Max Carnage

Houston: Some thoughts

28 posts in this topic

I've read a bit of banter lately from Aussie housing bubble bloggers which have used Houston, Texas as some kind of ideal for Australia to aspire to. I disagree.

This disagreement comes from two fronts. Firstly because I think Australians, despite all the whinging, have it much better than Houstonians, except for the lucky-by-birth ones. And secondly, because I think only part of the Houston picture is being presented.

Houston – a great place to be. For a small number of people. From Wikipedia:

According to the 2010 Census, Whites made up 50.5% of Houston's population, of which 25.6% were non-Hispanic whites. Blacks or African Americans made up 23.7% of Houston's population. American Indians made up 0.7% of Houston's population. Asians made up 6.0% of Houston's population while Pacific Islanders made up 0.1%. Individuals from some other race made up 15.2% of the city's population, of which 0.2% were non-Hispanic. Individuals from two or more races made up 3.3% of the city's population. People of Hispanic or Latino origin made up 43.8% of Houston's population.
http://en.wikipedia.org/wiki/Houston

No problem so far. Diversity is great. Unless you happen to be one of the diverse.

24836.jpg

If you’re a non-Hispanic white person in 2009 your median per capita income is $29,000, twice what it was a decade ago.

If on the other hand you’re black or African-American, your median per capita income is $17,000, 24% increase in the last decade.

If you’re Hispanic, you’ve got a median per capita income of $14,000, apparently the same as a decade ago.

Let’s get this straight. As unlucky as younger Australians are to have been born too late to buy cheap houses, this pales in comparison to the unlucky hordes of Houstonians who were not born into a privileged white household. Houston is a city of gross inequality, largely along racial bounds.

That’s all I’m going to say about race, for fear of hijacking my own thread. But the inequality segues nicely into my second point. It is but one of many factors that differentiate Australian and Houstonian housing markets.

The way it’s told by certain commentators you’d think that the only difference was the restrictiveness or not of planning rules. This is IMHO, either ignorant or deliberately deceptive. There are a multitude of differences.

Some suggest that Houston was immune to the housing bubble. Unfortunately, data are scarce and what are available come from the Houston Association of Realtors. And these are scattered inconsistently across dozens of press releases. But having compiled them, I’ve found that median Single Family Homes increased from an average $83,756 in 1996 to an average $148,350 in 2006. Median Town-homes & Condos increased from an average $55,214 in 1997 to an average $127,681 in 2007. 131% increase in a decade in an area supposedly immune to bubbles?

Also worthy of note is a huge discrepancy between median and mean price. The mean Single Family Home price peaked at $227,340 in June 2008, compared to $160,050 for the median Single Family Home. The mean for Town-homes & Condos peaked in June 2008 at $179,331 compared to $136,750 for the median. I suspect these gaps relate directly to income inequality. Suspect? I know it does:

White non-Hispanic median house value: $189,109

Black or African American median house value: $87,370

Hispanic or Latino median house value: $98,105

So, other relevant factors? A historic oil boom & bust for starters. 250k of Houston’s existing homes were built in the boom years of the 1970s. That compares to ~140k in the 1960s and 1980s. And ~112k in the 2000s. Meaning what? That historic construction and subsequent contraction as well as demographics as well as population growth rates (and the type/income of growth subsets) and housing stock are likely to have played a big part in both low starting prices and the size of increases.

Houston spent much of the 1980s in recession. Between March 1982 and Jan 1987, a net 222k jobs (over 14%) were lost. It took until May of 1990 to regain the pre-recession peak of 1.58 million employed. Bankers with long memories of the area’s recession might have been important too. Oh, there’s some speculation: I’ll bet Houston has a higher proportion of regional vs national banks?

Might both the lower incomes and lower income growth be relevant?

Median Household Income for Houston was $42,945 in 2009, up from $36,616 in 2000.

Median Price of houses and condos was $128,000 in 2009, up from $77,500 in 2000.

Can anybody think of other ways Australian cities are different/similar to Houston? Or is it fair enough just to point to the low prices and supposedly non-existent planning laws and say "Ahah!"?

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They have a very young median age.

30 relative to Australias 36. I know it does not sound like much difference but in most advanced economies people at 36 have a higher disposable income than those of 30 and generally have more wealth to throw at the likes of a family home.

