Comparison of Houston Home Prices
Given Andrew’s recent post on property taxes and their effect on housing prices here in Houston (and the relatively intense reaction it garnered among some), I thought I would do a little comparison. I am currently looking at purchasing property here in Houston and my initial reaction has been surprise at how much more expensive property is here in Houston than I expected.
One of the main selling points on my decision to move to Houston was the price of housing, and I guess I expected it to be cheaper than what I have seen. That being said, before I discuss my little comparison, I want to make a few general statements.
First, clearly the average and median (thanks RWB!) price of housing here in Houston is significantly less than the average and mean price of housing in other large metropolitan areas. The data is there for everyone to see and one can’t argue with those numbers. However, as I will discusss below, the price of housing in Houston in urban areas comparable to other major cities is not as cheap as one may think.
Second, these comparisons are simply that, comparisons of several properties I found in my initial search. They are not a comment on the average price of housing in Houston as compared to other cities. These comparisons are simply evidence of a trend that I seem to be picking up on in Houston – i.e. that when you compare areas of Houston that are similar in development, density and housing makeup to other major cities, Houston is not as cheap as it seems.
For my initial comparison I choose Arlington, Virginia. I chose that area for several reasons, mainly that (1) I am familiar with the area and (2) it roughly matches the density, development, and housing stock in the area of Houston I was initially looking at (the west Montrose area). Also, Arlington is a major urban area in the greater Washington D.C. metro region, and the urban character of Arlington is less like New York or Los Angeles and more like the urban character of Houston’s inner loop.
Okay, here is a town house in Houston off Westhiemer between Dunlavy and Shepard. The asking price is $549,000.
My comments: It is not my personal style of architecture and I really don’t like the huge outfacing garage, but it seems like a nice nice house. The neighborhood is considered trendy and it is walkable, by Houston standards at least.
Okay, here is a detached bungalow in the Ballston area of Arlington. The asking price is $599,000.
My comments: This is a detached bungalow with a much larger lot. The house is walking distance from the Ballston Metro stop on the Orange line. The neighborhood is safe, established and the public schools are excellent. In fact, Forbes Magazine ranked the Arlington public schools the best in the nation last year.
Where does that leave us? Well, clearly the Houston town house is larger and newer. It is also slightly cheaper. But the Arlington house is on a larger plot of land and is a detached structure. The Arlington house also is walking distance from Metro, an integrated public transit system. Houston has one rail line and it is not within walking distance of the town house. Arlington’s public schools are ranked as some of the best in the nation. Houston’s public schools are poor at best. Clearly there are pros and cons to each place, but considering how much one is giving up in terms of living in Houston as far as transit, walkability and public schools, it is surprising (to me at least) how close in price they are.
We can also look at other areas where the comparison to homes inside DC. In the beautiful and phenomenally walkable Capitol Hill neighborhood we find townhomes priced in the same ballpark as those in Montrose or Midtown. Here the DC townhome is cheaper, though it also has smaller rooms and less total square footage. However, this townhome is in a beautiful neighborhood that is one of the most walkable and well-served by transit in the nation. As urban neighborhoods go, the Capitol Hill area is vastly nicer than Midtown/Montrose.
Houston townhouse asking $484,900
DC townhome asking $449,000
So, where does this leave us? Well, in my mind it is some evidence that when one compares areas of Houston comparable to similar areas in what is traditionally thought of as “more expensive” areas of the country, Houston is not as much of a bargain as one would think. The difference with Houston is that the vast majority of its housing stock and neighborhoods are in sprawling developments and these share little in common with places like Arlington or Capitol Hill.
So, if you’re shopping for sprawl, you can get it cheap here. On the other hand, if you want to live in a quality urban neighborhood, you’re going to have a hard time matching the quality of other parts of the country, and you’re not likely to pay much less. And with our high property taxes, you’re paying quite a bit more if you buy a home here that has a similar listing price as a home in a city with lower property taxes.
Categories: choose, featured, live
Tags: , Arlington VA, home prices, Houston, lifestyle, neighborhood, price, property taxes, property values, quality, urban, value, Washington DC
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16 Comments
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Just fyi–”average” and “mean” are synonyms, so the phrase “average and mean price” is repetitive. Perhaps you meant “average and median price”?
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Duly noted and yes, I meant to say “median” rather than “mean.”
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Nice article. You’ve expressed what I’ve often thought to be the case very eloquently and better than I could do so because you know the DC area better than I know any of the “hoity toity” places of the East and West coasts.
In Houston’s defense, I will say that there is significant room for improvement – for instance in 10 years HISD or at least certain schools in HISD could be markedly improved. And I think the transit situation will be improving pretty dramatically.
