Welcome to another edition of the Coast to Coast Real Estate Investor. In this edition we’re on to Texas and the far west!
In the last edition, I mentioned Texas briefly. I want to start this episode by going back and looking in some more depth at the state. Texas, in my mind, represents the best investment value in the continental United States. Prices are among the lowest in the country, and you get good value for the money. And, that fact is coupled with an amazing quality of life
Now, understand that Texas has come into the sights of all those speculators who wrecked the Las Vegas and Phoenix markets, sending them sky-high. As those markets got too expensive, those same investors turned their attention to Texas because of the perceived value.
Personally, I don’t think the same thing can happen in Texas because there’s simply too much land – to much room to build. However, Texas is attracting a lot of attention, and prices are rising steadily, fortunately at sustainable rates. Appreciation is solid, but it’s not hyper-appreciation, and that makes a difference.
San Antonio and Austin are attracting the most attention – Austin is attracting the most attention because of its culture. It’s the state capital, home of the University of Texas, home of Dell and other high-tech businesses, and has a very hip young culture. You have great selection of properties ranging from inexpensive in-city condos, to country property, to recreation communities near Lake Austin. No doubt, with all of these factors present, Austin will continue to be a hot spot for people relocating.
San Antonio is…well, to say beautiful probably doesn’t do it justice. You’d never know, from impressions, that San Antonio is the 4th largest city in Texas. The best way to understand San Antonio is to experience it – to go on the world-renown Riverwalk and experience the unique ambiance. Housing values are extremely good, and new construction abounds in the greater market area – with some new builds starting under $100K
If being too close to the city is not your thing, there are a myriad of smaller towns & cities nearby that have great investment potential. Consider San Marcos, Bexar, Canyon Lake (which is a golf and lake community) and New Braunfels.
The obvious two cities – Texas’ largest are Dallas and Houston, and well worth considering.
The Dallas – Fort Worth metroplex has an amazing amount of real estate available – and at decent prices. Prices for single family homes can go as low as the 70’s even in decent neighborhoods. Condos can be had as low as the 30’s, and I’ve even seen units in the 20’s! Dallas has some very nice recreational areas around the various large lakes such as Lakeworth and Lake Lewisville.
Houston stretches from clear inland locales to bordering the coast of the Gulf of Mexico. The Bay Area Houston region in and around Clear Lake in the south east of the city is a water-oriented area bordering the Gulf. Areas like The Woodlands and Lake Conroe at the opposite end, on the north west provide planned communities, golf, and lakes for water recreation.
While looking around Houston, don’t forget the Texas coast – the one area of the country I know of where an average family can afford waterfront property! If you can handle the hurricane issue, consider looking at Galveston, Corpus Christie, and the towns that dot the area in between.
Other areas in Texas also hold interesting situations. Small towns and small cities abound, and at bargain basement prices. El Paso, for those of you who are interested in desert living is quite similar in geography to what you’d find in New Mexico, but at about 2/3 of the cost. Many of the more rural towns are getting more cosmopolitan as retirees are taking up residence, but not to the extent that prices are flying high.
As we move west into New Mexico, I’ll point out the beautiful small city of Las Cruces. The Mexican and Native American influences that so often draw retirees and people traveling to the desert SW are present and visible in Las Cruces, but the city still represents a tremendous value. Las Cruces is very close to El Paso, TX, has a university in town, and is only an hour in to Mexico, so it benefits from the presence of those features. There are other small towns nearby, such as Alamagordo, which are also attracting attention of retirees looking for small desert towns.
Albuquerque still represents good value, although the prices have climbed pretty steeply in the last 3 or so years. The way to consider Albuquerque in your mind is to see that, as place like Phoenix and Las Vegas get out of reach for most people, attention turns to Albuquerque because it consistently has lower prices. Thus, it’s an alternative of choice for people seeking the desert lifestyle.
With that in mind, let’s move into Arizona and talk about Phoenix. Once upon a time, Phoenix was a bargain-priced city as far as housing goes. Today, it’s one of the most expensive markets in the country. Can someone still get a ‘buy’ in Phoenix? The answer is yes. For one, condo conversions – where a developer has taken an apartment complex and converted into condo units – abound, and in fact, have been overbuilt. It’s very common to find developers offering no down payment, no mortgage payments for 6 months or even a year, no 1st year taxes or condo fees. I’ve seen incentives on a $120,000 condo of up to $8,000!
Look also to the region 30 minutes south of Phoenix – Queen Creek, Florence, Casa Grande, and Coolidge. Today, in 2007, these areas are still considered to be far enough outside of the city to be inconvenient, but at the same time were overbuilt. As a result, the prices are almost half of what they are in the metro area, but the region is destined to grow and become more populated.
