More Gloom Than Doom: Commercial Real Estate

In a general review article this morning by Dees Stribling in www.commercialpropertynews.com, the headline is "Economic Update - Commercial RE on the Edge?" That's a bit, well more than a bit, hyperbolic, particularly from a Texas vantage point.

There is much handwringing in the financial press about the near future of commercial real estate, which so far has fared okay compared to the residential sector. Notes Stribling:

The idea that commercial real estate might be the next big thing to implode--which is all too familiar within the commercial real estate industry--is finally getting some mainstream attention. On Saturday, speaking at a conference at Vanderbilt University, Atlanta Federal Reserve Bank president Dennis Lockhart said that "on our watch list this year, as a risk to the (U.S. economic) outlook, is continuing worsening in the commercial real estate sector."

Oh my. An economist mentioned commercial real estate as something they will watch this year. And it generates a doom and gloom headline. This is a classic Soros investing tactic: identify when everyone else is wrong, then do the opposite of what they're doing. So if there is more fear in the commercial sector than is warranted (and that requires some analysis with horsepower), then investors will find some good opportunities, particularly in markets and submarkets where the fear or "gloom" may be particularly unjustified. I see those all around me where I live and write.

So watch those barometers.

Take this paragraph from the same article:

Whatever else commercial real estate will be in the near- to medium term, it certainly won't see the investment volume of recent years, not only in the United States but almost everywhere in the world. According to Real Capital Analytics, about 1,000 buildings valued at $47 billion traded hands worldwide in the first quarter of 2009, a small fraction--about 16 percent--of the volume during the same period in 2007.

Did you catch that? Only 16% of last year! Yeah, but there were still about 1,000 buildings valued at $47 billion in this past quarter sold. Last I thought about it, $47 billion is still a lot of money. Certainly it's enough for nimble and aggressive investors and brokers with buying power -- and in the right markets such as Houston.

Foreclosures Are Mostly NOT Good Deals

Many people believe that foreclosures equal good deals and that good deals can be had by searching a market only for foreclosures. Nothing could be more wrong in our experience, especially in and around Houston, where most foreclosures are some of the worst deals on the market.

We have found that foreclosures, while they may look okay in photos or on the outside, most often a) need more work than an occupant can take on, b) require expertise and cash beyond what a homestead buyer normally has, and c) are often anything BUT good deals in the end.

The most effective way to find a good deal is simply to look in good neighborhoods for low prices and then figure out why the price may be low. An elderly person may be moving to elder care, it could be an estate sale, someone may just need to move quickly, perhaps a house needs updating that most will not want to do but you don't mind doing in time, etc.

Foreclosures per se are not good deals.

And don't rely on foreclosure "specialists" or workshops or special public auctions or lists you have to pay for. Remember also that almost any property can look good in a photo (think "online dating"). Nobody gets all good listings and nobody corners a market, so using the Multiple Listing Service in an area is still the best and most comprehensive way to search for prospective properties.

Some firms like mine only do foreclosures with investors. That way, we know the investor knows what they're getting into (foreclosures are riskier deals than traditional resale/new) and typically will not encounter underwriting issues and can accommodate the bureaucracy involved -- another huge disincentive for homestead buyers -- the timing can vary wildly from expectations on foreclosures and there's really nothing you can do.

Why are foreclosures often rotten deals? Well that's a trip down the rabbit hole we'll save for another time. Just know foreclosures often equal "beasts." Finding good deals takes standard old fashioned knowledgeable research and professional advice.

Local Option Appraisal Caps: An Assault On Property Tax

Texas is a property tax state. It has no income tax. The effect is that Texas counties have appraisal districts who appraise property values that are then used as the value basis for property tax rates. A property tax is calculated by multiplying the percentage rate (a sum of the rates of all taxing entities) by the value assessed by the appraisal district. Counties apply this to business property as well as to personal property, especially real estate.

The property tax is in many ways extraordinarily unfair and unreasonable. What could be the logic behind burdening property owners with almost the entire state financial needs? Yes, there are local sales taxes and some form of state franchise taxes on businesses, and god bless her Ann Richards got us a Lottery that was supposed to help fund education, but make no mistake the property tax is the staple of Texas state revenues.

I guess what bothers me most is this: someone could live in a modest home for 30 years and pay off their mortgage. They may never refinance or sell their property. But the county appraisal district has the power to raise the assessed value of the home over time to match or even exceed inflation in the district's sole judgment of property values. So the $150,000 home a person bought 30 years ago might be assessed today at $300,000 and at an average combined rate of 3%, this homeowner -- with her or his mortgage entirely paid off and even on a fixed income -- will have to pay $9,000 a year in state property taxes.

That's $750 every month to the state of Texas just for owning property that you might have entirely paid off and have held for 30 years.

Doesn't it make more sense to tax income? When someone makes income or converts investments into proceeds as taxable income, isn't it fair to ask for the good of society and its infrastructure that the recipient of the income pay a small share to the collective needs of the state? Wouldn't it make more sense only to tax income? Why tax savings or investments whose proceeds don't get tapped?

The idea that a person who has saved and paid off their house and is living on a fixed income (even if by choice) has to pay thousands a year on a house purchased 30 years ago but appraised at current value -- well it just strikes me as obscene.

