The Stress Test of $50-$60 a Barrel Oil and Will This Time be Different

With experience, calmness persists in the Lone Star State

            As the country looks on to see if Houston can withstand the stress test of lower oil prices, many of us are unperturbed. We’ve been to this rodeo before. As one oil executive put it, “I don’t need to go to Las Vegas. I’m in the oil business. I live in Las Vegas every single day.” As for me (and I’m dating myself), I’ve been in real estate for over 28 years and remember well those crazy 80’s years. I’ve been through two recessions and two bubbles and made it out alive and intact.

But let’s back up a minute and look at this situation realistically. This isn’t another 80’s bust. The housing market back then had a financial foundation thinner than tissue paper. We had non-recourse loans, so if things didn’t work out, we could simply give back the property. Real estate was used as a tax shelter. Deals could be a losing combination of both. You held your breath and hoped for the best. It was like keeping your high school kid home from school for a month and crossing your fingers that everything was going to be okay.

Getting back to the present, when the numbers come in, sales for both November and December are going to be lower, we know that. But it’s not because of lower oil prices. It’s for a couple of reasons:

• 60% of all buyers in the Houston market (I did a very unscientific survey) are from out of state. These folks don’t move or look at homes during the holidays. They come in the spring. 

People from all over are beginning to understand that the economy has changed permanently. The ups and downs of the national economy is “the new normal.”  In Texas, it’s always been the norm!

In 2007 and 2008, it was the stock market that incurred massive injuries, yet Houston experienced only a sniffle. We’ve been through much worse than $50-$60 oil. We know that what goes up does come down, and vice versa.  Panic isn’t something Houston does—and it doesn’t need to. It’s sitting pretty as an economically stable place to live:

·      We’re still an in-migration state. People are moving into Texas, not leaving. Seven of the fifteen fastest growing cities are located in Texas.

·      #1 in job creation. Texas leads the nation in the creation of jobs; 40% since 2009. (If it slows down, we’ll still be happy. It would give us time to fix our roads.)

·      Minimal building. When oil prices go down, lenders get a little uneasy. Spec building comes to almost a complete halt. But on the bright side, this stabilizes the supply and demand sides of housing. Apartment building slows down. Yippee!

·      In Texas, your home will never be your ATM machine; there are no equity lines of credit. Easy money always ends up being bad money. Because Texans are not able to access our home equity with an ATM card, it is a bit more complicated than that.  It is a harder process so foreclosures stay down and our real estate market stays relatively stable.

·      People nest when there is change.  When you go to work and things aren’t so happy-go-lucky, you tend to stay put with your housing. So inventory will stay down.

·      Most people in the oil business saw this coming. And they’ve been talking about it for six months, so no big surprise or shock. They have remained calm.

            So take a deep breath and relax. We have traveled this road before and we know where it leads.

Change of Scenery

Early this morning, I was perusing the Houston Chronicle and stumbled upon an article that just reminded me of how much our city has grown. So many people are moving to Houston, Texas from around the world.

Well, I had the pleasure of relocating a beautiful family from Connecticut to Houston, and it’s just so good to hear and read all the wonderful things they have to say about my city. Here’s a few things to keep in mind when you’re relocating to a new city, and relocating with children:

1.      .. Children can have mixed emotions about a move. It’s not about having just one big talk with them. Parents should probably have a series of talks with them. It may take them just as long as it has taken you to feel good about a move.
2.         Use the move as awesome bonding experience and a resilience builder.
3.         Find the perfect home; take everyone into consideration, even the children. Give and take a little bit. Try to make sure everyone is comfortable.
4.         And finally, get out find things to love about your new city. It’ll make the transition a lot easier if you can go out and find/taste the best ice cream you’ve ever had in life! J

Until next time,

Sissy

Inventory!

Why do good neighborhoods have such low inventory?

•             60% of the buyers are from out of town and they’re looking for GREAT SCHOOLS.
•       Majority of the Buyers are educated executives and education is a driving force in their decision-making.
•            All time record low interest rates.
•            People are afraid to put their house on the market, unless they have a place to go.
•       If you are thinking of selling your home, this is a great time.  Inventory of homes in good neighborhoods are Low!

Mr. President!

Dear Mr. President,

Your recent comment about marijuana just shows how little you know.

Your daughters have the advantage of coming home to a supervised home WITH AN INTACT FAMILY.  They do not go home to an empty apartment or HOUSE like so many AMERICAN children do.  Your children will have guidance (although after your stupid statement I worry about what type of guidance) on the subject of marijuana many kids will not EVER HAVE.  I have been a volunteer/board member of the Boys and Girls Club and tutored children in schools to bring them up to grade level.  I can tell you many of these kids are beating the odds but when someone they admire and want to grow up to emulate makes an IDIOTIC stupid comment, we lose more kids and it makes our job much harder.