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Thanks for the compliment. And I agree that Houston has significant room for improvement. My point was more that given this room for improvement, it is surprising that the price of housing in certain areas of Houston is so similar to comparable areas in “more expensive” cities. I mean, there are parts of Montrose that still have open drainage ditches running along the street.
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Nice approach, and I like the idea of specific comparisons. But I disagree with your conclusions, at least with respect to the comparison of the Montrose townhouse and the Arlington bungalow. (I am a Houston resident and native, but have lived in the North Arlington area not far from Ballston. Great area to live.)
This is sort of an apples and oranges comparison – a large, new, and modern townhouse to a small, 80-year old structure. On a square footage basis, the Montrose home is valued at $174.5/sf, while the Arlington home is valued at $571/sf. I’ve noticed that in Houston, we are much more hung up on the price per square foot than they are on the east coast. I think the primary reason is that here, we are mostly purchasing the improvements; while on the east coast (especially in the urban areas) they are mostly purchasing the land.
And land cost is where the disparity is. The value of a structure is not all that different from location to location. Wood, shingles, concrete, drywall, construction, etc… are not that different. But the land value is. Arlington County does not publish tax assessments online, but I would guess the value of the bungalow itself to be about $100,000 (I’m probably being generous), while the lot is probably worth about $500,000. Looking at HCAD’s value for the Houston townhouse, you find the opposite. The land is valued at just over $100,000, while the structure is worth $440,000.
The Arlington lot is larger, a source of some of the disparity. But the bottom line is the majority of the value is in the land vs. the structure.
I think if you drop the Houston Condo onto Wilson Blvd. in Arlington (with appropriate adjustments in architecture), on a similarly sized lot, it would list for about $1 million. And drop the Ballston bungalow into Montrose, it would list for about $300,000.
A better comparison would be to compare a Montrose, West U, Bellaire, or maybe even Heights bungalow with this one in Arlington. Or, compare a North Arlington tear down/rebuild (unfortunately, its happening there too) with a similar rebuild in West U or Bellaire.
Furthermore, I think a comparison two years ago would skew even more. The east and west coasts are much more impacted by the current economic condition than we are.
But I like the overall approach, and would be interested in seeing more similar comparisons for with other locations in other cities.
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Thanks for the comment and I agree with you that there is a different mindset at play in terms of people’s priorities (for example extremely stressful and long commutes seem to be just accepted by the vast majority of people here in Houston).
Once I get a little more time, I will look a little more into other comparisons but here is a link to a 3-2 bungalow in Woodland Heights on a smaller lot listed at $545,000. The home itself has more square feet though which plays into your point about the difference in mindset.
Link
Again, my overall point is that unless you are looking to buy way out, the prices are not as cheap here as often advertised.
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I’m always a bit suspicious of DC comparisons because it is such a special case as the nation’s capital. Unlike private business, the chief employer does not respond to market incentives to move, and they have access to huge federal funding pools other cities do not. In this case, I wonder if the tens of billions (today dollars) of *federal* dollars spent on the Metro system in essence subsidized a huge supply of this kind of housing in the DC area (with easy access downtown), moderating prices (relatively speaking). I’m curious what similar housing would go for in Chicago, SF, LA, Boston, or even Philly.
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Tory-
Fair enough point. Perhaps my next experiment will look at the cities you recommend.
As far as the Washington area benefiting from the federal government, that is true. But couldn’t the same be said for, say the Clear Lake area? What would that are be without NASA? I think you will find that every city and every area of the country benefits from federal dollars.
As far as Metro, while most other cities (like Houston) have subsidized sprawl growth through federal highway subsidies, Washington lacks the same extensive highway system. You have to remember that Metro was initially proposed in the 1970’s as an alternative to a massive highway system crisscrossing the Washington DC area. Residents and city leaders where concerned that such a system would destroy the urban neighborhoods in the city and, in looking at what happened to many other cities in the country, I believe they were correct. While other cities, like Houston, have numerous highways entering, crisscrossing and encircling the inner portions of the city, Washington does not. Washington has one loop (the Beltway) and essentially only two highways that actually enter the city as such and traverse the city itself (I-395 and I-295). Both eventually connect back to the Beltway in a rather convoluted manner through the Anacostia Freeway, which is something more akin to the Allen Parkway rather an actual highway. I-66, which runs through Arlington, is all HOV during rush hours and ends in a stop light on Independence Avenue once you cross into Washington from Virginia.
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One other quick comment, although I am not as familiar with Philly as the Washington area, I do know that it is known as a relative bargain as far as Northeast cities go. I have friends that have bought the Manayuk area of the city and I believe 2-3 bedroom townhomes cost in the range of $300K to $400K (comparable to the areas of Houston I have been looking at). Anyway, I will research this further.