But hey, we have no income tax. And that keeps Texas proud. Or something. I don't know.

Anyway, state representative Debbie Riddle of District 150 in Harris County includes an optimistic note in a recent email to some constituents about her "Option Appraisal Caps" plan, which would gut the state finance system as property owners concentrated in Harris County (the 4th largest in the nation and home to Houston), Bexar County (San Antonio), and Tarrant County (Dallas) would all surely go to the polls to limit annual appraisal raises to 3% of the prior year's assessed value.

It sounds democratic, and it is. It's a good plan. But the effect would be to force an income tax on the state. I don't think that would be such a bad thing.

From Representative Riddle's email:

LOCAL OPTION APPRAISAL CAPS

As focused as I am on the budget right now, this week is exciting for me for other reasons. Tomorrow morning, I will lay out HB 46 before the Ways and Means committee. This is a bill I have been filing since 2005, yet I have never received a hearing because the previous chairman opposed Appraisal Caps in all forms. Finally, the time has come to let the legislature know about the need for appraisal reform in District 150.

House Bill 46 would allow counties to hold elections to determine their own appraisal cap, anywhere from three percent to 10 percent. In my mind, this is the ultimate solution to the ongoing appraisal cap debate. I understand that many of my colleagues would not be reelected if they mandated an appraisal cap any lower than 10 percent for the entire state. But areas such as mine are desperate for relief from appraisal creep and cannot receive it because of concerns from legislators who live hundreds of miles away. Under my proposal, the people of each county would be able to make their voices heard and set their own caps. It takes the decision out of the hands of legislators in Austin and into the hands of local taxpayers, where it belongs.

The bill has widespread bi-partisan support, and I believe it has an excellent chance of being passed out by the committee and put before the entire floor this session. It does require a constitutional amendment, which has to be approved by 100 of the 150 members of the House. I will continue to gather signatures on the bill, but I believe this could be the breakthrough so many of us have waited years to see!

Kudos, Representative. But I won't hold my breath.

Houston House Prices: Still Pretty Good

From the new Houston Association of Realtors press release on recent home sale data:

Single-Family Homes Update
At $182,316, the average sales price for single-family homes dropped 10.5 percent from February 2008, when it was $203,797. However, the figure is up $18,000 from January of this year. The median price of single-family homes in February was $138,970, off 8.0 percent from one year earlier, but up about $10,000 from January. The national single-family median price reported by NAR is $169,900, illustrating the continued higher value and lower cost of living that prevail in the Houston market.

Now I can tell you we are not seeing those kinds of declines in value on the far north side of Houston in quality neighborhoods and with quality homes. The decline there, if any, is hardly noticeable.

But really, this chart contained in the release is all you need to see to get a simple read of the situation in Houston:

Look at the trend lines. Both the average price (skewed higher by expensive homes) and the median price (half of all sales are priced higher, half lower) -- both average and median trend lines show something very important that you can clearly see just by eyeballing it:

Prices in the Houston area are at mid-2007 levels right now.

In case anyone missed it, 2007 was a pretty darn good year for housing in Houston.

Houston #1 Corporate Growth In The United States

From the Houston Business Journal, a report about Houston at "the No. 1 spot for the first time on Site Selection magazine’s list of Top Metro rankings for corporate location and expansion activity."

Eat that, Chicago (#3)!!

And coming in at #2 behind Houston? Our little sister to the north, Dallas.

Site Selection said Houston clinched the top spot after scoring 179 corporate real estate deals in 2008, unseating three-year incumbent Chicago-Naperville-Joliet.
Dallas-Fort Worth-Arlington finished No. 2 with 156 projects, and Chicago came in third with 138.

Last year, Houston was No. 4 behind Cincinnati and St. Louis for cities with more than 1 million in population.

“Site Selection ’s award adds to the long and growing list of distinctions the Houston area is earning for our business recruitment, business retention, job creation and economic growth efforts,” Jeff Moseley, president and chief executive officer of the Greater Houston Partnership, said in a statement. “We will continue to show that the Houston region is the most attractive place to locate or expand your business in the United States.”

There is no place in The United States that I would rather own real estate right now than in and around the Houston metro area and definitely in the rightfully proud great State of Texas. (That's why I do, of course.)

Stimulus Money for Toll Roads: Good Policy

Let the political games begin. Now that the stimulus bill funds are being allocated by state and local authorities, well-meaning but terribly misinformed citizens and grand-standing politicians are cutting off our economic noses.

The purpose of the stim bill was to create immediate spending through public investment projects, the so-called "shovel ready" projects that retain and create infrastructure jobs immediately.

The following story from The Houston Chronicle is about the current kerfuffle among perennially disgruntled citizen activists and perennially grand-standing politician enablers of both parties.

As Stephen Colbert would say, the idea that allocating stim funds to toll roads is an unfair application of public funds sounds "truthy," meaning it has a ring of truth and so often is accepted as truth by people who miss the larger context that stands their "truthy" argument on its head. First:

$700 million eyed for toll projects
Grand Parkway's among 21 Texas roads in allocation
By ROSANNA RUIZ Copyright 2009 Houston Chronicle
Feb. 27, 2009, 9:37PM

The Texas Department of Transportation has set aside more than $700 million in economic stimulus funds for toll road projects across the state, sparking criticism and questions about whether the pay-to-drive roads are an appropriate use of the federal dollars. ...

