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.
While the "average" Houston home has appreciated over time, not every home has made money for its owners. Various pitfalls can put your financial investment at risk.
On a net basis, 38% of Houston-area homes bought & re-sold within a five-year period sold at a loss.
We studied 512,056 Houston home sales over 2 decades & identified NINE characteristics that have a systematic & statistically significant negative impact on resale value.
On average, homes with these Nine Kisses Of Death For Resale:
- Suffered from a smaller buyer pool (some buyers aren't willing to take on the issues).
- Stayed on the market longer.
- Needed more price reductions to attract buyers.
- Re-sold for lower values than their peers.
An expert Houston Realtor can help you avoid potential problems with resale.
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.
Wondering how to find the best home in Houston? Here are some hard facts.
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 in 10 years.
As most people finance their homes with a 20% down payment, this means their $60,000 down payment turned into $120,000 of equity.
There were winners who earned 5x their money. However, there are 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 appreciation rate was negative.
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 off 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 needs a 2.1% discount off the list price to sell.
Houston homes that have any of the 9 Kisses of Death required a larger discount off the list price to sell.
The main issue is that these challenges, like flood risk and location, take out a percentage of the buyer pool.
This is anecdotal, however, when we work with buyers in Houston's inner loop, about 10-15% of them will refuse to even consider a 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 tick all the boxes that's important to them and be priced less than their budget, but buyers won't consider the home even if it is in the best areas to invest in Houston real estate.
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.
41% of homes had at least one major resale issue from Close in Houston (defined as Houston MLS areas 2,4,9,16,17,22,23,24).
Homebuyers who avoided these issues nearly doubled Houston's 10-year appreciation.
Established home buying must-dos help ensure your 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
"Reputation-challenged builders" are firms with:
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three or more counts of litigation,
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bankruptcy, or
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a featured problem story in the Houston Business Journal or Houston Chronicle.
In our analysis of the Houston real estate market, we found that homes built by "reputation-challenged builders" tend to sell at a greater average discount to the list price.
It's best to check on the firm's history, lawsuits, and prior projects. It’s also important to run proper due diligence and look into the main individuals within the firm.
In addition, there are builders in Houston’s Inner Loop who form an LLC and build a collection of homes. These builders will then close the company when they run into issues, and form a new one.
As your trusted Houston Realtors, we can recommend a list of builders we like and those we suggest you avoid.
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 8 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
A 100-year floodplain is an area of land that:
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is designated on a flood insurance rate map as a special flood hazard area, identified as Zone A, V, A99, AE, AO, AH, VE, or AR;
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has a one percent annual chance of flooding, which is considered high-risk; and
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may include a regulatory floodway, flood pool, or reservoir.
A floodway is an area identified on the flood insurance rate map as a regulatory floodway. This includes the channel of a river or other watercourse and adjacent land areas reserved for base flood discharge.
In Houston, one in eight newly approved housing permits is in a floodplain, with development for plats within Houston flood zones currently underway.
The city has issued home construction permits in the 100-year floodplain and in the 500-year floodplain. These areas have a major flooding event every 100 or 500 years.
Before Hurricane Harvey, neighborhoods within the floodplain had a 3.5% depreciation rate.
The resale value of homes in flooded areas is likely to continue dropping because:
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Houston's city council passed onerous regulations for new permits in flood-prone areas.
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Many Harvey-flooded homes have been renovated and have hit the market. This created an oversupply of homes in flood-prone areas.
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The demand for construction pushed labor and material costs up.
This will make it difficult to determine the fair value between non-flooded homes, well-renovated flooded homes, and poorly-renovated flooded properties.
Buyers may benefit from a larger inventory and a stronger hand during negotiations. The best deals in these areas are homes from reputable builders and properties with remediation certificates. These Houston homes have strong warranties and insurance coverage.
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
A neighborhood with an "Above Average" number of FEMA claims, from two or more Houston flooding events since 2000, can indicate a higher risk of flooding. Read our full article How To Avoid Houston Homes With Flooding History for complete details.
A key part of doing due diligence on a Houston home is checking for flooding history. Here are some tips to help you evaluate flood risk:
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Check FEMA flood maps to determine whether the neighborhood is in a flood-risk zone;
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Obtain a survey to assess the elevation of the property;
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Consider getting a flood insurance policy;
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Research water levels and flood stages in the bodies of water near the home;
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Ask your future neighbors about the neighborhood's, or the home's, flood history; and
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Talk with an expert real estate broker.
By taking these precautions, you can make an informed decision about buying a home in a neighborhood with a history of flooding.
Resale Issue #4: Close To A Railroad Track
Living within 50 yards of a railroad track posed 4 resale risks, which affects 3% of houses in the market.
Impact: Appreciated only 4% Over 10 Years
Requires: 4.3% Off List Price To Sell
Effects: 3% Of the Market
For the purposes of this analysis, we define properties in this category as those located within 50 yards of a railroad track.
Homeowners in this location face several common concerns:
1. Noise
Noise is the most common concern. Trains pass by frequently throughout the day and night. Car engine and horn sounds can also be disruptive to daily life.
2. Child Safety
Many railroad tracks in Houston are not fenced and are near commercial properties.
This can pose a safety risk for children who may play on or near the tracks.
According to Operation Lifesaver, a person or vehicle is hit by a train every three hours.
3. Pet Safety
While there is little research on the number of pets hit and killed by trains each year, many families refuse to purchase a home too close to the railroad for fear their pets will wander onto the tracks at the wrong time.
