After reading about an upcoming development in downtown Houston, I'm thinking that The Oakmont Group is on to a great opportunity. The "catch" is that I'm also thinking it will eventually bring even more harm to home owners, and chances are it will not be only those in the Houston area.
The story is about what will be a 400+ apartment development, all within a 40-story building downtown and across the street from a large park and near shopping. Apartments will reportedly range from small studio units to oversized 3 bed and 3 bath suites including more than one penthouse.
Amenities planned include a TWO pools, a banquet room, screening room, half-court basketball court, and even a virtual golf simulator.
By now, you may be wondering why this "hurts" area home owners. Think about it.
It is tough enough right now, no matter what city you live in, even without this being built. Distressed property sales continue to have a lingering and damaging impact on property values, making it not practical for millions of home owners to be able to sell without losing money. Even with spending thousands of dollars for improvements and/or additions, there are no guarantees of making a profit if you can sell.
Many consumers who would "normally" look to buy are not able to qualify for a mortgage to do so, even though in some cases they could afford the monthly payments.
Now along comes an apartment building in an excellent downtown location with a variety of units to fit the needs of single people on up to executive suites. With shopping being very close, and a large park directly across the street, a percentage of tenants would not even need to own a car, increasing their monthly spending ability.
It is possible, if not likely, that a percentage of tenants would have employment nearby in downtown Houston, whether walking distance or even a short bus ride away. When this happens, it takes away literally hours of commuting time every week.
Sure, the tenants will pay a hefty monthly rental for these amenities and features. But look at it from their point of view.
While there is likely a security deposit and other move-in costs, there is no having to qualify for a mortgage and no down payment of $50,000 or more involved. They save hundreds of dollars by not needing to put gas in the car and/or purchase bus/train tickets. They have extra hours each week to enjoy an indoor swimming pool, screening room, and recreational activities. If they wish to entertain on a big scale, they can rent a banquet facility and not have to deal with hours of cleaning and labor to make it happen.
They don't have to mow the lawn, worry about the storm windows, maintain a pool and/or excercise equipment, and so on.
And they don't have a 15 or 30 year commitment to tie them down to their home no matter what happens in the real estate market. In other words, they won't be at risk of losing thousands and thousands of dollars, for no fault of their own, if they wish to or need to move in five years.
Thus, "Johnny and Jane" can live in a large luxury apartment with a view, a pool and recreation facilities, walk to work, not spend a minute on property maintenance, be able to shop close by, not have costly property taxes to pay, and without a long-term committment, why would they want to "buy" your home?
I'm hoping I get a lot of positive answers to that question. Houston is far from the only city where this is happening or already available.
Let me know how you feel about this "challenge".
Book Briefs #44
4 days ago