“It’s a total rip-off,” said Terri Hall, director of Texans Uniting for Reform and Freedom, a nonprofit opposed to toll roads. “That’s not how the money is supposed to be used.” ...

“I think it’s unfortunate that the discussion about these funds has eclipsed the broader discussion about the state’s transportation needs,” TxDOT spokesman Chris Lippincott said. ... [emphasis added]

I have to side completely with TxDOT on this. Toll roads, whether you like them are not, are not the issue right now. But that's really the beef that Hall has, namely toll roads in general and not this specific application of funds which has a different purpose of employing people and getting funds flowing into the cash-starved economy. I can respect Hall's citizen activism.

The political grandstanding, however, not so much:

U.S. Rep. Pete Olson, R-Sugar Land, who sits on the House Transportation and Infrastructure Committee, also questioned the use of stimulus funds on toll roads.

“It concerns me that state officials would prioritize toll projects that will hit already hard-pressed Texas drivers with additional fees,” he said... [emphasis added]

And so where has Olson's opposition to Texas toll-roads been in the last decade as the state turned more and more to toll road construction financing to avoid "public spending" to improve highways and reduce congestion? Yeah, that's what I thought.

For the record, a Democrat in the state legislature, Rep. Jim Dunnam, D-Waco, is the one "whose criticism led the commission to postpone its vote." Grandstanding has no party affiliation.

A reminder of reality from the U.S. House Transportation Committee:

The economic stimulus bill does not address toll roads, only that proposed projects satisfy requirements to create jobs and promote economic growth, said Jim Berard, a spokesman for the U.S. House Transportation Committee.

That's right. "[C]reate jobs and promote economic growth." Whether funds are used for immediate construction of schools, charter schools, highways, toll roads, government buildings -- public infrastructure regardless of how it's publicly financed is good stimulus. Now cannot be the time to piddle over the relative merits of various infrastructure projects. Is the project ready? Will it employ people? Will it create a public benefit when it's complete? That's all we need to know.

In addition to $181 million for the Grand Parkway, TxDOT’s list includes an additional $50 million for four new ramps connecting the Eastex Freeway and Beltway 8. ...

The above ramps proposal will connect a key alternative to the free I-45 north corridor into downtown Houston to the 2nd outer loop around Houston in a free portion (it becomes toll as it circles toward the west). These toll roads are not sparsely used. From before 6AM in the mornings until after 9AM and again for a few hours in the evening, these "toll" roads are used by thousands and thousands of motorists seeking the most efficient route around the city. The flyovers onto the 2nd outer ring will create even more incentive for motorists to use the toll roads and will off-set public tax dollars required to maintain these highways. You might argue with the idea, but you can't argue about the merits of the project at this moment in time.

There is a 3rd outer ring under construction in "segments" that will relieve traffic on Houston's other clogged highways that are mostly free. Better traffic capacity will benefit everyone, whether they choose to pay the tolls or stay on free highways. It's the driver's choice at any given moment on any given day.

Harris County Commissioner Steve Radack, whose precinct includes Segment E of the Grand Parkway, said the segment satisfies the federal stimulus mandate as a “shovel-ready” project. ...

Radack [argued] that a planned overhaul of U.S. 290 is not at the appropriate stage for the stimulus funds. ...

Radack points out that activists' demands that funds be used for a free northwest corridor (a "spoke" from the hub, so to speak) are misinformed because the project they advocate does not meet the criteria of the stim funds: the money couldn't be spent immediately and would not create immediate jobs. Yes, sometimes this governing stuff is actually kind of complicated.

Finally, the scale of the spending on the toll and free portions of area highways is of sufficient magnitude to achieve the express purpose of the stim funding:

The proposed Grand Parkway would span 180 miles, circling around the Houston area, at a projected cost of $4.8 billion. Segment E calls for a 15-mile, four-lane toll road that would connect the Katy Freeway and U.S. 290 at an estimated cost of $330 million, according to the Harris County Toll Road Authority. ...

The Best Things in Life

While we all now attempt to exercise our fair share of personal responsibility in our finances, it is an especially salient time to remember that the best things in life are (often) free.

Many communities have free events every week, and in large cities such as Houston, different parts of the city often have local events, from small neighborhoods to larger suburb cities or even micro-neighborhoods in the downtown area.

Here are two such events, both very different and appealing to different tastes. Of course in addition to this there are countless musician recitals at local colleges and churches, film festivals, area parks with nice amenities for kids, zoos, and in Houston, its world-class museums are now entirely free thanks to a giant grant from an estate. The museum district of any town should never be overlooked, nor should special arboretums and state and national parks.

Here are local events in Houston that caught my eye because they sound unique, fun, and free.

SpringFest to offer wine, art, music

The 11th Annual SpringFest, one of the largest wine exhibition and tasting events in Houston, will take place in Historic Old Town Spring Friday, March 6 through Sunday, March 8.

