More to do with, paraphrasing Will Rodgers 'Buy lake front property, God is not making any more of it!'. However interior lots can not be had for as little as $3,000. So if you try to use this part of Texas to substantiate value increases, it would be a poor choice.

[REWahoo]

Quote:

Originally Posted by honobob http://www.fhfa.gov/webfiles/2402/1q09hpi.pdf Check page 27.

I see the Corpus Christi info on page 27 and the Houston-Sugar Land-Baytown info on page 33 but I see nothing regarding the Leeland/Bastrop data you mentioned. Where is it located?

[honobob]

Quote:

Originally Posted by REWahoo I see the Corpus Christi info on page 27 and the Houston-Sugar Land-Baytown info on page 33 but I see nothing regarding the Leeland/Bastrop data you mentioned. Where is it located?

Jeez, that information was from 9/08.
Here's the link, or as close as I can get to it at this late date.

City Center Bastrop, TX Neighborhood Profile

[REWahoo]

Quote:

Originally Posted by honobob Jeez, that information was from 9/08. Here's the link, or as close as I can get to it at this late date. City Center Bastrop, TX Neighborhood Profile

Thanks. I found the following:

"Since 1990 TOTAL APPRECIATION: 173.91% AVG. ANNUAL RATE: 9.52%"

These numbers are 60% less than those you quoted in your original post and look much more reasonable. It is difficult to believe the 9/08 numbers could have been accurate. Do you think this non-government web site might have had erroneous data back then?

Never hurts to do a sanity check whenever you see insane numbers...

[honobob]

Quote:

Originally Posted by REWahoo Thanks. I found the following: "Since 1990 TOTAL APPRECIATION: 173.91% AVG. ANNUAL RATE: 9.52%" These numbers are 60% less than those you quoted in your original post and look much more reasonable. It is difficult to believe the 9/08 numbers could have been accurate. Do you think this non-government web site might have had erroneous data back then? Never hurts to do a sanity check whenever you see insane numbers...

Hey, I just cut and paste! Here ya go. PERIODTOTAL APPRECIATION AVG. ANNUAL RATE COMPARED
TO TX*COMPARED
TO AMERICA*Since 1990433.46% 23.75%

http://www.neighborhoodscout.com/comparison.jsf

Amusing that now you think almost double digit (9.52%) annual average appreciation for over 18 years IN TEXAS is reasonable. I was ready to believe the sorry Texas story when I started this poll just because I never looked. Next poll I sure won't exclude Texas or any other area between the coasts. My belief was just that most any middle class NBHD experienced better than 4% annual appreciation, probably closer to 6-8% average if not higher. And the difference between 4% and each point higher is considerable. Say $250,000 difference on a $100,000 house at 6% vs. 4%.

[REWahoo]

Whatever you're drinking Bob, I want some...

[honobob]

Quote:

Originally Posted by REWahoo Whatever you're drinking Bob, I want some...

Why don't you pick the beverage? Something that will go nice with your apology....or just sour grapes.

[REWahoo]

Quote:

Originally Posted by honobob Hey, I just cut and paste! Here ya go. PERIODTOTAL APPRECIATION AVG. ANNUAL RATE COMPARED TO TX*COMPARED TO AMERICA*Since 1990433.46% 23.75% NeighborhoodScout

This link shows no information. I'm done.

[Nords]

Quote:

Originally Posted by REWahoo Never hurts to do a sanity check whenever you see insane numbers...

He doesn't have to demonstrate sanity. He just has to seagull in, throw a few hand grenades, and express disbelief that anyone could possibly miss those screaming bargains.

It's not as if it's his money at risk.

[Sarah in SC]

Where are the dueling pistols when you need them?

[honobob]

Quote:

Originally Posted by REWahoo This link shows no information. I'm done.

REWahoo it's a shame that you've been on the internets since 2002 and can't figure how to search a website. Go to FIND, tab to find best nbhd's for appreciation rates, then pick Texas for state and then statewide search for city. It's the 3rd highest area for appreciation in Texas. Pick it and then click tab for appreciation rates. Then you'll see the 23.75% in black and white. Anyone....Anyone... Good luck!

[honobob]

Quote:

Originally Posted by Nords He doesn't have to demonstrate sanity. He just has to seagull in, throw a few hand grenades, and express disbelief that anyone could possibly miss those screaming bargains. It's not as if it's his money at risk.

Ya know I always wondered who all those "guests" were when I posted.

Kinda defeats the whole "ignore" function doesn't it?

"You like me, you really like me!"

[Rustic23]

Historical Evidence of US Home Price Booms and Busts 1978 2003

I think this chart describes the Texas Real Estate Market, and why selecting a starting date of 1990 is misleading. Properties in the late 80's early 90's dropped as much as 40%. If you look at the chart, you will see this is true for most of the 'Oil Patch' or what we referred to as the COLT states. Co. OK. La. Tx. while other portions of the country show some very large increase. So while Tx. may show double digit numbers from 1990, it is logical that these numbers come from a lower starting point, and therefore, not as much of a 'bubble' as properties are not that over valued when compared to a market that did not go through a bust.

Anyway, I thought it was an interesting chart.

[tryan]

Little bit interesting ... had another REDC auction Saturday. Had my eye on 2 properties:

1. 3 Bedroom 2 bath sold at the peak 370k. Bank has attempted to sell for years ... currently on the market for 170k. Sold at auction 110k.

2. 3 bedroom 1 bath water front cottage sold near the peak 230k. Currently on the market for 125k. Sold at auction for 105k. Needs a septic system ... issues with the install (no accesss to the install site until the lake freezes over).

I dropped out of the bidding at 70k due to the work each house needed and the fact that they'll rent for ~1200/month AFTER the work is completed. No loss ... there's others. Put a cash offer on a HUD home (60k) yesterday.

So if we want to cherry pick ... 2 can play.

[RunningBum]

Personal experience in Cedar Park. Bought my home in May 2003 for 137000, it was vacant and I think the seller was anxious and had just dropped the price. Sold in May 2008 for 181000. 5.72% annual rate of return. I bought a pretty generic 3 BR/2Ba near schools and shopping with resale in mind. Improved the landscaping and maintained it well. Access to Austin improved with a freeway extended to within 2-3 miles of my house, and the very nearby community college expanded. Really, about everything went as well as could be, the market hadn't really even cooled off in that area yet last spring. Nowhere remotely close to 9.56%. I remember seeing the original purchase price when the house was built in 1996, but don't recall the exact number, but I seem to remember it was around 5%/yr for that period too. It would've had to have been around 60K to get the claimed return.

[honobob]

Quote:

Originally Posted by RunningBum Personal experience in Cedar Park. Bought my home in May 2003 for 137000, it was vacant and I think the seller was anxious and had just dropped the price. Sold in May 2008 for 181000. 5.72% annual rate of return. Nowhere remotely close to 9.56%.

I'm assuming the 5.72% is your compounded annual appreciation. That's typically what I use to make comparisons but it understates appreciation against your purchase price. The 9.56% by NBHDscout is average annual. Your rate would be 6.4% (181-137=$44K/5years=$8,800/137,000 purchase is 6.4% average annual appreciation). Now if you leveraged that purchase and computed your return on equity you'd be more in the 40% range. Boosts your rate but dosen't make you any richer. I still like the compounded rate for comparisons.

[Martha]

Hono, when you think about this stuff I suggest reading up on the concept of regression.