2013 Real Estate Market Starting Out with a Bang

2013 has been a busy year so far for real estate in Montgomery County.  Too determine how busy, I decided to dive into the MLS database to see how the residential market for single family homes has been performing.  I was not surprised to see that sales through mid-March in Montgomery County were up over 15% compared to the same 75 day period last year.  Additionally, the median price per square foot rose about 10% and homes sold about a month faster compared to last year.

Most folks believe that the new Exxon campus in north Harris County has had a large impact on the local market.  In digging a little deeper into the year to year comparison, I can see that most of the increase in sales is in the areas nearest the Harris County line.  In fact, of the 151 increase in home sales year to year, 117 occurred in the southwest part of the county.  This is also where the homes are selling the fastest, with home sellers securing a buyer an average of only 45 days after listing their home.  This is about a month faster when compared to last year.  In the last year, the data indicates that southwest Montgomery County has gone from a good sellers’ market to a strong sellers’ market.   

I was recently told by a client relocating from Exxon’s Virginia office that they have been advised to look for homes in The Woodlands,  Spring or Tomball area.  So it’s not surprising that The Woodlands is taking the lead in Montgomery County’s increased demand for housing.  But like my client relocating from Virginia, there are a number of families that prefer the charm of many of the older neighborhoods and the more tranquil areas found in the northern part of the county.  And what some are discovering is that the commuting time to some of these more northern neighborhoods is actually less than the time it takes to get to some of the neighborhoods situated deep into The Woodlands.

In checking into some of the stats for a few Conroe neighborhoods located close to I-45, I found out that 4 of the 5 homes sold in Rivershire so far this year were on the market less than 2 weeks.  Last year during the same time period, 2 of the 3 homes sold in Rivershire were on the market 6 months and more.   Granted, there were only a few homes sold during both time periods, but the rapid pace they sold this year could be an indication that the increased demand in housing is spreading north.  I noticed that River Plantation and Stewart’s Forest also showed substantial improvement.  So there is reason for optimism for home sellers throughout Montgomery County.

There are obviously still lots of concerns about the overall housing market and about the overall national economy in general.  But there are some systemic changes in Montgomery County that seem, at least to this humble Realtor, to have some staying power.  Time will tell, but for anyone that is considering buying a home in this area, you might not want to wait too long.  Increased demand typically increases prices, especially in the short term before new construction catches up with the demand. 

Home Inspections

I heard a story about the wife of a junior high school principal who bought her husband a tie for Christmas.  She selected one with a subdued pattern with colors that complemented his favorite suit.  She didn’t notice until after she started wrapping it that the pattern consisted of numerous silhouettes of shapely women.  Fortunately, it was noticed before the tie was worn to school, as I can just imagine all the young boys acting up in class hoping to get sent to the principal’s office!

I think most of us have purchased an item or two that turned out to be a little different than what we expected.  And often it is because we missed an important detail.  When it comes to real estate, there are so many details that it is next to impossible for the average homebuyer to examine and understand each and every one.  That is why home inspections are so important.  Missing an important detail on a home purchase can be a costly mistake.

Home inspectors are licensed by the Texas Real Estate Commission (TREC) and have completed education and training in home inspections.  A typical home inspection covers a home’s structure, electrical system, heating and air conditioning system, plumbing system, appliances, as well as certain other improvements in place such as lawn irrigation.  The minimum level inspection as defined by TREC is a “limited visual survey and basic operation of the systems and components of a building using normal controls and does not require the use of specialized tools or procedures”.  TREC further states that “the purpose of the inspection is to provide the client with information regarding the general condition of the residence at the time of inspection”. 

Of course, some inspections offer services above and beyond what is required by TREC.  But that additional level of service might come with a higher service fee.  Regardless, licensed inspectors methodically examine the exterior and interior of the home and almost always find some issues that the buyer should take into consideration.   Sometimes a report might recommend hiring a specialist, such as a licensed HVAC technician, to do a more detailed analysis on an area of specific concern.

A Realtor should always recommend to their client that they purchase an option period for a specific time period to “kick the tires”.   During the option period, a client can back out of the contract at any time for any reason.  It is during the option period that the home inspection is done as well as other due diligence such as a termite inspection.  Most times, the home inspection report does not reveal issues that cause a buyer to exercise their option to terminate.  Typically there is one of three outcomes; the seller agrees to address all requested items on the inspection, the buyer agrees to accept the property as is, or most commonly, the seller agrees to make some, but not all, requested repairs.