Wine enthusiasts are invited to attend this Texas-style event featuring local wineries showcasing top Texas wines, micro-brewed beer tastings, original art work from local artists, exhibits with furniture and art, and live entertainment featuring performances from Davin James, Shake Russell, Max Stalling, Todd Fritsch, jazz ensembles and more. The event is presented by Houston Press and KVST 99.7 FM.

Admission is free on Friday and Sunday; free Saturday until 4 p.m.; and $10 on Saturday after 4 p.m.

And another from an internationally renowned neurologist (a personal favorite topic):

Neuroscientist to speak March 18-19 at Lone Star College-North Harris

Dr. Janet Zadina, an internationally recognized reading specialist and cognitive neuroscientist, will speak March 18 and 19 at Lone Star College—North Harris, 2700 W.W. Thorne. Area teachers, counselors, and any professionals or community residents interested in hearing about brain research and education are invited to attend any or all of her four presentations, which will be offered free of charge.
The schedule is as follows:

* 9:30-11 a.m. March 18: “Anxiety and the Brain: Overcoming Hidden Stress Triggers,” Room CE-101 in the Continuing Education Building.

* 1-4 p.m. March 18: “Using Brain Research to Enhance and Energize Instruction,” Room CE-101 in the Continuing Education Building. ...

* 10-11 a.m. March 19: “Is It All In Their Head? How Brain Research Informs Our Understanding of Learning Differences,” Room CE-101 in the Continuing Education Building.

Awesome.

Entire Major Cities & States Unemployed

It's hard to get our minds around certain statistics like today's announcement that 598,000 (let's just say 600,000 can we?) jobs were lost just last month. This shows definitively that the horrific job loss trend is indeed accelerating. (Every American should be pressuring their congress-critters to pass a stimulus bill asap - it's already past due.)

To put this in perspective, it is as if the following entire major cities were put out of work just last month:

U.S. Cities with Populations around 600,000:

• Boston
• El Paso
• Milwaukee
• Seattle
• Nashville
• Denver
• Washington, D.C.

The following cities have far fewer than 600,000 people. Last month's job losses alone would have eliminated more than one job for every person in the following cities:

• Las Vegas
• Louisville
• Portland, OR
• Atlanta
• Sacramento
• Kansas City
• Cleveland
• Miami
• Omaha
• Oakland
• Minneapolis
• Raleigh
• Arlington, TX
• St. Louis
• Tampa
• Cincinnati
• Pittsburgh
• Newark
• Plano, TX
• New Orleans
• Orlando

Obviously this is not an exhaustive list, and remember that city populations include children, the retired, and others not in the workforce.

There have been over 2 million jobs lost in the last three months.

There are only four U.S. cities with populations greater than 2 million:

• Houston (2.2 M)
• Chicago (2.8 M)
• Los Angeles (3.8 M)
• New York (8.2 M)

There are only fifteen U.S. states with populations over 2 million.

And there are 26 -- yes, twenty six -- U.S. states with populations less than 600,000 - the number of jobs lost in the U.S. just last month.

We are not having an academic or ideological discussion in this country about the imminent need for stimulus.

And Houston Joins the Fray

Make no mistake the Houston economy is still the exception in this nation, but that does not mean it is immune to the economic downturn.

This week's news that oil services firm Baker Hughes is laying off 1500 jobs worldwide and 200 jobs in Houston is unwelcome news and hopefully not a harbinger of things to come. It is a chilling headline.

As we have discussed here several times, there can be no broad economic turnaround without a) a stop in job losses, and b) net new jobs creation.

Today's headline from The Labor Department is that continued jobless claims are now at their highest peak ever since the data collection began in 1967. Continued jobless claims are people who continue their claims after an initial week, and the data is from the week ending January 17th, and stands at 4.776 million people nationwide.

However, it is important to note that continued jobless claims is more or less an indicator of current economic conditions and not a strong indicator of a longer trend - that's the silver lining I think.

Not All Bleak in Houston
Meanwhile, back in Houston, encouraging news still persists in the mix. Shell announced it has no layoff plans despite a weak 4th Quarter. Chevron is keeping its capital spending levels steady. Continental Airlines posts a loss, but beats analyst estimates. And huge Houston car-dealer AutoNation, which owns several area dealerships including BMW, Mercedes, Acura, Hyundai, GM, Ford, Nissan, Mitsubishi, Chrysler, and Toyota, has announced despite an historic challenging economic climate it nonetheless has booked a profit.

And on that note, I need to go pick up my car from the repair shop of a nearby AutoNation-owned dealership. I'm doing my part for the Houston economy, or at least my car is.

Storm Infrastructure in America

Rachel Maddow, the radio and evening television pundit, is a rare breed. A self-avowed liberal, graduate of Stanford, Rhodes Scholar, and PhD, Dr. Maddow is a 35-year-old model of a, if not "the", future of liberal politics. I guess.

Aside from that however, Maddow proves on her new hit show (which often beats Larry King in the time slot) that political orientation does not need to immunize anyone or any issue. (Her smackdown interview of Rod Blagojevich will go down in history. Anyone looking for some Blogojevich schadenfreude will enjoy her multi-part interview in which he seems to admit to his crimes in several trip-ups.)

