Buying A Houston Home? Do You Know What NOT To Buy?
We analyzed 512,056 Houston home sales. Save money, headache, & time with these top Houston homebuying tips.
Buying a home seems simple. But the reality is, there are pitfalls that can impact your quality of life and put your financial investment at risk.
How do you know if you’re getting a good deal? You can only truly answer this when it’s time to resell your home. This is true post-COVID-19 and the energy crisis. It’s like buying a stock: you only find out your gains or losses when you resell.
38% of homes bought & re-sold within 5 years lost money for their owner on a net basis. Hiring a seasoned professional to navigate you through is one of the best ways you can protect against this.
We studied 512,056 Houston home sales over two decades. Nine property traits had systematic & statistically significant negative impacts on the resale value.
These are the "The Nine Kisses Of Death For Resale". Avoid them to make a good Houston real estate investment.
Properties with any of these factors on average:
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Re-sold for lower values than their peers.
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Suffered from a smaller demand (some buyers are unwilling to take on these challenges).
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Stayed on the market longer.
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Required a larger discount off the original listing price to attract buyers.
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Created additional costs or hassles for their owners.
You can also read part #2 of this series. (5 Themes For Best Houston Real Estate Investments)
"Paige Martin and the The Houston Properties Team are amazing. They are unbelievably candid. They talked us out of buying over two dozen houses based on issues that we didn't see (although the houses looked gorgeous). They always have your best interests at heart and they're experts in their craft. That's why our family has completed eight transactions with them over the past decade. Paige and the Houston Properties Team are experts that you can trust." - Debi G
Table of Contents
- Resale Issues Lowers Future Market Value
- Resale Issues Cause Huge Price Cuts
- What to Avoid When Buying a House
- Resale Issue#1: Built by Reputation-Challenged Builders
- Resale Issue #2: In The Flood Plain / Flood Way
- Resale Issue #3: Neighborhood Flooding History/ Reputation
- Resale Issue #4: Close To A Railroad Track
- Resale Issue #5: Close to a Major Freeway
- Resale Issue #6: On a Major Thoroughfare
- Resale Issue #7: Proximity to Commercial Buildings
- Resale Issue #8: Close to High Voltage Power Lines
- Resale Issue #9: Awkward / Choppy Floor Plans
- Top Ranked Realtors: Paige Martin & The Houston Properties Team
Resale Issues Lowers Future Market Value
Our analysis revealed that every resale issue reduced the average 10-year appreciation rate by 55% or more. It even reached a negative rating in one case.
Here are some hard facts if you are wondering how to find the best home in Houston.
From our study, the 10-year median sale price appreciation rate of the Close In Houston Neighborhoods was 20%. This means a $300,000 investment turned into $360,000 over 10 years.
Most people finance their homes with a 20% down payment. That means their $60,000 down payment turned into $120,000 of equity.
There were winners who earned 5x their money. But, there are also losers who lost significant sums over this time period.
From our analysis, every resale issue reduced the average 10-year appreciation rate by 55% or more. In one case, the 10-year appreciation rate was negative.
Buying a home? Read the following tips for buying a house in Houston to avoid these resale challenges!
Resale Issues Cause Huge Price Cuts
Homes with any of the 9 Kisses of Death suffered from staggering discounts off their list price to sell.
Each issue required huge price cuts to sell.
Houston homes for sale with issues were harder to sell. Specifically, buyers required a greater discount on the list price to close the deal.
An example is a Houston home that was listed at $300,000 and sold at $294,000. It has a 2% discount required to sell the home. This is not good for sellers.
From our Close In Houston analysis, the median Houston home required a 2.1% discount off the list price to sell.
Homes that possessed any of the 9 Kisses of Death required a larger discount off the list price to sell.
A resale issue is the main reason buyers required discounts. An issue like flood risk and damage to homes took a percent of the population out of the buyer pool.
Here's an anecdote from when we worked with buyers in Houston's Inner Loop. About 10-15% of the population will refuse to even consider property where they can hear a train. In most cases, this concern stems from their children's safety more than noise pollution.
