Houston Real Estate Bubble?

UnknownBelow is a link to a Houston Chronicle article.  In the piece Trulia thinks the Houston market is slightly overvalued. In our opinion we believe they are mistaken. Prices are a function of supply and demand. Currently, there is more demand than supply which pushes prices up, and that doesn’t look to change for several more years. Houston is the #1 destination for U-Haul trailers in the country and the people moving here have to live somewhere.

With the collapse of the market in 2007 – 2012 there was virtually no new construction home building going on, yet we have been adding over 30,000 people per year to the city (Census Bureau). New construction is just starting to take off again in the city, but will take several years for supply to catch up with demand.

In addition, there is a pent up demand from buyers who have been wanting to own their own home, but have been afraid to wade back into the mortgage waters because of the economy and tighter lending standards (which are starting to loosen slightly). With the economy in Houston doing well buyers are back in the market, which is also driving prices higher.

What we learned from the 2007 market downturn is to watch the supply and demand curve and ignore what people are “feeling” in the market. As you see supply catching up with demand is when you want to be cautious about buying (but it’s usually a great time to sell).