More importantly however, were Maddow's opening remarks about the sad statement of the condition of American infrastructure revealed -- yet again -- by a normal winter storm putting over 1 million Americans in the dark, in the dead of winter, with no power.

Her most powerful remark is how we are accustomed to hearing about the unimaginable terrorist "force multiplier" threats that could target our nation's energy grid, and yet time and again, including what we experienced ourselves right here in Houston, the nation's energy grid shows just how frail a condition it is in and how it cannot stand up to even run-of-the-mill seasonal storms.

This commentary leads into a revealing and frustrating discussion with US Oregon Representative Pete DeFazio about his efforts to get the new stimulus bill to include more job-providing, long-term infrastructure projects that Americans overwhelmingly support.

On this issue there can be no legitimate debate about the broad outlines:

1. Economic stimulation policy depends on increasing demand. Any attempt to stimulate supply by providing tax breaks for producers and investors inevitably fails because if the demand doesn't exist, you can, as we have with banks, provide all the money you want, but that money will just sit on the sidelines until there are buyers to produce for. Scared money doesn't spend.

2. Economic stimulus to increase demand must increase both spending power and actual spending in the private markets. It's no use to give money to those who in fear will put the money under a mattress. Therefore targeting money toward those who need it most, who have no choice but to spend it, is most effective. Therefore stimulative policy must focus on low-income workers and families who will spend. In addition, without jobs, those who must spend cannot. Therefore the other prong of stimulative spending must focus on jobs: preventing job loss and creating new jobs, preferably private-sector jobs that can be sustained in a recovery.

3. Simple tax rebates to those who will not spend and tax cuts to those with incomes who pay the most taxes (and by definition do not need to spend immediately) are not stimulative in this kind of environment. Most economists suggest long-term policy should include a fixed tax policy and stimulative/arresting policies from the Fed. Tax policy, except adjusting to route money immediately into the economy to those who will immediately spend that money (such as through payroll tax credits, which take effect immediately), is not effective for immediate stimulus.

4. The best investments of government spending must provide for future returns on that investment enough to cover future debt repayments and instill confidence in global investors of American national debt. The entire stimulus bill will be borrowed money. In order to accomplish that confidence, foreign investors need to see the US increasing its production capacity. Tax cuts do not do that; that approach is what ballooned - along with unrestrained spending - the national debt in the past 8 years past $11 trillion in an economy that has been producing $13 trillion annually. However, infrastructure investments do work.

The most famous infrastructure success story came from the Eisenhower administration in the $500 billion National Highway bill that established the Interstate highway system in every state. The modern parallel, aside from repair and maintenance of our roads, would be creating new high speed rails ("bullet trains" that don't exist yet in this country) but will reduce demand of foreign fossil fuels and provide new much more reliable and convenient regional travel (think uber-convenient substitute to Southwest Airlines).

Nonetheless, the idea that Houston's evacuation efforts involve many many hours of gridlock on highways, and the midwest to northeast loses power in the middle of a standard winter storm for over a million people, and Houston and other gulf coast cities can lose power for weeks and even months in the wake of a mid-tier hurricane -- it's just unacceptable in America. It's incompatible with the American way of life, and it presents an enormous security risk.

Enjoy Maddow's opening segment (and then watch the Blagojevich segments in the link above for a good laugh as he crashes and burns under Maddow's withering, crouching interview worthy of any world-class legal team).

When Elevators Attack

If I told you that someone was injured when their elevator fell from the 27th to the 25th floor before the emergency brake kicked in, you might ask, "What happened?"

But if I told you someone jumped off a 2-story building, you'd probably ask, "Did they survive?"

It's essentially the same thing though.

Granted, elevator travel really is the safest form of travel in the world. The best elevators in the world will only fall 6 feet, even if the suspension cables hypothetically snapped. There are redundancies upon redundancies, and aside from accidentally falling in an open door into the shaft, the danger couldn't be less given that the car travels along a fixed path cleared of all obstructions in only 2 directions.

But still, like anything, systems fail. When I first read of the failure in the linked article, I thought it would be a clear example of how our nation's aging skyscrapers are falling into extraordinary disrepair in an ever spiraling need for greater maintenance to fight against the ravages of physical aging. Skyscrapers weren't built to last 100 years on their own.

But the building in question, in downtown Houston, was only finished in 2003. Instead of being of comfort, it only alarms me more.

I am convinced that the era for central business districts consisting of dense roads and tall skyscrapers is fated for an end. Whereas prior to the telecom revolution, businesses required physical proximity for efficiencies of day-to-day business, this is just no longer the case. The falling costs of telecom technology, its rising efficiencies and capabilities, and the inevitably rapid rise of transit costs - auto or mass - point clearly to the future trend, which doesn't favor the downtown skylines of 20th century American triumphalism.

I expect that one day American history books will have a chapter with awesome skyline photos of American cities in the same way they now have photos of the 19th century American West full of buffalo herds roaming on open plains.

Whether it's an isolated instance of failure or not, this recent elevator failure foretells I think the kinds of infrastructure problems we are certain to see more as the next few decades unfold amidst ever-expanding telecom technology, rising transport costs, and declining urban and municipal tax bases.