I have a 20-year-old son and one of the lessons I have tried to teach him is “just because you think it, does not give you the right to say it.”  When he was in 7th grade a boy was suspended because he hit my son.  I asked "why he hit my son" and he said "he called me Fat".  I made the school suspend my son.

Mr. President you are welcome to voice your opinion when you can do so from experience as a parent.  When Sasha and Malia EXPERIMENT WITH pot and you see first hand "THAT IT IS NO WORSE THAN ALCOHOL", then you are entitled to an opinion.  Your opinion should be based on YOUR PERSONAL experience.  Because you think it, does not give you the right to say it.  You should just go up to all the volunteers trying to help mentor kids and slap us in the face.  It would have been much easier on us and at least the children would be protected.

The reality of what you have done is made impressionable kids think marijuana is OK.  For the kids that have the hardest odds against them, you have just made it harder. Does this make you feel proud? Do you feel like a hip parent?

Regards,

Sissy Lappin 

Real Estate Malpractice!

In the past few months, I have become increasingly sensitive to something that has been getting overlooked when buying a home.  The reason for this is I have seen two very serious cases of this.  If there was ever a case to file a complaint this should be it.

  

My daughter was having severe migraines and getting regular facet blocks in her neck. While she was in recovery one day, I struck up a conversation with her neuro-radiologist. You could probably tell from her title that this was a woman who was smart and who had gone to school for a very long time; she had to have been at the top of her game to get the degree she did. Education was a clear priority in her life. She asked me what I did, and I told her I was a real estate broker. “Can I pick your brain?” she asked me.

Well, she’d taken such good care of my daughter that I would have given her a kidney if she’d asked. “By all means,” I said. The neuro-radiologist told me that she and her husband (a pediatric cardiology surgeon, by the way) had two children ages 3 and 5, and had moved to Houston 18 months prior. They had applied to all the private schools and had gotten turned down by every one. “Those schools only take siblings and legacies for lower school” I assured her. She and her husband had bought a home in a nice neighborhood, but one that didn’t have the best schools. “I saw online that the schools were rated as “Acceptable,” said the neuro-radiologist, a look of consternation on her face. “Do you think that’s okay for our kids? Or should we have bought something elsewhere?” “What did your real estate agent tell you?” I asked her.

She shrugged. “She never mentioned schools. But now we sort of want to move.” I couldn’t believe what she was saying. I thought to myself—her real estate agent should be sued for malpractice. Obviously, education is a huge driving force in this family’s life, and you sell them a house with “Acceptable” school ratings? And now, fast-forward 18 months, they have to move to a new neighborhood because of the crappy schools. I tried to break the news gently. “Real estate agents don’t always consider everything that they should,” I said. “I had to start work within a month,” said this mild-mannered doctor regretfully. “We had to pick a home quickly. I thought that real estate agents were supposed to be experts! It’s like, when they call me into the operating room, there’s nothing I’m not considering about the patient—why isn’t it like that with real estate?”  

“I’m not sure,” I told her. “I’m really sorry. I always tell my clients that buying a house is like picking a spouse. You have to think pretty far ahead into the future.”  

The Questions An Agent Might Not Ask are the most important ones!

Do you have kids? Do you want to have kids? Are you going to have more kids? Do you need to consider school districts? Have your kids been in the same private school forever, and you couldn’t care less about your school district? Are your kids moving out for good? Or, do kids scare you and you know you never want to have them? Are you close to your workplace? Do you absolutely detest commuting, or are you happy to go for a cheaper neighborhood and drive an hour to work every day? Maybe commuting de-stresses you—I have a few clients (mostly lawyers, interestingly enough) who feel that way. Is there a possibility that your parents might be moving in at any point? Do they have any health conditions that would require a one-story, or a house with a full bath downstairs? If buying a house is like picking a spouse, looking for a house is like dating. It’s really easy to get swept away by the beautiful marble countertop, the huge backyard, and all other forms of glitz. But a house, like a spouse, is an enormous and long-term commitment. You need to think about the future and ask yourself the questions that may not be sexy but are far more important than the chandelier in the dining room.  Before you say, “I do,” you need to use common sense as well as your emotional leanings. Sure, love is blind, but this isn’t the time for it! I have seen so many real estate ads that say, “Buy with your heart, not your head.” Well, consider the source and the motivation for that statement: it’s all about that commission.