Tucson has always been a couple of steps behind Phoenix in terms of attention. In fact, until about 2005, Tucson wasn’t really much on the radar of investors or retirees. That’s not the case now – not since Phoenix went sky-high. Appreciation is running 10-12% per year as I write this in 2007. That said, reasonably priced property is still available, but continues to climb. Now is a good window of opportunity, because Tucson prices are driven by what’s happening in Phoenix and it’s not going to be long before Tucson and Phoenix are on par.
Another great area in Arizona is the town of Lake Havasu, which is on the border between AZ and Ca. It’s a recreational area, with a lot of water activity. Condos are readily available in the low $100s and single family homes can be had in the upper $100’s.
In Nevada, you see the same forces in Las Vegas as you do in Phoenix. Condo conversions are a best-buy because they were overbuilt and incentives are generous. Condos are about the only property you can buy in Las Vegas for under $200,000. An alternative to pricey Vegas is Laughlin, which has some of the same characteristics of Vegas (such as casino gambling, shows, and large world-class hotels), but is smaller, is a safer environment, has a riverfront and more reasonable pricing. Bullhead city, close by, is another choice.
I’ll wrap up this edition by talking about one last desert area, and that is Palm Springs, California. Believe it or not, the Palm Springs/Indio/Cathedral City area of California still represents a solid value in desert resort real estate and will no doubt continue to appreciate as people choose the area for relocation & retirement. As areas like Las Vegas and Phoenix get out of reach, areas like Palm Springs, Lake Havasu, and Laughlin will be next in line for substantial growth and appreciation.
I’ll wrap up with that – next time, I’ll continue with the examination by moving through the West and into the Pacific Northwest.
Have a great day, and live your real estate dreams!
Friday, April 6, 2007
Monday, April 2, 2007
Where to Invest (Part 1)
You know, people ask me all the time – where should I invest? What are the hot markets? Are there places that have any good deals left?
Well, that’s where I am going to take you today; this posting is the first in a two-part overview I’m going to write on what markets have good potential. In this part I, I’ll be taking a look at the first 4 of several states that have fantastic investment potential. Part II and forward will continue the examination to the states I don’t cover today.
But, first, I want you to understand some of the forces that are driving the areas I'm highlighting. If you’ve read the prior two postings, you saw the references I made to places like Phoenix and Las Vegas. Understand that those fast and furious run-ups were more driven by speculation than anything else. Fix and flip style investors (actually, more appropriately the “buy and flip” speculators), primarily from California were going into those markets en-masse buying property with the expectation that another investor (probably of the same mentality) would come in an pay them more money…because they expected someone to come behind them…well you get the picture.
If there ever was the definition of a bubble, that was it, and bubbles do burst. Enough said.
I don’t look place much credence on those forces. Oh sure, I am keenly aware that money can be made under those circumstances, but that’s speculation, and speculation leaves a lot of debris. Trying to second-guess speculative forces is tricky, and quite simply, it’s not sustainable. Only those that get in early make any money…and those that are too late…well, please turn out the lights!
I am an investor (and I am assuming you are as well), and not a speculator. Investors, by definition buy with the expectation that things will increase in value over time, but we are not subscribers to the greater fool theory. We rely on valid, sustainable market forces and good value to give us a return on investment over time. We rely as much as we do on our own negotiation and knowledge of a given market as we do on rampant forces over which we have no control.
With that in mind, the most fundamental economic force is supply and demand, and the greatest market force that plays into supply an demand as far as real estate goes is the designs of the baby boomer population and what they are doing – housing wise – as they approach retirement.
There are, depending on who is counting, some 70-80 million baby boomers in the age range from 60 down to about 45. There are clear paths this population is taking in buying properties for their retirement and recreation. Simply put, as a group, they are in a position to buy their dream homes, and they are doing it. Any coastal area, for example, has seen a healthy run-up in values in the last 10 years, mainly because boomers are buying homes in coastal locations.
The interesting thing is, there is still about 15 years of boomer migration yet to happen. Those later bloomers may not get a house on the beach simply because they are too expensive now. But, it is clear that certain areas will become the next ones in line for late boomer interest. Anything near the water, for example…be it ocean, lake, or river is attracting attention. Any area noted for recreation – golf for example, is going to be on the radar.
With that basic premise in mind, I want to cover a preliminary set of 4 states that are attracting this kind of evident attention, and in a broad way point you to areas within those states to pay attention to. I am going to be somewhat general in this and the next blog. My intention in later postings is to get into some intense depth on a state by state, city by city basis. For now, I want to merely build a framework of where you ought to be paying attention.
I’ll begin on the East coast, and work my way South and West. I’ll begin my discussion with SouthEast Virginia
Virginia’s proximity to the Metropolitan Washington DC area makes it a perfect retirement choice for people who are from DC. Chances are, they’ve vacationed in places like Virginia Beach and Williamsburg, and their thoughts turn to that area as a life destination.