Beyond that, how many horror stories like the following will the public tolerate?

From The Houston Chronicle:

On Dec. 9, DeRouen, who has been working as a contract consultant for Rosetta Resources on the 27th floor, said she finished work about 5:30 p.m.

“I pressed one, and it started free-falling really fast,” DeRouen said.

Sent airborne during the descent, she slammed hard into the floor when the elevator suddenly halted at the 23rd floor.

Her tibia bone tore through her leg between her knee and ankle, creating a long wound. Her ankle and toes on her left leg were fractured.

The elevator door wouldn’t open, so employees on the 23rd floor could not come to her aid as she pierced the air with screams, Boutros said. They kept her talking, though, worried that she might lose consciousness otherwise, she said.

It took a half-hour for help to arrive, Boutros said.

She has undergone several surgeries on her leg and will undergo at least two surgeries to repair the fractured lower vertebra and ruptured discs, Boutros said.

Oh, and there wasn't just one instance -- there was another one shortly after in the same building.

Both incidents are still under investigation by the landlord and its elevator contractors (and where are the police?), while the other elevators are still in operation. Naturally, many employees are taking 25 flights of stairs now instead of using the remaining elevators.

Just this week, roughly one month after the first incident still under investigation:

On Monday, Carleen Naumann, a sales representative for Besco Tubular, and Allan Keel, president of Crimson Exploration, were injured when an elevator dropped precipitously from the 27th floor to the 25th floor.

They were trapped in the elevator for a short time. Keel said he suffered a minor back injury and declined to be taken to a hospital.

Later, called ambulance
Naumann, of Katy, also declined treatment Monday. But she said she called for an ambulance after she got up Tuesday morning and her nose was bleeding. Her ankle also was hurting, she said.

Staff at Memorial Hermann Hospital in Katy determined she had fractured a vertebra in her lower back, she said.

“The elevator was flying. I thought we went down 15 stories. I was shocked to hear it was only two,” she said. “I was airborne and then it was as if we hit bottom.”

The nation's urban infrastructure problems are piling up so quickly from accelerating deterioration and a long history of deferred maintenance -- one day the costs of renewing the systems of the buildings, water systems, roads, fuel, and air will exceed the capacity of the nation to pay them. This is one of the biggest secrets in American municipal government and civil engineering. Few yet appreciate the full scope of the problem.

And if anybody else gets killed in their car from an exploding old gas main, or falls to their death in an open road hole from a water main break, or simply plunges into a river from a failed Interstate bridge, or especially if other cities see executives with bones sticking out of their legs or crushed vertebrae after an elevator falls two or three stories -- well, let's just say the suburbs and exurbs and rural areas will suddenly find new federal resources to support low-rise commercial development, and brand new sewer, water, electrical, and gas lines.

One day telecommuting won't be an HR incentive - it will be our way of life. It is destined to become the only affordable option for the nation's economy.

Suburban Blight

This article is terribly, horribly interesting. It is about certain community leaders' efforts to revitalize a corridor of north Houston that used to be the de facto suburbs just 30 years ago. The area is the FM 1960 highway corridor (really it's a 5-lane cement thoroughfare) from I-45 westward to about Steubner Airline. It used to feature a primary medical district for the north Houston region, family-oriented retail strips, major retail outlets, entertainment, restaurants, and mid-rise office buildings.

But in the past 30 years as the northern boundary of the city of Houston reached FM 1960, and as the suburbs sprawled ever northward into the next county and past one of the nation's earliest and most successful master-planned communities, The Woodlands, the FM 1960 corridor - along its many large adjacent subdivisions, many once affluent - fell into total disrepair.

Now, driving from I-45 westward on FM 1960 to Spring Steubner at night reminds me of driving through Times Square in its worst years. The once neighborly strip centers have bars on the windows, the nice restaurants now long gone, obscenely bright flashing LED lights untolerated in any dignified residential area, pawn shops every other block along with other "low rent" small businesses, and the office buildings that once spared nearby residents from long commutes have fallen into office-slum status.

So now a group wants to create a special taxing entity to tax commercial businesses in the corridor to make "improvements." And here is where suburban politics intersects with traditionally "urban" concerns: the Republican state representatives are sitting on their hands, reluctant to create "additional layers of government", "new taxes", or to do anything local businesses -- even low rent ones -- might find objectionable.

Call it suburban blight. And we'll be seeing a whole lot more of this.

From the article:

That management district would provide a method to raise money, through an assessment on commercial property, to carry out improvement projects in the 1960 area. The annual assessment charged to commercial property owners would range between 9-15-cents-per-$100-property valuation.

In the past two years, Renaissance 1960 has been working on projects aimed at spurring revitalization, including the creation of an Urban Design plan for the community, group “bandit sign” removal efforts and community clean-up days, but work on larger projects would require a larger, steady source of income, management district supporters say. ...Many see signs of deterioration in vacant and abandoned buildings, graffiti, signage, heavy traffic and the perception that crime is on the increase.

Well this is certainly new territory for suburban Republican representatives, such as state Reps. Patricia Harless and Debbie Riddle.

