Despite a slowing in year-over-year price rises, the Houston real estate market remains steady and strong. It managed to shrug off the brutal oil price plunge between 2014-2016 – according to moving service U-Haul, Houston has been the #1 destination for one-way rentals for nine years straight.

Combined with the fact it is the sixth most affordable metro area in the USA, and the strength of Houston’s housing market shouldn’t come as a surprise.

However, not all areas of this sprawling metropolis are the same. Some areas offer excellent value, while others are poor long-term investments. In this article, we’ll fill you in on what you need to know about the Houston housing market and when you should consider selling your property.

Houston: the economic powerhouse of Texas

How has Houston’s housing market remained string while others have cooled off? Let’s start by taking a closer look at this city’s economy. Oil & gas accounts for 11% of Houston’s GDP, making it the third most valuable segment after shipping and the government.

Over 100,000 Houstonians hold positions with firms in this industry, many of whom make salaries well into the six figures. This gives them plenty of disposable income, which has further accelerated economic growth.

Yet, Houston has escaped the boom/bust trap that has ensnared other oil-rich regions around the world. It has evolved considerably since the 80s when the oil and gas industry was responsible for 25% of the region’s GDP. Since then, employers in other sectors have led the way in job creation, creating a highly-diversified labor pool.

For example, the healthcare industry has created a considerable number of well-paying jobs. The Memorial Hermann Health System and the UT MD Anderson Cancer Center alone employ more than 40,000 people, with tens of thousands more working in other hospital and research facilities across the Houston metropolitan area.

This has made it easier for the region to bounce back from hard economic times. In 2013, Houston was the first city in America to recover all the jobs it lost in the Great Recession, creating employment at a ratio of 2:1 (two jobs created for every one lost).

Which neighborhoods are hot? Where can the best buys be found?

The other half of Houston’s real estate success story: low housing prices. According to Zillow.com, it had an average assessed house value of $183,000 in 2018 – the sixth-lowest figure in America. Combined with high average incomes and low living costs (e.g. groceries are 30% cheaper than in Boston), and it is easy to save for a down payment here.

However, not all neighborhoods offer excellent value. Spots like West University Place and Bellaire may seem nice at first glance, but average prices start at around $500,000 in these neighborhoods. Similarly, any sellers offering ‘killer deals’ in places like Galleria/Uptown area may be hiding a dirty little secret. In this area and others, properties were affected by flooding caused by Hurricane Harvey.

This storm stalled over Houston for four days, dropping over 40 inches of rain – this inundated floodplains across the region, causing extensive damage. Unless you want to be on the hook for remediating a flood-damaged property, we recommend avoiding buying in any neighborhood located in a known floodplain.

So, where can you get the best value for your real estate dollar in Houston? Start in Greenway/Upper Kirby – located on the other side of I-610 from Galleria/Uptown, it survived Hurricane Harvey relatively unscathed, with residents reporting little to no street flooding. While houses here are quite pricey (starting in the 400s), smaller townhouses and condos in this high-density area can be purchased for as little as $100,000-$120,000.

Looking for an affordable detached home in Houston? There are plenty of neighborhoods in the northern, eastern, and southern areas outside the Sam Houston Tollway. In these places, homes can be found in the 100k price range.

While many of these areas have a blue-collar vibe, they come with a substantial population of renters to choose from once your property is ready for tenants.

Maintaining a house in Houston

While homes can be snapped up on the cheap in Houston, maintaining them is another story altogether. High humidity, thunderstorms, and the occasional hurricane can put the integrity of the best-built house to the test.

Homeowner’s insurance is a given for any property owner. However, value-priced properties in Houston may be situated on land that is prone to flooding. Always ensure if flooding is covered by your policy – if it isn’t, you may need to take out a separate policy.

You should also be aware that general wear and tear is NOT covered by most homeowner insurance policies. To protect yourself against the high costs of routine repairs, obtaining a home warranty is recommended.

This practice is very popular in Houston, as the high humidity that plagues this city is tough on central air systems. The cost of completely replacing a central A/C system can exceed $5,500 – combine that with the cost of other repairs, and it makes sense to drop several hundred dollars per year for this coverage.

When should I sell?

The market has been kind to Houston since the Great Recession. However, buyers in 2019 may want to consider parting with their home within the next decade. Houston may be an economically diverse city, but oil and gas still provide the region with much of its wealth.

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Storm clouds are starting to build, as the world is starting to feel the effects of climate change in a profound way. People are starting to demand action from their governments, and some have already acceded to these demands.

Drop-dead dates for the sale of gasoline-powered cars are looming in many countries – Norway will ban ICE vehicle sales starting in 2025, and scores of other nations in 2030 and beyond.

At the same time, the International Energy Agency projects 125 million electric vehicles will be on the road in 2030, with more than double that amount possible if robust measures like the Green New Deal are implemented.

This means peak oil demand may occur sometime between the mid-2020s and the early 2030s – years ahead of schedule. This will permanently tank the price of oil, greatly reducing revenues and spurring layoffs.

When this happens, it will have a decidedly negative impact on the Houston housing market. As such, investors should take steps over the coming decade to enhance the value of their properties. Regular lawn maintenance, upgrading the siding/front door, and repainting the interior walls are a few ways you can add thousands to your listing price.

Does this say anything about the Trump Administration?

So far in this article we have only looked at the “dry facts” behind the rise and rise of the Texas real estate market but in fact you cannot ignore the close tie between the increase in property prices and the person who serves as the president of the USA – you simply can’t, and specifically in Trump’s case.

The president has always used a very pro-oil rhetoric (and appointed people like Rex Tillerson) and that also helps the Lone Star State’s residents and investors maintain the notion that the state will continue thrive based on its natural resources.

That aspect of Trump’s administration is often ignored. The people of Texas still have higher than 50% approval rate for president Trump while the rest of the country shows declining approval rates, because they know some of his actions are in their direct benefit. Even if they are not directly involve with the oil industry, his actions push their property prices through the roof more than almost anywhere else in the country.