The house could have every factor that's important to them, the right number of beds and the right home size. The house can even be priced less than their budget. But, these buyers will not even consider the property even if they are in the best areas to invest in real estate in Houston.
When there is low demand, prices fall.
What to Avoid When Buying a House
Wise Houston homebuyers who avoided these resale issues enjoyed double the average 10-year real estate appreciation in Houston.
We have isolated these Houston homes' resale issues for your benefit. Have a look at them.
41% of homes had at least one major resale issue from Close in Houston. (This is defined as Houston MLS areas 2,4,9,16,17,22,23,24).
Homebuyers who know what to avoid when buying a house nearly doubled 10-year appreciation.
Established home buying must-dos help improve the expected long-term appreciation rate. The best move is to avoid properties with one or more of these nine factors.
Even the best neighborhood in Houston may have properties with resale issues. These are due to:
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Houston's growing population and traffic.
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Houston's lack of property zoning in most neighborhoods. Commercial establishments can be next to residential properties.
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Newer builders require an inventory and have been acquiring lots in less desirable locations for recent construction.
Resale Issue#1: Built by Reputation-Challenged Builders
Contact us for unbiased builder recommendations. We will tell you which ones we trust and those that we will seriously urge you to avoid.
Impact: Depreciated 5.3% Over 10 Years
Requires: 5.6% Off List Price To Sell
Effects: 4% Of the Market
In our analysis of the best Houston real estate market, we defined "reputation challenged builders" as those with:
1) Three or more counts of litigation;
2) Bankruptcy; or
3) A featured problem story in the Houston Business Journal or Houston Chronicle.
Our research showed that homes built by these builders sold for the greatest average discount to the list price.
To avoid these builders, the best Houston realtor should check on the firm's history and lawsuits, and prior projects.
One concerning trend In Houston's Inner Loop is builders that will form an LLC. They will then build a collection of homes and run into issues. The same principals will close that company and form another new one.
It's important to run proper due diligence on small builders. Same with researching the main individuals within the firm and understanding their history.
Contact us for builder recommendations. We have a list of both builders we like and those we'd suggest you consider avoiding. We are always here to help answer your query on real estate investment companies.
Resale Issue #2: In The Flood Plain / Flood Way
New rainfall data show that current flood maps understate the risk posed by strengthening storms. Despite this, one in 5 new housing permits in Houston is still in a flood plain.
Impact: Depreciated 3.5% Over 10 Years
Requires: 5.2% Off List Price To Sell
Effects: 7% Of the Market
Definition:
100-year floodplain means any area of land that:
(A) is identified on the flood insurance rate map as a special flood hazard area. This is designated as Zone A, V, A99, AE, AO, AH, VE, or AR on the map;
(B) has a one percent annual chance of flooding. This is considered to be a high risk of flooding; and
(C) may include a regulatory floodway, flood pool, or reservoir.
A floodway means an area that is identified on the flood insurance rate map as a regulatory floodway. A floodway includes the channel of a river or other watercourse.
It includes the adjacent land areas reserved for base flood discharge. This is also referred to as a 100-year flood, without cumulatively increasing the water surface elevation more than a designated height.
One in five newly approved housing permits in Houston is in a flood plain.
Development for 260 plats within Houston flood zones is currently underway.
The city issued about 615 home construction permits in the 100-year floodplain. They issued over 600 permits in the 500-year floodplain.
These areas have one major flooding every 100 or 500 years.
Before Harvey, neighborhoods within the floodplain have a 3.5% depreciation rate. This makes residents look for the best area to buy a house in Houston.
There's a high likelihood that resale numbers in these flooded areas will continue to drop because:
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Houston’s city council passed onerous regulations for any new permits in flood-prone areas.
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Many Harvey-flooded renovated homes are hitting the market. They create an oversupply in areas that are flooded.
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The demand for construction is pushing labor and material costs. Many builders and major remodelers expect their costs to increase by 15-25% in these areas.
This will make determining fair value difficult between non-flooded homes, flooded-and-well renovated houses and flooded-and-poorly renovated properties. We see seasoned real estate agents struggle with these factors of home investment in Houston.