Harless said Renaissance 1960 and Houston Northwest Chamber of Commerce members worked the past two years to communicate the management district’s mission to property and business owners, and they sought letters of support from those constituents.

In the end, 39 businesses representing about 10 percent of the property value in the proposed district’s boundaries wrote letters of support. That is a substantial number, Harless said, but the questions remain about the overall level of support, and the district’s ability to raise enough money to make an impact on the area even if the bill is passed.

“So that leaves us at how do you create a new tax and new layer of government when several major property owners do not support it?” Harless said.

Personally, I think all the smart "major property owners" bailed on this area years ago. Can anything be done now to lure those quality owners and developers back?

Hmmm... this is sounding more and more like a particularly well-known phenomenon... called urban blight.

Riddle said the management district option is not generating a positive response among commercial property owners who would pay the annual assessment. She said there is a misconception in the community that a management district would have the powers granted to a homeowners’ association, but that is not the case.

Because of those limited powers, she said the vast majority of problems on FM 1960 could not be addressed by management district, and there are other ways the community could address those issues with that without creating a “taxing authority.”

“We are all in agreement that doing nothing is not an option,” Riddle said.

Well now that's an understatement, Debbie. Welcome to urban, or post-suburban, politics.

New Rule: Sell Low, Buy Low

Recently at a good friend's holiday party I met a very nice woman who wants to leave her house of 20+ years where she raised her children to move into a single story, smaller house. She has a very common problem: she no longer can climb the stairs to and from her master bedroom and bathroom every day without difficulty.

For many young families, floor plans with all bedrooms up offer a very good value -- they get a functional layout downstairs for family activities and 4 bedrooms or so upstairs including the master, which also usually keeps the footprint of the house small so that it fits well onto a small but affordable lot. Using upstairs space for livable square footage is also a good value because upstairs square footage is much less expensive to produce, since a house only has one foundation, one roof, one set of plumbing stacks, etc. On a per-square-foot basis, single stories are often priced higher than comparable two-story homes for this reason (and a few others).

Some young parents also feel reassured sleeping close to their young children.

[An often overlooked advantage to having a master suite upstairs is that it typically allows for a much larger master suite.]

But in a few decades, those young parents become empty nesters and their many years of hard-work may leave their bodies a little less forgiving with the stair climbing up and down all day every day.

So the lady at the party with whom I was speaking felt like now is not a good time to sell in the market, particularly because she paid at the high end of the market cycle in the early 80's and it's difficult to face a lousy investment return on a house, even though the house has served as the main family stage for those many years. Memories aside, the simple numbers are disappointing. I get it.

So I asked her if she wanted to stay in the same area, and she said yes because her adult children still live in the general area.

"No problem, " I said. "You may sell your house for less than you might have a few years ago, but you're also going to pay less for your next house."

This is the new rule for taking advantage of the current housing market: sell low, buy low.

So for many people who might want to downsize or even buy a bigger house, if the goal is to stay within the same general market area, then it would hold that however much the market may be depressed, it's depressed on both the selling and the buying side. So yeah, you might not get to sell for as much as you would like (nobody ever does in Houston), but you will get to buy for less in the same market!

Not to mention the historically low interest rates right now for qualified buyers. (Well qualified buyers have no excuse not to be in the housing market right now. Move up, refinance, whatever, but now is your time.)

Think of the California market circa 2005, for example. What use would it serve for a couple to sell their 1200 SF home for $1.5 million if all they could do was buy another comparable 1200 SF home for $1.5 million?!? This is why Texas saw so many people relocate from California and other areas, because cashing out was only possible by selling in the high market and moving to buy in a market that wasn't so wildly out of control (ie, Houston).

It occurs to me that the reverse is now true in most housing markets. Sure prices may be a little down year-over-year, which makes the thought of selling daunting if one doesn't have to sell. However the market also has good buying opportunities coupled with historically, ridiculously low 30-year fixed interest rates.

In conclusion, it is not a buyer's market. It is not a seller's market. The forces affecting each side are relatively balanced when you think about it. So it's not a bad time to sell if what you want to do is turn around and buy. So don't give up, the opportunity to get what you need or want is still very much available in this market.

We'll Have Iced Tea. Never Mind! Gotta go!

Last night my business partner (my mother also) and I went to one of our regular "conference rooms" -- IHOP. I love IHOP because there is never a bad time of day for a fantastic omelet, not to mention those Harvest Grain n' Nut pancakes.

Nonetheless, even my ferocious appetite has its limits. The kid waiting on us approached our table and in as friendly a manner as he possibly could muster, he introduced himself and asked for our drink orders. Nothing wrong with that. Friendly, hard-working guy.

But he also sounded like he was just out of a hospital bed with pneumonia. Sniffle, sniffle, sniffle...

I saw in my mother's eyes that she would not be eating anything... or touching anything that poor guy tried to put on the table. At about the moment he walked away to get our drinks, the restaurant manager walked by our table and let out an echoing loud, hacking cough that almost made me grab my cell phone for help.