Richmond Virginia, is still a sleeper, although the area has seen a run-up in prices over the last 10 years. On a national average basis, though, Richmond homes are less costly than average, and you get a lot of house for the money. It’s not uncommon to find a relatively new SFH for about $160,000 in a nice neighborhood. One particularly notable characteristic of the Richmond metro area is the multitude of planned recreational communities.
Tidewater Virginia – Williamsburg, Newport News, Hampton, Norfolk, and especially Virginia Beach probably represents one of the best values in coastal living in the country. The western edge at Williamsburg is pretty pricey at this point unless you look towards rural housing. Move towards the east to what is knows as the “peninsula” and it gets more suburban, less elite, and less expensive. Hampton is a real sleeper of a waterfront town that has just now blossomed. It has a beautiful harbor, and attracts a big boating population. The city is going through its second renaissance, and has some pretty grand plans for downtown.
Portsmouth & Norfolk have all the trappings of a major city, but are packaged like small towns. The area is virtually surrounded by water, and there’s a lot of renaissance in older areas at still-great prices. Chesapeake, Virginia is a bedroom community that has some pretty good values by Tidewater standards. Virginia Beach is both a resort, and a traditional city once you get off the shoreline, and while it’s gotten much more expensive than in decades past, there’s still a lot of value there. In all of these cities you have a good pick of condos, townhouses, and single-family homes.
Next, let’s move down the coast to North Carolina.
The areas collectively known as the Albemarle Sound still offer a great deal of opportunity both in terms of price and in potential growth. The outer banks areas – areas like Nags Head or Cape Hatteras are probably out of the reach of anyone unless they have deep pockets. But, get into areas like Elizabeth City, Washington, or New Bern, and you’ll find beautiful port towns, at reasonable prices, and still within a short drive of the oceanfront. No doubt, these areas are positioned for increased activity and we are beginning to see it now.
Charlotte is a major urban area – part of the new South that is still reasonable in terms of cost, has an amazing volume of amenities and quality of life, and abundant housing. Just yesterday, I found a 2 bedroom condo, in a complex with a pool and tennis for under $30,000!
The Research Triangle area – Raleigh/Durham/Chapel Hill also benefits from the New South phenomena, the effects of several major universities, a “tech” economy, and has the pricing and quality of life that still make it a treasure find.
South Carolina – nearly all of it is still priced amazingly well by national averages. The coastal areas are still affordable – even Hilton Head has condos under 150K. Look to areas around Charleston and Myrtle Beach which both have good quality of life, lots of amenities, and abundant housing in all price ranges. Columbia, the capitol city, is a real sleeper and I feel waiting to be discovered. My personal secret is the college town of Clemson and it’s surrounds – truly beautiful, affordable, and just now beginning to grow.
Georgia looks a lot like South Carolina in many ways – throughout the state there’s a great quality of life, and you can pick anything from a large city in Atlanta (which still holds promise), to college towns like Athens, which are great investment areas, or even the coast – such as around Savannah which holds good investment promise.
In my next edition I am going to profile the state of Florida. South Florida and certain other parts have followed the bubble-burst of many locations, but Florida as a whole still has an amazing amount to offer.
Until next time - follow your real estate dreams!
William Flood
Your Coast to Coast Real Estate guide
Well, that’s where I am going to take you today; this posting is the first in a two-part overview I’m going to write on what markets have good potential. In this part I, I’ll be taking a look at the first 4 of several states that have fantastic investment potential. Part II and forward will continue the examination to the states I don’t cover today.
But, first, I want you to understand some of the forces that are driving the areas I'm highlighting. If you’ve read the prior two postings, you saw the references I made to places like Phoenix and Las Vegas. Understand that those fast and furious run-ups were more driven by speculation than anything else. Fix and flip style investors (actually, more appropriately the “buy and flip” speculators), primarily from California were going into those markets en-masse buying property with the expectation that another investor (probably of the same mentality) would come in an pay them more money…because they expected someone to come behind them…well you get the picture.
If there ever was the definition of a bubble, that was it, and bubbles do burst. Enough said.
I don’t look place much credence on those forces. Oh sure, I am keenly aware that money can be made under those circumstances, but that’s speculation, and speculation leaves a lot of debris. Trying to second-guess speculative forces is tricky, and quite simply, it’s not sustainable. Only those that get in early make any money…and those that are too late…well, please turn out the lights!
I am an investor (and I am assuming you are as well), and not a speculator. Investors, by definition buy with the expectation that things will increase in value over time, but we are not subscribers to the greater fool theory. We rely on valid, sustainable market forces and good value to give us a return on investment over time. We rely as much as we do on our own negotiation and knowledge of a given market as we do on rampant forces over which we have no control.
