Houston home prices fall for first time in 14 years

Housing values in nearly two-thirds of more than 2,000 Houston-area neighborhoods declined or stood still last year, according to an annual home price analysis commissioned by the Houston Chronicle. “That’s unusually high. In good years, we usually have many more up than down,” said Crawford Realty Advisors’ Evert Crawford, who conducted the study in conjunction with the University of Houston’s Institute for Regional Forecasting.

Overall, the median price per square foot of a single-family home fell 2 percent in 2008 to $72.71, marking the first time it has dropped into negative territory in 14 years. A year earlier, the median price rose 1.5 percent, according to the study, which evaluated 56,012 homes sold through the Multiple Listing Service in Harris, Fort Bend, Montgomery, Galveston and Brazoria counties. About 18 percent of those were new.

Other survey highlights:

• • Sales activity dropped in all counties for non-foreclosure transactions. All counties showed a rise in sales of foreclosed homes.
• • High median price increases were found in parts of The Woodlands, the Inner Loop, Memorial and southwest Houston just outside the 610 Loop.
• • The highest median price increase by school district was in Spring Branch ISD.
• • The ring between the Loop and Beltway 8 experienced the most softness, falling 7 percent, compared to the regions inside the Loop and outside the Beltway.
Part of what’s been dragging down home values are the high numbers of homes sold out of foreclosure, which rose substantially in 2008.

While high oil prices helped bolster the local economy through much of 2008, Hurricane Ike, the stock market plunge and a ballooning credit crisis during the latter part of the year took a toll.

Home sales were off 16 percent, as would-be buyers couldn’t qualify for mortgages or were too scared to make any big purchases amid an uncertain economy.

“Why would you go out and commit yourself to that much debt when jobs are a question mark? A lot of people have reason to wonder,” Crawford said.

Leslie Winston isn’t taking any chances. She’s selling her family’s house in an attempt to live debt-free throughout the recession.

“What I keep hearing is we haven’t seen the worst of it,” said Winston, who recently put her four-bedroom Meyerland house on the market.

When it sells, she and her husband plan to pay off their debt and rent a home closer to their church and daughter’s school inside the Loop.

“If over the next year the market takes a nose dive, we’ll be in a great position to buy,” Winston said.

Hopeful signs
Relatively speaking, Houston’s housing market hasn’t seen anything like other cities nationwide that saw huge price run-ups and are now seeing double-digit drops.
And federal efforts to stem foreclosures and stimulate sales are providing hope.

Almost everyone who showed up at a recent open house in Eldridge Park was a first-time buyer who had heard about an $8,000 federal tax credit, according to listing agent Amy McGee of Coldwell Banker.

Record-low interest rates should also help boost sales this spring and summer, said broker Ronnie Matthews. "That’s the one thing that can drive people,” said Matthews, owner of RE/MAX Legends. “If they’re comfortable with their job, now’s a pretty good time to buy.”
Still, he’s seeing more asking prices drop. Chris Blayney put a contract on a house in Bear Creek after the owner lowered the price by $10,000. “It looked like they hadn’t had a whole lot of offers,” Blayney said.

Some would-be buyers are still skeptical. Cindy Clifford started looking last year in the Montrose area. But she noticed houses lingering on the market, and then she started hearing about more people losing jobs.

“I’d hate to buy a house and the market drops,” said Clifford, who owns a public relations firm. She’s taken herself out of the market for now.

Tax assessments falling
The tax man has acknowledged the down market, too. The Harris County Appraisal District said nearly half of homeowners in the county saw their property values decline this year. A third saw no movement.
The total value of the 860,000 homes assessed so far has fallen by about 2.5 percent from last year, chief appraiser Jim Robinson said last month. It’s the first time property values have declined or stagnated since the 1980s.
Patrick O’Connor, president of the property valuation and consulting firm O’Connor & Associates, pegs the start of the slump to the decline in oil prices. He anticipates further declines until the national economy and global financial markets begin to moderate.
“Unfortunately it seems the bad news keeps coming,” he said. “It doesn’t seem like we’ve seen the end so far.”
nancy.sarnoff@chron.com
By NANCY SARNOFF Copyright 2009 Houston Chronicle
April 4, 2009, 9:05PM