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The title of this post is a little misleading. It should be something more like “Comparison of Expensive Inner Loop Houston Home Prices”. The national attention Houston has received is based on the fact that the average house here is much less expensive than in other major markets. The actual location of said houses is not typically included in the analysis.
Even so, two houses do not a market make. If you want to do a real survey you’re going to need to do a comparison across the spectrum of available housing. These two properties are quite a bit above the mean and out of reach for most Houston residents. Houston’s strength in this regard is very much in the outside-the-loop areas, not in the inner core, and any good comparisons need to include those properties as well. The point of many of the house price comparisons I have seen is that the average family can get more for their money in the Houston metro area than they can in other large metro areas. I think you will find that while there are some areas where the house prices are similar enough to argue that the difference in tax rates tips the scales away from Houston, that you will also find many more areas where there is still a real difference in prices.
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August, I’d say the point is that Houston has a specific product that is cheap – conventional suburban spec housing. If you want to live in a very typical “cookie cutter” subdivision outside the beltway, you can get in for less than the national average.
What ARP is saying is the same thing my wife and I have run into living here: if you WANT an urban neighborhood and you DON’T WANT to spend all your life in traffic, then you’re not likely to save any money over other parts of the country, AND you won’t get as nice of a neighborhood.
When it comes to urban neighborhood, frankly, Houston is lacking. There are many nice ’spots’ where you’ve got a block or two that’s really cool (Midtown Square, for instance), but there aren’t large thriving districts here where one can really enjoy an urban life. Even Dallas with its Downtown / Uptown district is light years ahead of what’s available today in Houston if you want a nice urban life.
But even worse than the lack of available product is the disdain for urbanity that Houstonians so often express. People in Houston are often very proud of their suburban, car-dependent lifestyle, and very scornful of anyone who might like something different. The hostility of the suburbanites here, and the limited supply of quality urban neighborhoods are significant contributors to the perception – especially among young professionals – that Houston isn’t a desirable place to live.
It’s frustrating that when I travel I always find myself defending Houston as a place to live. Things are getting better, and I think Houston’s economic success is paving the way for it to emerge as a world class city in the next generation, but the sooner we can get over the hostility between suburban and urban the better. I’m content to let the suburbanites live out on the edge, it would be nice if they wouldn’t be so hostile to us living in the center.
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>>But even worse than the lack of available product is the disdain for urbanity that Houstonians so often express. People in Houston are often very proud of their suburban, car-dependent lifestyle, and very scornful of anyone who might like something different.
Is this really people in Houston that you hear this from, or the vested interests? We have a lot of powerful people and interest groups in Houston that have a monetary interest in promoting a suburban culture, but I don’t think the average person scorns the types of things you’ve promoted on this blog like more mixed-use, walkable, urban environments – I think they actually enjoy these things just like you do. Many people may not be able to afford to live in that type of environment here in Houston, but that’s a separate issue.
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Andrew, I understand your point and the one that ARP eventually got to near the end of his post. My point was that the post title is misleading in that it implies that Houston really isn’t any cheaper than anywhere else. What it really shows is that maybe Houston isn’t really cheaper for a narrow demographic. I suspect that is true also for River Oaks in comparison to similar neighborhoods in other cities, but it is hardly representative of Houston’s strengths.
No doubt Houston lacks by comparison for urban neighborhoods. I would argue that Houston, even inside the loop, is primarily suburban in nature. It’s just the age of the subdivisions and the trends in place when they were built that differs.
I don’t personally know anyone who is particularly proud of the suburban, car dependent lifestyle or really disdains urban living. The typical answers I get when I ask why someone bought in one of the far flung master planned communities is that the schools are better, or they once had an old house and they don’t want to deal with the repairs/remodeling needed, or they feel safer away from the urban core, or the amenities they are looking for are more readily available (usually this is an avid golfer who wants to be in a golf course community), or most typically they get more house for the price and/or they can’t even afford to live inside the loop at their income level.
Finally, the perceived hostility goes both ways. Living on the west side past the beltway I get the impression that many inner-loopers believe everything outside the loop is a zombie wasteland. I’ve visited many of the almost ex-urban master planned communities that form the edge of the metro area and I agree that they are way too car dependent for my taste but much of the city inside the highway 6/fm 1960 loop dates from the 50′ through the early 80’s. These areas have a plethora of shopping and dining options nearby due to the length of time they have been there and the subsequent commercial development and redevelopment that has occurred. Metro also serves these areas in a reasonable manner and the cultural diversity is widespread. If you want to defend Houston to outsiders then you need to explain the other great things about living here. If all you compare are expensive urban neighborhoods then not only are you missing an opportunity to let others know about the great diversity, food and quality of life here but you will also lose the debate.
