As per Houston Chronicle news released 1/12/2023, Tesla appears to be preparing a large new industrial facility west of Houston in a project that further deepens the electric vehicle-maker’s investments in Texas about a year after billionaire Elon Musk moved its headquarters to Austin.

Little is known about Tesla’s plans, but the Fortune 500 company signed a lease late last year for about 1.03 million square feet at 111 Empire West, part of the 300-acre Empire West Business Park in Brookshire, according to research reports from real estate brokerages Cushman & Wakefield and Savills. The landlord and developer of the park, Dallas-based Stream Realty Partners, declined to comment. Tesla officials did not respond to a request for comment. 

A certificate of occupancy issued by the city of Brookshire in October names Tesla in Building 9 at Empire West, about 6 miles west of Katy and 36 miles west of downtown Houston.


2022 was a tale of two halves. January through May/June was one type of market, and July through December was a very different market. Below was report released by Biggerpockets this month and I had to concur with their outlook. They been doing really good job analyzing all different data points and helping investors.

Through the first half of 2022, we saw a continuation of the wild appreciation that defined 2021. Every major variable that influences housing prices was putting upward pressure on the market. Inventory was almost non-existent. And, of course, mortgage rates were historically low. 

But then, things changed. In March of 2022, the Federal Reserve started raising the federal funds rate, pushing up bond yields and mortgage rates. The change of policy actually spiked demand as homebuyers and sellers rushed to transact before the full impact of higher mortgage rates were felt. This, combined with normal seasonality, allowed the party to continue and for prices to continue going up for a few extra months.

Eventually, the impact of skyrocketing mortgage rates took hold. Already facing ultra-high home prices, higher mortgage rates priced many homebuyers out of the market, and demand fell. When demand falls, inventory tends to rise, which is exactly what happened.

Some of the decline since June is seasonal, but as of December 2022, prices are down almost 10% off their May peak, and a typical seasonal decline is 5%-7%. The descent from the summer peak was deeper in 2022. 

It’s worth noting that although prices are declining, they are not in free fall. Prices remain up year-over-year, and inventory has started to moderate. Mortgage rates have come down from October to December, and there are signs that the drop-off is becoming less steep. At this point, we remain in a correction, but not a crash. 

2023 Outlook

Will we see a continuation of the downward trend we’re in now? Will things get worse? Or could the market reverse? 

Again it can be tale of two halves. First half of 2023, we’ll see a continuation of the market we’re in now: sellers don’t want to sell, and buyers don’t want to buy. Of course, deals are still underway, but I expect sales volume to remain well below what we’ve seen for the last 7-10 years. Even though inflation is moderating, there remains too much uncertainty in the economy for the market to stabilize fully.

Hopefully, during the first half of 2023, we will see inflation come down and get more clarity about what is happening with the global economy. But what really matters for housing volume and home prices is about one thing: affordability. If housing stays as unaffordable as it is now, sales volume and appreciation will stay low. If affordability recovers, you can expect the housing market to stabilize and perhaps even see a modest recovery in the second half of 2023. 

So if you are buyer, you could wait out of bit unless you have killer deal waiting for you. If you are seller, I would say go ahead start work towards putting the property in market during summer which could be decent time even with expected fluctuation in the market.

Let’s hope for the best and another decent year!!

Happy New 2023!!!

May the New Year bring health, prosperity, and happiness into your home!

Rising Interest rate challenges Houston Housing Affordability – Report Housing Affordability Index

As per the report released for Q3 2022 by HAR team, housing affordability remains a challenge for homebuyers in the Greater Houston area amid a backdrop of slowing home sales, moderating home price appreciation and higher mortgage rates. Fewer households could afford to purchase a median-priced home in the third quarter of 2022 compared to a year ago, according to the report.

The median home price in the Houston area grew 12.8 percent to $349,500 in the third quarter of 2022. Forty-one percent of households in the Houston area earned the minimum annual income needed to purchase a home at the median price. That’s down from 53 percent in the third quarter of 2021. The monthly mortgage payment on a 30-year, fixed-rate loan, including taxes and insurance, rose to $2,250 from $1,590 a year ago. As a result, Houston-area homebuyers needed to earn 41.5 percent more income annually than they did a year ago to afford a median-priced home. 

See chart show year over year numbers,

This index really shows how the market has changed from last year with price increase and now with rate increase making many low income people not able to afford housing and pushing them to rent.

Please read full report here, https://www.har.com/content/department/newsroom?pid=1897

How mortgage rates affect Homeownership ROR

The Texas Real Estate Research Center recently looked at how different interest rates can affect the rate of return on homeownership for first-time buyers. The study’s model made several assumptions (Table 2). 

  • The home costs $250,000, which was the first-quartile  sales price for first-time buyers for an existing single-family home in Texas in 2Q2022.
  • The buyer made a 5 percent down payment ($12,500) on a $250,000 home.
  • Rent reflected the first-quartile rent for an existing single-family home in Texas in 2Q2022—$1,800 per month, or $21,600 annually. Rent reflects the opportunity cost incurred by the homeowner in purchasing a home. In other words, by purchasing a home, the homeowner is saving on rent. However, the true opportunity cost of homeownership is renting and investing the difference between the mortgage payment and rent in an investment account. For more on that, read “Purchasing a Home Versus Renting and Investing.”
  • As the loan-to-value ratio exceeds 80 percent (in other words, if there’s less than a 20 percent down payment), the model assumes private mortgage insurance of 0.5 percent.
  • The loan term was 30 years.
  • Property taxes were 3 percent of the home price; insurance, 1 percent.
  • Maintenance costs were 2 percent of the home price.
  • Closing costs equated to 2 percent of the purchase price; selling fees were 6 percent

For example, with a rate of 3 percent, homeowners can expect to expend $27,421 in year five on mortgage principal and interest and property taxes, insurance, and maintenance (Table 4). That amount increases to $32,637 with a 6 percent rate.

Meanwhile, homeowners with a rate of 3 percent can expect to make $72,883 from the sale of the home in year five, but only $63,587 with a 6 percent rate.

In addition, higher mortgage rates leave higher residual mortgage balances, because it takes longer for the mortgage principal to be paid down.