When I purchased my first home several decades ago, the inspection report consisted of three items scribbled on a half sheet of notebook paper.  Those days are long gone.  Nowadays, inspectors are licensed and required to issue an inspection report that provides assurance to a buyer that a trained professional has inspected the home according to state mandated procedures.  Of course there are no guarantees, but a home inspection is one of the most important tools to help prevent buyer’s remorse. 

The junior high school principal’s wife had an easy solution to her problem.  She just took the tie back and exchanged it.  But overlooking an important detail in a home can have much more foreboding consequences.  So be sure to always have an inspection done before purchasing a home.

Importance of HOA's in Purchasing Decisions

Several weeks ago, I spent a couple of days out of state in wonderful community. It had wide tree-lined avenues flanked by pristinely restored century old residences. There were sidewalks alongside each street on which we strolled each evening with a complete sense of safety. The surroundings were quiet, wildlife was in abundance, and everyone we encountered during our stay was friendly, polite and respectful.

OK, it was a highly secured military base, but nevertheless, we had a great couple of days visiting our newest grandson in this peaceful environment. Our kids had just sold their home and were temporarily living on base while in the process of being transferred to another facility. They secured us a room on base in a restored historic residence built in 1908 identified on the historical marker as “Bachelor Officer’s Quarters”.

I suppose you could view a military base as the ultimate gated community. With armed guards, guard dogs, and other security measures, access is highly controlled. And residents inside are greatly incentivized to follow base rules so everyone is on their best behavior. But while it is a nice place to visit, I suspect the many rules wear on folks after a while. That’s probably why many military personnel choose to live off base.

I dare say that not many of us would choose to live in a neighborhood with that level of control over our lives either. But there are local neighborhoods with some of the same features. There are neighborhoods with manned 24/7 security, private security patrols, and deed restrictions on what can be built, how it is built, how each property is maintained. Other restrictions are often included to protect property values and foster good neighbor relationships.

According to the Texas Realtors Association, 4.8 million Texans live in neighborhoods with HOAs. When looking for a home, chances are pretty good you will be looking at a property subject to deed restrictions and governance by a homeowner association. When buying a home, close attention should be given to any deed restrictions that apply to a property. All deed restrictions are legally recorded and are available for inspection by prospective buyers. Any restriction that a buyer can’t live with should be a deal killer. Conversely, buyers should investigate to see if restrictions that are important to them are in place and are being enforced. If enforcement is lax, inconsistent or non-existent, it should be taken into consideration before a contract is finalized. Getting information about the level of enforcement is not easy as its perception can vary from person to person. But speaking with several neighbors could possibly provide sufficient insights into how much importance the HOA puts on the subdivisions’ deed restrictions.

HOAs have on occasion been on the wrong side of public opinion due to controversial actions imposed on their residents. To address some of these concerns, the Texas Legislature passed several bills during the last session designed to better balance the interest of property owners and HOAs. Many of the provisions in the new statutes relate to increased HOA transparency, but other provisions prohibit an HOA from having outright bans on certain items like rain harvesting devices or national and state flags.

A home is a valuable asset and an HOA exists primarily to protect the value of homes within its boundaries. A little due diligence on existing deed restrictions and on the enforcement philosophy of an HOA could be valuable to buyers as they make a purchasing decision. These items could have an impact both on the buyers’ future quality of life as well as the value of the purchased home when it comes time to sell.

A Thanksgiving Story

Some time back I listed a home for a couple who was going through a most difficult time. Because of some financial hardships, they had reluctantly decided to pull up stakes. They had a modest home on some great property, but it needed some cleanup and repairs that the owners just didn’t have the time or money to do. Not long after listing their property, they moved out of state and quit making mortgage payments. Before the bank started foreclosure proceedings, I helped them get approved for a short sale.

The condition of the home was a significant negative for most prospective buyers who viewed the home. But eventually a very nice couple contacted me about the property and fell in love with it. The husband was a do-it-yourself type of guy and wasn’t the least bit intimidated about the needed repairs. They said that the house and acreage was the perfect fit for them. And they loved the area as it was close to their family. This property had everything on their wish list and nothing else they had seen had come close. Even the sellers were overjoyed that someone would continue to appreciate the property as they once had.