4. Pollution / Health Risks
A study conducted by the University of Washington found that people living near railroad tracks are exposed to harmful particles from diesel emissions, which can pose health risks.
Another study from California found that people living near railroad stations had a higher risk for cancer due to exposure to diesel pollution from the trains.
Additionally, the Mayo Clinic found that asthma was 40% to 70% more prevalent in children who lived near a railroad intersection.
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
Houston homes in this category are within 50 yards of a US or Texas Freeway.
While a home near a major freeway may seem convenient for some, there are several issues that may affect its resale value and desirability as a rental property:
1. Noise
Noise from high-speed vehicular traffic is the common issue here and won’t be appealing for many buyers.
2. Safety Concerns
Busy streets and high-speed traffic can pose risks to both children and pets.
3. Inconvenience
Living near a freeway can also be inconvenient. Parking and reversing out of a driveway can be challenging 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 Drive, Voss, and Woodway. The study also covered TC Jester, Richmond, Washington Avenue, Montrose Boulevard, W. Gray, W. Dallas, Shepherd, and Westheimer Road.
Homebuyers in Houston face the following challenges when living along a major thoroughfare:
1. Noise
The incessant honking and car noise can be disturbing for homeowners who want to enjoy peace and quiet.
Car headlights shining through windows can also disturb sleep.
2. Traffic and Parking
Living on a major thoroughfare means dealing with hundreds of cars passing by, especially during rush hour.
This can make parking and driving in and out of the property more challenging.
3. Children’s Safety and Playtime
Major thoroughfares are not ideal areas for children to play due to the increased risk of accidents.
Sidewalks may not be safe for children to play on, and traffic noise can disrupt outdoor playtime.
4. Privacy
Living on a major street can also compromise privacy due to increased foot and car traffic.
Homes on major streets are more exposed than those on quieter streets.
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
Properties included in this analysis are those located adjacent to a lot with a commercial property according to Google Maps.
While living near restaurants, convenience stores, and gyms can increase the value of a home, it also comes with some challenges.
Homeowners living close to commercial buildings face the following issues:
1. Traffic Congestion
The patrons of nearby businesses can contribute to traffic congestion, especially during peak business hours.
This can make it difficult for homeowners to park their cars and exit their driveways.
2. Noise
Living near a pub or restaurant can mean loud music and noisy customers, especially at night.
In addition, delivery trucks running their engines can be a constant source of noise.
3. Safety and Privacy
Rowdy customers can also bring safety concerns, and conflicts can happen anytime.
Homeowners living nearby may be exposed to potential dangers.
Additionally, living close to commercial buildings can also compromise privacy.
4. Cleanliness
Restaurants and bars often have dumpsters. Homeowners may have to deal with the smell until the garbage is collected.
5. Uncertainty of Future Developments
Future developments are out of the homeowners’ control. A coffee shop across the street might turn into a bar in the future, and homeowners would have to deal with the aforementioned issues.
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
Houston properties fall under this category if they are within 50 yards of a power transmission station or high voltage transmission line.
Here are some concerns that homebuyers have raised:
1. Health Concerns
Some homebuyers are concerned that living near high-voltage power lines can cause health problems due to the electromagnetic fields (EMFs) they emit.
Studies since the 1990s have disproved the link between low-frequency EMF and cancer, however, some people still avoid buying properties near power lines.
2. Issues on Comfort
Many homebuyers don’t like the constant buzzing sound produced from power lines even without an actual hazard.
3. Home Appearance
Power lines are unattractive and may reduce land value. Lower market prices aren’t 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 Houston 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.)
While it may be difficult for homebuyers to identify bad floor plans on their first visit, they will still feel something is not right about the house.
Fixing a bad floor plan can be expensive, especially if load-bearing walls need to be moved.
Correcting a poor floor plan means owners need to spend more money to correct it. The only way to recover these expenses is to increase the price during reselling. However, higher pricing will lead to longer time on the market.
To avoid bad floor plans, it's essential to know what to look for when touring a house. Here are some of the most common bad layout designs:
1. Inside stairway facing the entrance
This can be off-putting and confrontational to guests. Ideal stairways are wide, curved, well-lit, and off to the side.
2. Hallway facing the entrance
Long, narrow, dark hallways cause negative impressions, especially if they see the entire hallway right from the entryway.
3. No buffer for bedrooms
Bedroom doors that directly open to dining or living areas compromise privacy.
Noise from adjacent rooms causes a disturbance. Placing bedrooms between closets or bathrooms provides a good source of sound buffer.
4. Poorly located bathrooms
Bathrooms visible from the entryway or accessible only by passing through a utility or laundry room can be unappealing.
A good floor plan has bathrooms strategically located for privacy and convenience.
5. Lack of natural lighting
Natural lighting provides a comfortable and pleasant vibe to your home.
A good layout sets windows on different walls to allow more light to come in and circulate.
A window placed toward one edge reflects the light off to the adjacent wall.
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 Group by Closed Listing Volume, Keller Williams Memorial
- 2022: #1 Group by Closed Units, Keller Williams Memorial
- 2022: #1 Group by Closed Overall Volume, Keller Williams Memorial
- 2022: #1 Group by Closed Listing Units, Keller Williams Memorial
- 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
- An Ultimate Guide to the Best Active 55+ Communities in Houston
- How To Avoid Buying In Houston's Flooded Zones
- Best Houston Neighborhoods With Top Houston Schools
- Spring Branch Real Estate Market: 5 Top Home Sales Trends
- Hedwig Circle Homes For Sale & Real Estate Trends