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I actually find it very difficult to look at things form the demand side.

Being involved with making stuff means you look at expensive things or anything for that matter and decide on their value primarily based on what it takes / costs to make them. Whether I am buying an exercise bike or a house I would always apply this rule. OF course markets are made up of two sides so supply is only half the story.

It makes my view of things potentially flawed but here goes and I don't really add anything here to your assessment only explain why their housing might be different for reasons other than planning restrictions;

The large difference between mean and median in homes is likely a result of the difference between the haves and have nots. Australia combats this in two ways around incomes; 1. with a higher minimum wage than the USA and 2. With a much more progressive taxation system around income tax.

This alone does not necessarily explain it but then when you realise that they have fewer haves than have nots but the haves, have so much it explaines why their are certain pockets that are madly expensive with the rest pretty poor.

This have and have not issue around wages inportantly not only changes demand for homes it also allows one to build and develop housing much cheaper. With a ready supply of migrant workers, many of whom are reasonably skilled in building trades it is obvious that to build a home there it will come off cheaper than Australia.

If in Huoston wages of the lowest skilled workers never bubbled with wage pressures than their would also be no cost side pressure exacerbating the bubble or at least not to the degree in other parts of the USA or Australia.

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Let’s get this straight. As unlucky as younger Australians are to have been born too late to buy cheap houses, this pales in comparison to the unlucky hordes of Houstonians who were not born into a privileged white household. Houston is a city of gross inequality, largely along racial bounds.

Isn't this blindingly obvious?

America is a place of gross inequality, across racial lines and across gender lines, too, and it distorts everything completely.

It really isn't very much like Australia at all.

People either don't realise how different a country it really is, or choose to ignore that for their own purposes, I don't know which.

We think we know it, because we watch it on TV and read it on the internet all the time - but we are wrong, because we filter everything we see through our own cultural understandings and so the conclusions we draw are not those an American would necessarily draw from experiencing the same thing.

I've lived in both countries for a reasonable number of years and I am constantly surprised at how different we are, in so many ways. Australia is infinitely preferable. No matter how good the internet shopping may be over there, here is where I chose to buy a house & rear the kids. I like this socialist democracy we have here, no matter how much I might bitch about it.

I know this is kind of rant-y and a bit off-topic, but my point basically is this - the two countries are very different and only comparable after correcting for so many variables that you can hardly see where you have come from, argument-wise.

BTW, personally I think social factors account for as much of the variance in the housing markets in the US as any straight economic ones, maybe more. But then, I would.

Edited by Ruffian

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I know this is kind of rant-y and a bit off-topic, but my point basically is this - the two countries are very different and only comparable after correcting for so many variables that you can hardly see where you have come from, argument-wise.

Well put. And succinct!

Wim, we might have 'roos, but they have chupacabra. Well, used to, anyway. Then they shot it: http://www.wapt.com/news/28608410/detail.html

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I think people choose to use Houston as an example of "America" simple because it has been referenced by something they read on a blog. I agree that it is not as simple as that and I doubt any blogger who uses the Houston example has ever lived there. The sheer size of the US vs Australia makes comparison difficult. For example, Houston metro is +6m. If you can find a way around that challenge then US cities themselves can be wildly different i.e. New Orleans vs Portland or Seattle. NO is extremely poor and "dangerous"...I loved the year I lived there. Did not get mugged or robbed. I had my car in Glen Iris broken into three times over two years. Comparisons on a scale of "city" are unfair as each is unique and often depends on where you live in that city and what line of work you are in.

Some people desire affordable housing, see a correction in the US housing market that improved affordability and are thus drawn to use it in an example. Here's an extreme example: I have a friend w GM who moved from a nice house in Melbourne to an absolute mansion outside Detroit. He tells me he's happier there and making more money at the end of the day because his costs are so much lower. Houses, cars, energy...all are considerably cheaper. Health insurance is not. Is Detroit better than Melbourne? Depends.

Each city brings its own advantages and disadvantages to the individual based on what is important to the individual. If you don't own in Australia currently the US would look pretty good, assuming you want to own a house as a priority.