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No disrespect is intended, but I strongly disagree with your assessment. I have two comments related to your post:
(1) why I disagree with your conclusion about your price comparison between the Houston and D.C. markets; and
(2) how I view the quality of life comparisons that you make between Houston and D.C.
**First**
As background, I am an Inside-the-Loop homeowner, and I have family-members who have lived/worked in the Clarendon and Ballston areas for years (in Arlington, VA). Your two comparisons here are inadequate.
Here are the 2 properties you use to describe Houston ITL homes:
$549,000 / $485,000
3,131 sq.ft.; 2005 construction; 4BR/3.5BA; 2,500 sq.ft. lot; modern townhome
2,809 sq.ft.; 2003 construction; 3BR/3.5BA; 1,715 sq.ft. lot; modern townhome
Here are the 2 properties you use to describe Arlington / D.C. homes:
$599,000 / $449,000
1,050 sq.ft.; 1925 construction; 2BR/2BA; 7,840 sq.ft. lot; 84-year-old bungalow
1,244 sq.ft.; 1912 construction; 3BR/1.5BA; 870 sq.ft. lot; 97-year-old rowhome
They roughly cost the same amount. And that’s supposed to establish that the housing costs are roughly commensurate?!? It’s a poor comparison.
There are plenty of places Inside the Loop where you could find a *much, much* more comparable property to the ones you referenced in D.C. Off the top of my head, here is a property—which is located near Lovett and Montrose, one of the most interesting and prettiest areas inside the loop—that is much more comparable:
http://www.zillow.com/homedetails/birds-eye-view-map/28197679_zpid/#street-view
$193,000 (granted it’s Zillow, but they’re usually in the right ballpark)
1,386 sq.ft., 1972 construction, 2BR/2BA, [very small lot], 37-year-old rowhome
Here are the VA/D.C. comparisons again:
$599,000 / $449,000
1,050 sq.ft.; 1925 construction; 2BR/2BA; 7,840 sq.ft. lot; 84-year-old bungalow
1,244 sq.ft.; 1912 construction; 3BR/1.5BA; 870 sq.ft. lot; 97-year-old rowhome
The Lovett street rowhome is on a pretty, oak-lined street; within walking distance of many of the best restaurants / most interesting establishments in Houston; is within 1 mile (Downtown); 1 mile (TMC); and 4 miles (Uptown); of 3 of the largest 20 Business Districts in the United States; and is only a 3 minute longer walk to our future Light Rail stop than the Ballston bungalow. To be clear, this is NOT comparable to the experience you would get in Arlington or D.C. (which I’ll discuss in a second).
My point, however, is that this is one of the best areas in Houston to make a comparison (one of the most comparable areas we have to offer). And using this as a comparison, the Houston rowhome is roughly 50% the price of the D.C. rowhome, despite being 60 years younger and having otherwise comparable measurables. I use this only as an example, as I believe it is generally indicative of many other properties in the ITL market.
**Second**
You mention throughout the post all of the ways in which the VA/D.C. areas provide better public services than the comparable Inside the Loop areas. **This is absolutely true.** Arlington is a beautiful area that is well-planned, has great transit, is very pedestrian friendly, and is home to one of the most educated populations in the world. There are many reasons why someone would want to live in an Arlington neighborhood rather than Inside the Loop in Houston.
My proposition, for the sake of clarity, is to keep housing costs comparisons and quality of life comparisons separate. People knowingly accept a different (in most viewpoints, less desirable) experience when moving to Houston instead of D.C., Manhattan, SF, Chicago, etc.
My argument though is that housing Inside the Loop is much more affordable than housing of similar construction, square footage, age, quality, etc. in Arlington or comparable areas. I think that thorough market research will resoundingly prove that point. Based upon my research looking into both markets heavily over the last 1+ years (on behalf of my family and myself), I’ve concluded that Houston Inside the Loop is notably cheaper.
Final Point: As you mentioned, Arlington has a huge leg up on Houston with regard to many land use issues. That said, Houston ITL has the potential to become a truly special urban area over the few decades. I hope this blog will be a part of that because our city really needs more community discussion about how to get from Point A to Point B. The exciting part is that there’s a lot of untapped potential here. The frustrating part is that little has been done about it in many years. I hope you guys will play a part in helping us turn that around.
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To summarize: Yes, you can get more house for your money inside the loop in Houston. The only catch is that you have to live inside the loop in Houston.
-ITL lifer
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Did you really just compare the impact of federal expenditures in Clear Lake to those in DC? The apples and oranges problem persists.