Buyers will have the benefit of a larger inventory and competition to get the best deals. The best deals are those built by reputable builders and properties with remediation certificates. They are houses with strong warranties and insurance costs. Buyers typically have a stronger hand during negotiations.
Why Hire Realtor in Buying Houston Home
Should I buy a house in Houston? When is the best time to buy a house in Houston? Where to buy a house in Houston? Is buying a house in Houston a good investment?
These concerns are among the reasons to hire a realtor in buying a Houston home. Your realtor should be able to steer you toward getting good deals.
For sellers, your agent will advise you on how to properly and fairly price your home.
Resale Issue #3: Neighborhood Flooding History/ Reputation
Home values and land prices in flood-prone areas are still reeling two years after Harvey, with home valuations on a decline of 6% over the last 3 years.
Impact: Only 2.3% Appreciation Over 10 Years
Requires: 4% Off List Price To Sell
Effects: 9% Of the Market
Definition:
Located within a neighborhood with an "Above Average" number of FEMA claims. These claims are from two or more Houston flooding events since 2000. Read our full article How To Avoid Houston Homes With Flooding History for complete details.
To make sure you are buying a good home in Houston, check for flooding history. Hot tips in such an area include:
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Checking FEMA flood maps to see whether the neighborhood you’re considering is a flood-risk zone or not
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Getting a survey
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Consider getting a flood insurance policy
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Researching water levels and flood stages in the bodies of water near the home
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Asking your future neighbors about the neighborhood’s, or the home’s, flood history
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Talking to an expert real estate broker
Resale Issue #4: Close To A Railroad Track
Living within 50 yards of a railroad track posed 4 resale risks, which took 3% of houses off the market.
Impact: Appreciated only 4% Over 10 Years
Requires: 4.3% Off List Price To Sell
Effects: 3% Of the Market
For this analysis, we defined properties in this category as those located within 50 yards of a railroad track.
Homeowners in this location face these several common concerns:
1. Noise
Noise is the most common concern. Homeowners will have to deal with the sound of the trains throughout the day and night. Even engine and horn sounds from cars are a problem.
2. Child Safety
Most railroad tracks in Houston are not fenced. They are near commercial properties. Many children have put themselves in danger when playing on or near railroad tracks.
According to Operation Life Saver, “every three hours, a person or vehicle is hit by a train.”
3. Pet Safety
Houston recently made the list of the top 25 most dog-friendly cities in the United States.
While there has been a lot of documented research on the number of people who are hit by trains, there is very little analysis on the number of pets hit and killed by trains each year.
Even without published studies, a number of families refuse to purchase a home too close to the railroad for the fear their pets will wander onto the tracks at the wrong time.
4. Pollution / Health Risks
A study from California found people near railroad stations had a higher risk for cancer. This is due to exposure to diesel pollution from the trains.
An analysis by the Mayo Clinic found asthma to be 40 to 70% more prevalent in children who lived near a railroad intersection. Diesel engine pollution is in the air around the tracks and homes.
The University of Washington conducted a separate study. They found residents near rail lines faced exposure to harmful particles from diesel emissions.
Resale Issue #5: Close to a Major Freeway
We know Houston's 576-mile freeway system like the back of our hand and we can help you with your options if your house is located near them.
Impact: Appreciated only 6% Over 10 Years
Requires: 3.7% Off List Price To Sell
Effects: 4% Of the Market
Definition:
Located within 50 yards of a Texas or US highway.
High-speed vehicular traffic is common on freeways. And just like properties near a railroad track, homes in this location have lower resale value and higher owner and tenant turnovers.
Some issues that come with residential investment property Houston along freeways include:
1. Noise
The most common factor is still noise. Homeowners will have to deal with the sound of traffic. This location will not appeal to some.
2. Safety Concerns
Families may also skip residential investment property in Houston which is close to a major freeway. Busy streets with cars running at high speed can be dangerous to pets and children.
3. Inconvenience
Freeways make it easier for some people to go into the city. But, those who live along freeways experience the opposite. Parking and reversing a car out of a driveway can be a challenge during peak traffic hours.
