06.18.05
The three real estate markets
At the San Francisco BAIES meeting I got to see Adiel Gorel speak. I like Adie. He's a smart guy and knows the real estate markets. I particularly like him because he is bullish on the Texas Real Estate markets and I'm invested there. Always good to have company 
Despite my bias, if you have an opportunity to see him speak, he is worth seeing. His company's (http://www.icgre.com) focus is to acquire "A" quality SFR properties for busy professionals.
Anyway, Adie spent quite a bit of time addressing the "bubble" in real estate. He pointed out that, unlike the stock market, there is no national real estate market. There are actually around 200 markets. So when the media speak of a bubble of real estate they are focusing on some local "frothy" markets.
According to Adie there are three types of markets.
- expensive big bubble markets like San Diego
- little bubble markets (not so expensive but still high appreciation) like Las Vegas
- non bubble markets (like Dallas and Houston in Texas)
He is most worried about the expensive big bubble markets like San Diego and LA. The affordability of these markets is totally out of whack with the income and they could come down hard. Interestingly he is a little less worried about the SF Bay Area, there are some unique factors that will protect this market, namely higher incomes and geographical factors that make it a desirable place to live.
The little bubble markets may pop but it shouldn't be a castrosophic event. Adie points out that he has a major weakness for a real estate investor … in that he can not see the future. However he is a keen observer and he feels that the Las Vegas market over the last year shows us how the little bubble markets will behave. Las Vegas real estate values soared and then stuttered for a short period of time when everyone decided to sell out. However relatively speaking Las Vegas is still not that expensive and will be fueled by folks fleeing the big bubble markets. However the gains in Las Vegas and Phoenix might be mitigated by folks fleeing those markets for the non bubble markets…. it's all relative, folks…
Adie is big on Olkahoma City and many of the Texas big cities.
Of course one thing he doesn't address is quality of life. Does that retired couple really want to move from San Diego to Dallas?
06.04.05
Padre Island
I thought I would capture some of my observations of the Padre Island Real Estate market. With Corpus Christi appreciating 12% (a figure almost unheard of in Texas) there has been a lot of investor interest, so perhaps this entry in my blog might be of use to someone. To be honest I haven’t looked at it for six months, but I have been tracking it for over two years and have made several trips there.
Padre Island is a barrier island near Corpus Christi. The residential section is incorporated into the City and very close to the Padre Island National Park. Being so close to the ocean, the real estate rental market there is a mixture of long term and short term rentals. There is a lot of canals so many condos and homes are on the water. Houses that are not on the water are called “dry lot” houses.
Padre Island has gone crazy. It’s one of the last affordable places where you can buy on the water and there has been a lot of investor interest. There is a lot of development planned and the big news is the packery channel plans (so boats have easier access to the water), the land near it just skyrocketed.
There are two tourist seasons on Padre. During the summer most of the vacation rentals are by Texans for a weekend or a week. The other season is during January, February and March, when the “winter Texans” drive down for 2-3 months from the cold midwest. These folks are generally retired and live in places like Minnesota. They often settle on a particular property to stay in year after year and look forward to meeting up with all their other winter Texan friends. Year round residents are a mixture of commuters, retirees and folks that own business on the island.
Houses on the water have really appreciated, unfortunately I don’t have stats for those, but my dry lot house appreciated about 20% over 18 months.
Long term rentals have been dampened by the work on the causeway which should be about done.
It’s really tempting to buy a condo on the water. An older one is still under $120-150K. All the newer condo/townhouse developments are more upscale. However when I was there in January there was a glut of the new ones on the rental market. The dry lot houses rent easier. You have to think of your market, not everyone can afford the high rents and if they can, they are likely to want the space and privacy that a SFR affords them.
Is it too late to get into the Padre Island market? Certainly difficult to buy anything that will cashflow anymore. Especially if you are looking at the vacation rentals. You would be investing for break-even and the appreciation. I think that it is an area that will continue to draw retail buyers as they retire, you just have to ride out any short term hiccups likely in this economy.
One thing to know about Padre Island is that the carrying costs are very high. You have to carry flood, fire and wind insurance and like elsewhere in the Texas the property taxes are high.
The Padre Island real estate market is different than the rest of Corpus Christi, it is more expensive but the appreciation has been higher.
06.03.05
55 housing boom towns
Just wanted to share this article on msn money central.
Are you invested in one of these towns?