It sounds like a nice ending to a sad story, but there was a hitch. After contacting their lender, the couple learned that they were some issues that had to be resolved that could take 6 months to a year to work out. The sellers’ bank would not wait that long for them and directed that the property stay on the market in search of another buyer. I felt their pain as this nice couple saw their dream home slip away.

But there just had to be another way. What if an investor purchased the home, leased it to this couple and then sold it to them when the time came that they were able to purchase it on their own? I ran this idea past several investors that I work with and one of them agreed. Working with the sellers, the seller’s bank, the buyers, the buyer’s lender, and the investor, an agreement was reached when all parties were able to get the terms and assurances needed to go forward with this plan.

My clients signed the lease moments after the investor closed on the property. They quickly moved in and immediately began sprucing the place up. It became very obvious that they were committed to doing whatever was possible to purchase the home from the investor as quickly as possible. They worked diligently with their lender and followed her suggestions to the tee. In seven short months, they were able to purchase the home from the investor.

I’m typing this article after leaving the closing table. The joy in the room was contagious. The buyers commented that someone should make a movie about how this all happened. They were still in awe how everyone worked together to help them realize their dream. Along with the lender and the investor, I was happy that I was able to play a part in this story. Hugs abounded and I think I saw a tear or two from some of the folks in the room.

There are so many sad stories these days stemming from the prolonged economic recession we’re suffering from. But there are still some heartwarming stories taking place. As I sit down and give thanks this Thanksgiving Day, I will be thinking of this wonderful couple celebrating their first Thanksgiving Day in their new home.

Dreams still come true. Happy Thanksgiving everyone.

An Efficient Approach to Home Buying

There are a lot of things to consider when searching for a new home. If you had to rank the below features from 1 to 10, how would you proceed?

1) Proximity to work
2) Quality of schools
3) Curb appeal
4) Floorplan
5) Energy efficiency
6) Quality of construction
7) Finish materials, i.e. countertops, flooring
8) Lot size
9) Price
10) Neighborhood amenities

If I asked 10 home buyers to do this exercise, I would most likely get 10 different rankings. And several would probably tell me that their most important priority is not even on the list! Or another might tell me each item is equally important. Everyone has different priorities. And an individual’s priorities can change as they go into different stages of life. So short of building a custom home on an ideal site in your preferred location, how do you get the home that has the most of what you are looking for?

Most folks these days start off with an internet search. HAR.com has the most comprehensive, up-to-date listings in our area. And almost every realtor’s website has the ability to tap into HAR.com. Even http://www.claudiahohlt.com/. An internet search can help you get started and give you a general idea of homes on the market. It can even help identify many of the features listed above. But at some point, you will want to personally visit homes that you are interested in. At that point, you have two options. You can call the listing agent for each home or call a buyer’s agent.

The listing agent would be more than happy to help you. After all, he/she wants to sell his/her client’s home. But if you end up viewing 10 homes before deciding, you will need to meet with 10 separate listing agents. That can be time-consuming and frustrating.

A more efficient approach would be to enlist the help of a buyer’s agent. You will then have only one point of contact who is working in your best interest. The buyer’s agent will make appointments for all homes that you have an interest and accompany you to each showing. The agent may even have some additional homes that match your criteria that you would want to view.

While viewing homes, an experienced buyer’s agent will offer valuable insight on your home search. He/she will have seen hundreds, if not thousands of homes over their career and can point out details, both good and bad, that you may not notice. The agent will have school information, pricing information and neighborhood information readily available. And the agent can chase down other information, such as POA info, utility info, etc. for you. And once you find your dream home, a buyer’s agent can work on your behalf to get you the best deal possible.

Another tidbit of advice would be to enlist the help of a buyer’s agent that has been in business for a long time in the area of your search. Any realtor holding a Texas license can represent you in anywhere in the state. But unless you’ve lived and practiced in the area of your interest, it will be much more difficult to find that perfect home. A local agent will have the knowledge and will be more likely to be available when you are.

Good luck on your search. And if you need assistance in my neck of the woods, i.e. Montgomery County, Texas, please give me a call. I would be pleased to help you.