Resale Issue #6: On a Major Thoroughfare
With traffic noise of 70 to 80 decibels bombarding homeowners daily from the highway, homes within 50 yards of major thoroughfares only appreciated at 6.5% over 10 years.
Impact: Appreciated only 6.5% Over 10 Years
Requires: 2.8% Off List Price To Sell
Effects: 8% Of the Market
Properties included in this analysis are those located on major Houston streets. These are Kirby, Bissonnet, Buffalo Speedway, Memorial Dr, Voss, and Woodway. The study also covered TC Jester, Richmond, Washington Ave, Montrose Blvd, W. Gray, W Dallas, Shepherd, and Westheimer Rd.
Houston homebuyers face the following challenges when living along a major thoroughfare:
1. Noise
The incessant honking and car noise can put off a homeowner who wants to enjoy peace and quiet. Car headlights through the windows can disturb homeowners' sleep. To avoid these, they would start wondering where is the best zip code Houston home.
2. Traffic and Parking
Hundreds of cars passing by can be very challenging, especially during rush hour.
3. Kids’ Enjoyment and Safety
Kids playing on the front lawn is riskier for homes on major streets. Case in point, Westheimer Road's sidewalk is not an ideal play area for kids.
4. Privacy
Issues on privacy can be a combination of the three items above. The foot and car traffic is greater than living in a home on a quiet street. A home on a major street means you are somewhat exposed.
Resale Issue #7: Proximity to Commercial Buildings
Accessibility, convenience, and privacy often don't mix but a good Houston Realtor can help you find the property with the right balance without sacrificing a probable future resell.
Impact: Appreciated only 8.9% Over 10 Years
Requires: 3.1% Off List Price To Sell
Effects: 6% Of the Market
Definition:
Property located on a lot adjacent to a lot with a commercial property according to Google Maps.
Living near restaurants, convenience stores, and gyms might increase your home's value. But, having them right outside your doorstep brings some challenges too.
Some common issues of homes near commercial buildings are:
1. Traffic Congestion
Patrons of the businesses next door will contribute to traffic congestion, especially during peak business hours. Many cars would pass by the house round the clock. Homeowners will have a difficult time parking and going out of the driveway.
2. Noise
If the house backs up to a pub or restaurant, loud music and loud customers can be a problem, especially at night. Loud diesel delivery trucks driving by and running their engines will also be a constant source of the noise.
3. Safety and Privacy
Aside from the noise, rowdy customers also bring safety concerns. Conflicts can happen anytime and the severity is unpredictable. These conflicts expose homeowners living nearby to dangers that may arise.
4. Cleanliness
Proper garbage disposal and management can also be a source of problems. Restaurants and bars usually have unavoidable dumpsters. Homeowners have to deal with the smell until the garbage is collected.
5. Unpredictable future developments
The property might sit across from a coffee shop right now. But since this is a commercial property, future developments are out of the homeowners' control.
The building owner can turn it into a pub in a few years, and others will have to deal with the first four issues mentioned above.
Resale Issue #8: Close to High Voltage Power Lines
Proximity to power lines may lower a property’s value by as much as 30%. What may only start out as an inconvenience can be a big detriment in getting fair resale value later on.
Impact: Appreciated only 7% Over 10 Years
Requires: 2.3% Off List Price To Sell
Effects: 1% Of the Market
We define properties as close to high voltage power lines if they are within 50 yards of a power transmission station or high voltage transmission line.
Here are some concerns homebuyers have raised about properties near power lines:
1. Health Concerns
Power lines are often red flags for homebuyers. Many people believe that living near power lines can cause cancer because of the EMF (electromagnetic field) they emit.
There were studies since the 1990s disproving the effects of low-frequency EMF on cancer. However, most homebuyers are still averse to buying these properties.
2. Issues on Comfort
The buzzing noise from power lines also gives residents a certain level of discomfort. Even without an actual hazard, disturbing sounds can put off homebuyers even while still viewing.