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http://www.macrobusiness.com.au/2011/08/a-housing-whodunit/

The unconventional economist has posted up a blog comparing Texas tax regime around property v other US states. Some bubbled away some didn't.

This appears to point to taxes having less impact than land use policies in the various states.

There certainly appears to be a correlation in the land use policies and the state of their housing markets pre and post GFC however.

My thoughts are however there are two kinds of taxes on real estate and the difference has a profound influence on price of property it has a lot less to do with total tax take than what kind of taxes we use.

You can have a very high tax regime which is all concentrated on the new supply of homes only in our case; developer levies, GST, excessive council permits Section 94 contributions etc.

This of course would tend to increase the price of new homes due to cost increases.

Or you can alternately as in the case of many US states have a broad based land tax on all existing land new home or old home indeed even land with no home which is put toward building the macro infrastructure for new estates alleviating the need to slug only new homes for this infrastructure. Works in two ways, encourages capitalisation to extract rent and provides the infrastructure needed to service new areas with the land tax earning back for the gov the increased value of that land.

One tax pushes price up the other drags it down.

I would say tax regimes are fundamental to the price of homes in any place, but I suspect you have to dig one level deeper to discover this, not aggregate all property taxes and say, look tax pushes price down in the case of Cameron Murray or in the case of unconventional economist claim taxes are only a secondary influence as evidenced by the range of outcomes not dependant on the property tax taken from each state.

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One tax pushes price up the other drags it down.

All else being equal, I'm sure that would be true.
There certainly appears to be a correlation in the land use policies and the state of their housing markets pre and post GFC however.
There must be a (large) number of correlations between housing prices and stuff.

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There must be a (large) number of correlations between housing prices and stuff.

Point taken.

It is perhaps another instance where digging beneath teh surface is required.

Of course it would be certain that average credit v income is higher in those places with bubbly prices but this could be either a cause or a symptom.

I guess on the restrictive land use policies it could equally be argues they only appear restrictive when unnatural demand is stirred as a result of a bubble. i.e. the gov releases land on the basis of sound population strategies not v demand, these other measures may quench demand at any level except bubble demand?

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I have lived in Houston my entire life, and I must say that we do have a great market for home investors right now. It is also great for those looking to buy a cheap home with minor remodeling issues. How is the market in Australia today?

It is funny I have always wanted to travel there, but still have not. You can see home prices and some good articles on the Houston market on my site. Here is a good article about the market...

http://www.greenreal...and-short-sales

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I have lived in Houston my entire life, and I must say that we do have a great market for home investors right now. It is also great for those looking to buy a cheap home with minor remodeling issues. How is the market in Australia today?

It is funny I have always wanted to travel there, but still have not. You can see home prices and some good articles on the Houston market on my site. Here is a good article about the market...

http://www.greenreal...and-short-sales

Most on this forum believe that the property market here is overdue a correction.

We have bid up property to crazy levels due largely to cheap debt for the past 20 years and that our tax system has favoured property investment over other asset classes for quite some time.

We escaped the worst of the GFC because we are Chinas quarry. We did blow a wad of cash at the time of the GFC in stimulus which may or may not have been necessary given hindsight and Chinas thirst for resources. However we did manage to engineer a mini subprime crisis in 2009 when we gave 30K to new home buyers when interest rates were at all time lows. The official cash rate here are at moment is at 4.75%. It was as low as 3% but the median price for home where I live is a cool half million aussie pesos. There are clamourings from the real estate/property developer complex for interest rate cuts. Inflation is rising though and our reserve bank (read fed) are being stubborn.

While commodities (Iron ore, Coal, Gas etc) stay high we have a high dollar and nominally a healthy if "two speed" economy. The high dollar is hollowing out the rest of the economy and we a toying with the idea of protectionism (Manufacturing and export industries are suffering with the higher dollar)

The retail industry is depressed due to the disturbing news that constantly emanates from you chaps in the US and Europe. ^_^ Tourism is also screwed due to high dollar. We have low public debt but very high public debt and were all just waiting for the government bails out banks in the same way as the rest of the world and the switch is made.

In answer to your original question I think property is a bit 'toppy' at the moment. :)

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Listing your house for sale in Houston, TX is not the best thing to do when the market is just coming out of a recession, but some home owners may not have a choice.

isn't the US about to go back into recession?