With that in mind, the most fundamental economic force is supply and demand, and the greatest market force that plays into supply an demand as far as real estate goes is the designs of the baby boomer population and what they are doing – housing wise – as they approach retirement.
There are, depending on who is counting, some 70-80 million baby boomers in the age range from 60 down to about 45. There are clear paths this population is taking in buying properties for their retirement and recreation. Simply put, as a group, they are in a position to buy their dream homes, and they are doing it. Any coastal area, for example, has seen a healthy run-up in values in the last 10 years, mainly because boomers are buying homes in coastal locations.
The interesting thing is, there is still about 15 years of boomer migration yet to happen. Those later bloomers may not get a house on the beach simply because they are too expensive now. But, it is clear that certain areas will become the next ones in line for late boomer interest. Anything near the water, for example…be it ocean, lake, or river is attracting attention. Any area noted for recreation – golf for example, is going to be on the radar.
With that basic premise in mind, I want to cover a preliminary set of 4 states that are attracting this kind of evident attention, and in a broad way point you to areas within those states to pay attention to. I am going to be somewhat general in this and the next blog. My intention in later postings is to get into some intense depth on a state by state, city by city basis. For now, I want to merely build a framework of where you ought to be paying attention.
I’ll begin on the East coast, and work my way South and West. I’ll begin my discussion with SouthEast Virginia
Virginia’s proximity to the Metropolitan Washington DC area makes it a perfect retirement choice for people who are from DC. Chances are, they’ve vacationed in places like Virginia Beach and Williamsburg, and their thoughts turn to that area as a life destination.
Richmond Virginia, is still a sleeper, although the area has seen a run-up in prices over the last 10 years. On a national average basis, though, Richmond homes are less costly than average, and you get a lot of house for the money. It’s not uncommon to find a relatively new SFH for about $160,000 in a nice neighborhood. One particularly notable characteristic of the Richmond metro area is the multitude of planned recreational communities.
Tidewater Virginia – Williamsburg, Newport News, Hampton, Norfolk, and especially Virginia Beach probably represents one of the best values in coastal living in the country. The western edge at Williamsburg is pretty pricey at this point unless you look towards rural housing. Move towards the east to what is knows as the “peninsula” and it gets more suburban, less elite, and less expensive. Hampton is a real sleeper of a waterfront town that has just now blossomed. It has a beautiful harbor, and attracts a big boating population. The city is going through its second renaissance, and has some pretty grand plans for downtown.
Portsmouth & Norfolk have all the trappings of a major city, but are packaged like small towns. The area is virtually surrounded by water, and there’s a lot of renaissance in older areas at still-great prices. Chesapeake, Virginia is a bedroom community that has some pretty good values by Tidewater standards. Virginia Beach is both a resort, and a traditional city once you get off the shoreline, and while it’s gotten much more expensive than in decades past, there’s still a lot of value there. In all of these cities you have a good pick of condos, townhouses, and single-family homes.
Next, let’s move down the coast to North Carolina.
The areas collectively known as the Albemarle Sound still offer a great deal of opportunity both in terms of price and in potential growth. The outer banks areas – areas like Nags Head or Cape Hatteras are probably out of the reach of anyone unless they have deep pockets. But, get into areas like Elizabeth City, Washington, or New Bern, and you’ll find beautiful port towns, at reasonable prices, and still within a short drive of the oceanfront. No doubt, these areas are positioned for increased activity and we are beginning to see it now.
Charlotte is a major urban area – part of the new South that is still reasonable in terms of cost, has an amazing volume of amenities and quality of life, and abundant housing. Just yesterday, I found a 2 bedroom condo, in a complex with a pool and tennis for under $30,000!
The Research Triangle area – Raleigh/Durham/Chapel Hill also benefits from the New South phenomena, the effects of several major universities, a “tech” economy, and has the pricing and quality of life that still make it a treasure find.
South Carolina – nearly all of it is still priced amazingly well by national averages. The coastal areas are still affordable – even Hilton Head has condos under 150K. Look to areas around Charleston and Myrtle Beach which both have good quality of life, lots of amenities, and abundant housing in all price ranges. Columbia, the capitol city, is a real sleeper and I feel waiting to be discovered. My personal secret is the college town of Clemson and it’s surrounds – truly beautiful, affordable, and just now beginning to grow.
Georgia looks a lot like South Carolina in many ways – throughout the state there’s a great quality of life, and you can pick anything from a large city in Atlanta (which still holds promise), to college towns like Athens, which are great investment areas, or even the coast – such as around Savannah which holds good investment promise.
In my next edition I am going to profile the state of Florida. South Florida and certain other parts have followed the bubble-burst of many locations, but Florida as a whole still has an amazing amount to offer.
Until next time - follow your real estate dreams!
William Flood
Your Coast to Coast Real Estate guide
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