Texas Real Estate Undervalued

BASED ON FORTUNE’S FINDINGS, HSB AIN’T SEEN NOTHING YET!

ON APRIL 1, 2006, TEXAS’ REAL ESTATE WAS CONSIDERED BY USA TODAY AS THE COUNTRY’S MOST UNDERVALUED.  FORTUNE MAGAZINE IS NOW PREDICTING THAT TEXAS’ REAL ESTATE WILL APPRECIATE MORE DURING 2007 AND 2008 THAN ANYWHERE ELSE IN AMERICA.

Hold on to your hat!  Although we’ve been reporting figures showing that HSB’s real estate market began turning around at the end of 2003 and has been on an ever-increasing roll since, one of the country’s leading business magazines predicted this week that we ain’t seen nothing yet! 

HSB’s values have been appreciating the past three years while the balance of Texas’ real estate was in a depression.  Our real estate has been rising against a falling tide.  The guru are now saying the tide has been turning this year and will be rising across Texas for the next few, lifting values statewide more than anywhere else in the entire country. 

Based on findings from two national studies that together cover the period from 3-31-2001 through 12-31-2008 - the first published by USA TODAY on 6-13-2006 and the second by FORTUNE Magazine on !2-25-2006 - the good times are just getting ready to roll in Texas.  The USA TODAY study looked back over a five-year period dating from 3-31-2006.  The FORTUNE study covered a three-year period forward from 1-1-2006.  Both studies see 2006 as a transitional year for Texas’ real estate, transforming swiftly from the country’s worst as of 3-31-2006 to where it will be the country’s best during 2007 and 2008.

In its 6-13-2006 issue, the USA TODAY reported that Texas’ real estate remained in a relatively flat, depressed state through the first quarter of 2006.  Worst yet, the study, which compared prices over the prior five-year period in 317 metropolitan areas across the country, found that the eight most undervalued areas in the country were all in Texas, including Bryan (-23.7%), Dallas (-18.9%), Fort Worth (-18.5%), Houston (-15.8%), Killeen (-15.1%), Midland (-13.6%), El Paso (-13.1%) and McAllen (-12.9%). 

The Austin market, though not among the bottom eight, was not far off the bottom.  Although Texas’ real estate remained weak as late as early this year, HSB’s haven’t.  By several measures, HSB’s market bottomed much earlier. 

For example, the average selling price for HSB’s full-sized undeveloped lakefront lots was $292,400 in 2002, $266,300 in 2003, $283,100 in 2004, $428,000 in 2005 and as of December 20^th, $691,000 for 2006.  As you can see, HSB’s lakefront bottomed in 2003, almost three years earlier than the rest of Texas’ market, and began strengthening in 2004.

That HSB’s market could turn positive during a period when performance in the

remainder of Texas amounted to the country’s worst is an extremely significant

finding.  It speaks volumes about HSB’s unique lifestyle offering, indicating people are

increasingly singling out HSB as a special spot with extraordinary appeal.

However, the 12-25-2006 issue of FORTUNE Magazine carried an article entitled:

“INVESTORS’ GUIDE 2007:  Getting Real About Real Estate, the Top-100 Markets in

the U.S. for 2007 and 2008.”  It predicts the southeastern U.S. will experience more

market appreciation than the country’s three other sectors, with 12 of the country’s

20 fastest growing metropolitan areas during 2007 and six of the 11 fastest during

2008. 

The California-Las Vegas market is forecast to suffer the nation’s greatest

depreciation during 2007 and 2008, with Vegas leading the decline - down about

15%.  Florida is predicted to be the nation’s second worst market, with Miami/Miami

Beach having the state’s worst - down about 12% during the two years.

FORTUNE likes the Texas market best of all for the two-year period.  It believes

Texas will not merely lead the 16 states in its sector during 2007 and 2008, it will lead

the entire country, with McAllen/Mission being the country’s hot spot – up 18% over

the two-year period.

We should tip our hats to National Recreational Properties, the California company

that came in here last year, bought up over 1,500 undeveloped off-water lots, marked

them up substantially, and has been hugely successful selling them off in volumes

averaging $1 million per week since it kicked off an exceptionally professional sales

program last April.  It had the vision to see all this coming.

During 2007, the Magazine predicts seven of the southeast’s nine leading markets

will be in Texas.  In addition to McAllen/Mission, the state’s six other leading markets

will be El Paso, San Antonio, Fort Worth, Austin, Houston, Dallas.  These six, Texas’

six largest cities and representing six of the 21 largest cities in America, ring HSB.

Their predicted price gains might be reasonably expected to augment the gains HSB

has been realizing on its own over the past three years.

On a national basis, these same seven Texas cities are predicted to rank among the dozen best of the country’s top-100 markets during 2007.  During 2008, five of the country’s 10 fastest growing cities are located in Texas.

Folks, it don’t get no better than this.  We’re clearly in line for a substantial period of prosperity.  Make the most of the good-fortuned blessing. 

Here’s wishing you and yours a HAPPY AND PROSPEROUS NEW YEAR!