Tor thinks he cooks sh*t hot ribs. Surely a Texan would have a better recipe? pop over to the mandatory recipe thread and share your secret. it's not all about housing at simple and sustainable.

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isn't the US about to go back into recession?

Tor thinks he cooks sh*t hot ribs. Surely a Texan would have a better recipe? pop over to the mandatory recipe thread and share your secret. it's not all about housing at simple and sustainable.

I recently nailed a ribs night with a completely new and novel root beer + slow cooker recipe. Can you get root beer in Australia? Ginger beer would probably work. Will test before putting something that outrageous on the thread.

The Houston thread is interesting but no recipe = no posty. This place is hardcore.

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I recently nailed a ribs night with a completely new and novel root beer + slow cooker recipe. Can you get root beer in Australia? Ginger beer would probably work. Will test before putting something that outrageous on the thread.

The Houston thread is interesting but no recipe = no posty. This place is hardcore.

Saw root beer in an asian supermarket today (hornsby, outside the mall).

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Saw root beer in an asian supermarket today (hornsby, outside the mall).

Feel free mods to pop this over in the MRT.

Can't help it - just had a massive brain wave/embolism. I'm gonna combine the best of both rib making techniques. The slow baked sticky glaze method and the dry rub smoked egg variety to create the most awesome rib recipe ever.

Here goes.

dry rub the spice mix:

garlic powder

onion powder

sage powder

celery seeds

mustard powder

pepper

chilli powder (optional)

cumin powder (optional)

coriander powder (optional)

ginger powder (optional)

rub on the ribs. let sit for a few hours (or overnight).

do the baked glazed method from here. Bake and glaze with a mixture of:

honey

bourbon

tomato sauce

mustard powder

tobasco

brown sugar

water

<insert root beer here>

bake on really low for two hours glazing every 1/2 hour to create a sticky coating. meat should be fall off the bone now. Remove from oven. cool. Optionally leave overnight for a second stage of marination.

Place into a smoker roaster for a further x hours for fully smoke out.

You wouldn't be left with anything even resembling pork. Just a delicious sticky mass on a bone. 10/10.

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Can't help it - just had a massive brain wave/embolism. I'm gonna combine the best of both rib making techniques. The slow baked sticky glaze method and the dry rub smoked egg variety to create the most awesome rib recipe ever.

Would the smoke take after it is already cooked?

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Would the smoke take after it is already cooked?

I've previously used a pressure cooker to precook ribs (Maybe 20 mins in the cooker.) I've been getting into the whole thrice cooked meat lately. (Chinese pork belly) I don't know if the smoke would take TBH. It's a bit of an experiment. The glaze may well isolate the meat from the smoke. It may be that smoke is fine enough to imbue the ribs with flavour. I'm thinking several hours of 110C. As close to cold smoking as you can get on an egg. I'm pretty keen to get some answers. :) Might have a go this weekend. I think I will leave half on for even longer in an attempt to create pork jerky.

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I've previously used a pressure cooker to precook ribs (Maybe 20 mins in the cooker.) I've been getting into the whole thrice cooked meat lately. (Chinese pork belly) I don't know if the smoke would take TBH. It's a bit of an experiment. The glaze may well isolate the meat from the smoke. It may be that smoke is fine enough to imbue the ribs with flavour. I'm thinking several hours of 110C. As close to cold smoking as you can get on an egg. I'm pretty keen to get some answers. :) Might have a go this weekend. I think I will leave half on for even longer in an attempt to create pork jerky.

You've gone mad with power! Mad I say!

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You've gone mad with power! Mad I say!

Sometimes I have moments of doubt, I try to focus on the ultimate prize. The perfect rib and the title of "pork lord" appeals to me greatly.

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Sometimes I have moments of doubt, I try to focus on the ultimate prize. The perfect rib and the title of "pork lord" appeals to me greatly.

would you settle for "lord pork"?

i bet we could get elf to change your nick for you if you asked nicely.

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would you settle for "lord pork"?

i bet we could get elf to change your nick for you if you asked nicely.

I'd settle for the title of lard ass tbh. I'm not a proud man. I'm prepared to compromise and go for "lord of the pork!"

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