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Cents of Place

by Evan Wetmore, with reporting by Constance Shook | Houston magazine | July 30, 2012

Continuing to defy national trends, Houston’s housing market is robust and rocking. Here are some fun facts about real estate now, in the most fascinating city in America.

H-Town Is Looking Up
Realtor Kerman Haynes of Sudhoff Properties declares River Oaks’ Highland Tower the future of inner-Loop living. “Houstonians usually embrace town-home living, single-family homes,” says Haynes, who recently moved here from Georgia to oversee sales for the 16-story building, completed in late 2010. “But times are starting to change.”

Haynes notes that at press time, the 93-unit tower is 62 percent sold—and he expects to be sold out by year’s end. The quick pace of sales reflects Houston’s growing interest in high-rise living. The number of high-rise units sold in Houston during the first five months of this year was up 46 percent, compared to last year, according to the Houston Association of Realtors (HAR). That number will likely rise, as new towers pop up, joining the likes of the 2727 Kirby building, which opened in 2009 and currently proffers a penthouse for $5.25 million.

PM Realty Group plans to break ground this month on a 40-story high-rise at the corner of Weslayan and West Alabama. And Randall Davis’ 25-story, art-deco-savvy Astoria tower, near the Galleria, is also underway, with 55 condos and 10 penthouses, the latter starting at $2 mil apiece.

“Lots of developers are grabbing land,” says Haynes. “To put up a high-rise, you only need an acre. Where there was once one or two people living, now you can fit... 200 people. This will dramatically impact the Houston population and the beauty of our skyline.”

Mod Is on the Make
Earlier this summer, near Rice, three light-filled, modern stunners hit the market—and sold in days, helping account for the area’s rise in sales activity, as the number of sales for the first five months of the year jumped 13 percent over that of the same timeframe in 2011. Is mod on the move in studious West U?

“I’ve sold traditional homes, I’ve sold modern homes,” says Andrew McCain of John Daugherty Realtors, adding a note on the posh next-door neighborhood of Southampton. “I sold a modern home in a historic setting.” The redwood home went for $2 mil, and will likely be among the last contemporaries in the area, as parts of it were designated as historic in ’09.

There may be no other section of Houston where homes of such varying design styles not only sell, but sell high, with the average price in West U remaining steady at $830,000. “Modern and family-oriented,” says Daugherty himself of what’s selling near the university, citing a 1979 showplace on Bolsover Street that just fetched $900,000.

What’s Old Is New
In the Heights, home developers are choosing to embrace and enrich history, often updating homes but maintaining original architectural elements, in keeping with the Victorian-tilting feel of the ’hood. And it seems to be paying off, helping catapult the area into a new stratosphere of value. Through May of this year, 52 Heights homes sold for $500,000 or more, more than half-again the number of half-a-mil houses that were sold by the same time in 2011; the overall count of home sales has also increased, by nearly 40 percent.

Area developer Clark Arnold has revamped and expanded three houses in the Heights already this year—including his own 1920s bungalow on West 22nd Street, which is now on the market for $750,000, more than triple its pre-reno asking price in 2009. “I did them all as one-story plans,” he says. “I didn’t want them looking like itty-bitty bungalows that were swallowed by a whale.”

There’s a premium on preservation in the Heights, according to realtors, who say that while teardown-rebuilds are popular in districts like Montrose and Braeswood, restoration-expansions such as Arnold’s are all the rage here. “Most of the people here buy to remodel, not tear down,” says Arnold. “They’re in love with the neighborhood, with the feel.” Plus, deed restrictions apply to about 60 percent of homes; while most limit only the scale and placement of homes on the premises, some streets are designated as renovate-only, with teardowns strictly forbidden.

More Is Lease
Jenni Corcoran and twins Kristen and Megan Lastrapes, all 23, wanted to live in a place where they could spread out—and go out. “We wanted a good floor plan, and to be by the activity, the good restaurants, where the bulk of our age group seemed to be moving,” says Corcoran, an account manager for a recruiting company.

The roommates found a townhouse on still-popular Washington Corridor, where the average rent for homes and townhouses topped $2,000 through May of this year, up 18 percent over that timeframe in 2011, according to HAR—and where hot properties don’t linger empty. “We’d fall in love with a place, look into it the next day, and it’d be gone,” says Kristen, a medical sales rep, of their ordeal in March.

And it’s a similar story all over town: The rental market is robust, aided by a healthy job report—Houston added nearly 100,000 jobs in the past 12 months. Realtors say that many workers who relocate from other cities are having a hard time selling the homes they left behind, and don’t want to take on a second mortgage—so they rent instead. Rental rates in Memorial are up 10 percent, the Heights 13 percent. And, overall in Houston last month, apartment occupancy was at nearly 90 percent, up a hair over July 2011.

“Renting is a choice that made sense for us, but it was stressful,” says Corcoran. “Good places right now, they get picked up like wildfire.”

The Dame Delivers
If Houston’s ever-robust real estate market has been a beacon for the nation, then River Oaks, the Grande Dame of the city’s neighborhoods, has been a beacon for Houston. The highest of high-end enclaves has rarely been affected by economic downturns. “It felt the energy crisis in the mid to late ’80s, but it didn’t feel anything before and it hasn’t since,” says John Daugherty, whose agency sells many of the area’s most expensive homes.

Indeed, the average price of a home from January through May in River Oaks was $1.2 mil—an increase of more than 27 percent over that time period in 2011. And the total number of sales was up more than 10 percent. More homes are selling, and at higher prices.

“There’s a high demand for River Oaks,” says Martha Turner’s Walter Bering. “There have been four sales in River Oaks this year of homes that were on the market an average of six days,” all of which sold for an excess of $3 million, and most of which had multiple offers. “Every time one of those hits the market, you have a revolving door of buyers.”

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