3. Home Appearance
Power lines make houses look unattractive and may reduce land value. Lower market prices are not enough to compensate for the bad view.
Resale Issue #9: Awkward / Choppy Floor Plans
An analysis of 815,494 Houston home listings revealed that bad floor plans and increasing property value will never go hand in hand. Here are the dos and don'ts for homebuyers.
Disclaimer: The Houston MLS lets us track about 200 different property factors. Eight of the factors listed above came directly from the data. For this last factor, we didn’t have a statistically significant method that pulled data from the last 20 years. However, our top-ranked Realtors unanimously voted to add the awkward/choppy floor plan to the list. Our expert Realtors understand the hottest real estate markets in Houston. (We are the #1 boutique real estate team in Houston with over $1 billion of residential property sales.)
Homebuyers might not know how to choose the best home in Houston. They might not identify what bad floor plans are on the first visit. They will still feel something is not right about the house.
Buyers will not resonate with a home with a bad floor plan. It is often hard to correct a bad floor plan without having to spend a lot of money.
Some walls you wish to relocate can even be load-bearing walls, which may be impossible or financially unreasonable to move.
You might need to do a major overhaul of your real estate investment in Houston. This can cost you more money over a longer time. The only way for you to recover these expenses is by increasing the price during reselling. Higher pricing, in turn, will take you longer days on the market.
How to Find the Best Home in Houston
Great tips for buying a home in Houston include avoiding bad floor plans. You can do this by knowing what to look for when touring a house. Here are some of the most common bad layout designs:
1. Inside stairway facing the entrance.
Welcoming guests with a stairway can be off-putting and confrontational. Ideal stairways are wide, curved, well-lit, and off to the side.
2. Hallway facing the entrance.
Long, narrow, dark hallways cause negative impressions. This is especially true if they see the entire hallway right from the entryway.
3. No buffer for bedrooms.
Bedroom doors must not directly open to dining or living areas for privacy. Noise from adjacent rooms causes a disturbance. Placing bedrooms between closets or bathrooms will provide a good source of sound buffer.
4. Poorly located bathrooms.
The only thing worse than seeing a long dark hallway upon entrance is looking at a full view of a toilet at the end. A good floor plan has bathrooms strategically located for privacy and convenience. A bathroom accessible only by passing through a utility or laundry room is also unappealing.
5. No natural lighting.
The natural lighting provides a comfortable and pleasant vibe to your home. A window placed toward one edge brings in natural light. It reflects the light off to the adjacent wall. A good layout sets windows on different walls to allow more light to come in and circulate.
Top Ranked Realtors: Paige Martin & The Houston Properties Team
The Houston Properties Team has a well-defined structure based on the individual strengths of each member. Each member is a specialist in their role – which is why our homes sell faster and for more money than average.
Paige Martin, Broker Associate with Keller Williams Realty, and the Houston Properties Team are ranked among the top residential Realtors in the world.
They have been featured on TV and in dozens of publications including The Wall Street Journal, Fortune Magazine, Reuters, Fox News in the Morning, Money Magazine, Houston Business Journal, Houstonia, and Houston Chronicle.
Paige Martin was just ranked as the #5 agent in the world with Keller Williams, completing over $1 Billion in Houston residential real estate sales.
