It’s nice to know some parts of the country are still seeing home prices climb—one of them is Houston, the energy capital of the U.S. The Houston Association of Realtors reports that the average home price there rose 8% in July to $226,000.
It’s not just oil and gas that’s driving the economy, says long time Realtor Martha Turner. She says the Texas Medical Center, one the nation’s premiere healthcare facilities, is expanding, as is the Port of Houston. About 15% of the sales are corporate relocations, as low-cost Houston remains a good a place to do business.
The big explanation for the rise in home prices though is that Houston’s rich are getting richer. Turner says the city saw 508 homes sell for over $1 million so far this year, up 10% from the same period last year. Houston’s overall home sales were down 12% in July.
In River Oaks, Houston’s version of Beverly Hills, Turner says the number of homes on the market is at a 15-year low. When homes do become available they typically get multiple offers, often from people who plan on tearing them down to build bigger mansions. Turner says one client who’d made a killing in the oil business in South America bought a $15 million mansion on Kirby Drive just to use for entertaining. The client kept his main River Oaks home to live in. “People with unlimited funds want to do unlimited things,” Turner says.
It’s not just River Oaks that’s seeing the rise in house prices. As Houston’s employment has spread out all over the metropolis and commutes are getting tougher, prices are soaring in suburbs such as the Woodlands, Kingwood and the I-10 “energy corridor.” The Kingwood home pictured above is on the market for $1.8 million. “We used to never see million-dollar houses in the suburbs,” Turner says.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.