Recent awards include:
– 2022: #1 Residential Real Estate Team by Sales Volume, Houston Business Journal
– 2021: Best Real Estate Teams in America, RealTrends.com
– 2021: Top 100 Women Leaders in Real Estate of 2021
– 2021: America’s Top 100 Real Estate Agents
– 2021: Top Real Estate Team (Houston Properties Team), Houston Business Journal
– 2021: Best Houston Real Estate Team, Best of Reader’s Choice
– 2021: Top Real Estate Team (Houston Properties Team), Houston Business Journal
– 2021: #1 Real Estate Team, Keller Williams Memorial
– 2020: America’s Best Real Estate Teams, Best of America Trends
– 2020: Best Houston Real Estate Team, Best of Reader’s Choice
– 2020: Top Real Estate Team (Houston Properties Team), Houston Business Journal
– 2020: #6 Individual Agent, Keller Williams, Worldwide
– 2020: #1 Individual Agent, Keller Williams, Texas (Top Keller Williams Realtor)
– 2020: #1 Real Estate Team, Keller Williams Memorial
- 2019: Top Residential Realtors in Houston, Houston Business Journal
- 2019: America’s Best Real Estate Agents, RealTrends.com
- 2019: #5 Individual Agent, KW Worldwide
- 2019: #1 Individual Agent, KW Texas
- 2018: #5 Individual Agent, Keller Williams, Worldwide
- 2018: #1 Individual Agent, Keller Williams, Texas
- 2018: #1 Individual Agent, Keller Williams, Houston
- 2018: America’s Best Real Estate Agents, RealTrends.com
- 2018: Top 25 Residential Realtor in Houston, Houston Business Journal
- 2018: Texas’ Most Influential Realtors
- 2017: #1 Individual Agent, Keller Williams, Texas
- 2017: #1 Individual Agent, Keller Williams, Houston
- 2017: #10 Individual Agent, Keller Williams, Worldwide
- 2017: America’s Best Real Estate Agents, RealTrends.com
- 2017: Top 25 Residential Realtor in Houston, Houston Business Journal
- 2017: Texas’ Most Influential Realtors
- 2016: #1 Individual Agent, Keller Williams, Texas
- 2016: #1 Individual Agent, Keller Williams, Houston
- 2016: #20 Individual Agent, Keller Williams, Worldwide
- 2016: Texas’ Most Influential Realtors
- 2016: Top 25 Residential Realtor in Houston, HBJ
- 2016: Five Star Realtor, Featured in Texas Monthly
- 2016: America’s Best Real Estate Agents, RealTrends.com
- 2015: #9 Individual Agent, Keller Williams, United States
- 2015: #1 Individual Agent, Keller Williams, Texas
- 2015: #1 Individual Agent, Keller Williams, Houston
- 2015: America’s Best Real Estate Agents, RealTrends.com
- 2015: Top 25 Residential Realtor in Houston, HBJ
- 2015: Five Star Realtor, Texas Monthly Magazine
- 2014: America’s Best Real Estate Agents, RealTrends.com
- 2014: #1 Individual Agent, Keller Williams Memorial
...in addition to over 318 additional awards.
Paige also serves a variety of non-profits, and civic and community boards. She was appointed by the mayor of Houston to be on the downtown TIRZ board.
Benefits Of Working With The Houston Properties Team
Our team, composed of distinguished and competent Houston luxury realtors, has a well-defined structure based on the individual strengths of each member.
We find team approach as the most effective way to sell homes. We have dedicated people doing staging, marketing, social media, open houses, and showings. Each Houston Properties Team member is a specialist in their role—which is why our homes sell faster and for more money than average.
The benefits of working with a team include:
- the ability to be in two or three places at one time; a member can handle showings, while another answer calls
- collective time and experience of members
- targeted advice and marketing of agent expert in your area
- competitive advantage by simply having more resources, more ideas, and more perspectives
- a “checks and balances” system; selling and buying a home in Houston is an intensely complex process
- more people addressing field calls and questions from buyers and agents to facilitate a faster, successful sale
- efficient multi-tasking; one agent takes care of inspections and repair work, while another agent focuses on administrative details
- multiple marketing channels using members’ networks
- constant attention: guaranteed focus on your home and your transaction
- lower risk for mistakes. Multiple moving parts increase oversights. A team approach handles these “parts” separately
- flexibility in negotiation and marketing
- better management of document flow
- increased foot traffic through more timely and effective showing schedule coordination; and
- increased sphere of influence and exposure to more potential buyers.
To meet all the award-winning members of the Houston Properties Team, please go here.
Best Houston Real Estate Resources
- Houston Texas Zip Code Map | HoustonProperties
- How To Avoid Buying In Houston's Flooded Zones
- Houston Neighborhoods | Houston Map, Real Estate, Homes
- 1031 Exchange For Houston Real Estate | HoustonProperties
- Houston Homes For Sale: Guide To Houses In The Best Neighborhoods