That was it. My mom and I were torn about the ugly prospect of being one of "those" types... to leave just after sitting down, and we debated it. But neither of us wanted to eat anymore. Or drink. Or sit there and risk it... So we waited for our drinks to come, and I told the waiter we forgot an appointment and couldn't stay. He was very polite and offered the drinks for free, but I did lay down a $5 that I hoped he would pocket, and we left (and had a wonderful meal at a new Mexican restaurant in The Woodlands).

Why do sick people go to work?

Obviously, people who rely on hourly wages or tips often feel compelled to go to work sick because if they don't work, they don't get paid, and that is certainly understandable. Debatable, but understandable for sure.

It's also part of our crazy health care system in this country that hard-working people who really need the money are least likely to have adequate insurance or insurance at all for when they do get sick and need basic care, such as for strep throat, a sinus infection, or a cold that threatens to get worse.

It seems everyone's favorite refrain this time of year, as more and more of us come down with nasally voices from stuffed sinuses and endless sniffles, is "it's just my allergies."

But the truth is that it's very difficult to tell the difference between allergies and a common cold. (The link has a great comparison chart.) In fact, treatments are much the same because the symptoms are much the same. The difference: with a cold, the body's immune system is reacting appropriately, whereas with allergies, the body's immune system is reacting inappropriately.

Hence, several over-the-counter and even prescription medicines are branded as "cold & allergy" relief, because they contain some combination of antihistamine, nasal decongestant, and perhaps a little ibuprofen. If you can get it, and if you can stand it, Pseudoephedrine works really well to dry things up (including your tongue though).

The Inexcusable Working Sick

There is one inexcusable type of "working sick" people. These are the people who have paid-time-off but don't want to "use up" a personal day, and so in exchange, they go to work and risk infecting all their coworkers and colleagues (who invariably do get infected in a nasty chain reaction lasting for weeks). Yeah, have a nice time on that extra day of vacation this summer, thanks a lot.

To be fair, however, some blame must be given to the common corporate practice of granting generic "paid time off" days to employees in lieu of separate "vacation days" and "sick days." At first blush, it seems nice that if you want to take a day off, you don't have to give a reason or call in fake-sick (which is inexcusable also). But I think what's really going on is that corporate HR departments decided that to avoid employee abuse of "sick days" with fake-sick call-ins, they would just lump everything together and probably wind up doling out fewer paid days off in total.

Talk about unintended consequences. This has been all the rage for at least 10 years or more in the Fortune 500. I don't know of a single study that has examined whether giving employees an unintended incentive to come to work sick has had any impact on how many sick days the entire workforce requires in any year. I wouldn't be surprised if the total number of days has actually risen. And unlike vacation days, being sick is not something people can plan, which makes the impact on productivity even worse.

In my company, we are pretty good and flexible employers. We try to pay honestly for an honest day's work, and we never expect employees to check their humanity (or their family) at the door when they come to work. However, an employee showing up for work while sick is a terminable offense in our office. Zero.... tolerance.... Anti-tolerance.

Of course, in this economic environment, people may not only need the money, but they could also need the "face time" with the bosses to maximize their chances of just keeping their jobs. Ugh. Why must everything be so darn complicated? Why can't we just live in a black and white world? It sure would make being sick easier.

No matter. For me it's time for another dose of Benadryl, Flonase, and Pseudoephedrine.......

Repeat: Houston is the Exception

Okay, another press release, another frightening headline. But repeat and repeat again: "Houston is the exception." Let me cut to the chase, which is the last line in this Reuters article:

"The bear market continues; home prices are back to their March, 2004 levels," David M. Blitzer, chairman of the Index Committee at Standard & Poor's, said in a statement.

Okay, now as anyone can remember who was in the market in 2004 as a seller: those were not hard times in Houston.

So while other economic metrics mentioned in the article are at multi-decade lows, home prices in Houston remained relatively stable in comparison, down year-over-year in November by about 7%, but that's on much much lighter activity overall. Basically, sellers are afraid to sell, and buyers are afraid to buy, and so we mustn't be too serious about the price figures, which only reflect a small set of data due to the overall inactivity in the Houston market. (Note an important corollary: many would-be area sellers are also would-be area buyers. They are coupled, and so are the market effects.)

In other news, while the article says that a turnaround in housing is required for an overall economic turnaround (true enough), it also reports an important jobs figure:

Chief among consumers' woes has been spiraling job losses in recent months.

U.S. employers axed 533,000 jobs from payrolls in November alone, the most in 34 years, according to Labor Department data released earlier this month.

The Conference Board data reflected this, with its "jobs hard to get" index rising to 42.0 in December -- the highest since December 1992. That was up from 37.1 in November.

As we've discussed on this site again and again, the real indicator of an economic turnaround will be a stabilization of job losses. Without jobs, the economy can go nowhere for 99% of Americans. If you want a good housing market, you must have a good jobs market.

Repeat ad nauseum.

Klein Collins Drill Team to Inauguration

North Houston area Klein Collins High School's Junior ROTC drill team is on its way to partake in the Inaugural Parade in Washington D.C. on January 20th. They were in the top only 7% of applicants from all over the nation to be accepted for the high honor.

From The Houston Chronicle:

“We were very fortunate to be one of two groups selected for our state,” said retired Col. Daniel Crum, senior aerospace science instructor for Klein Collin’s Jr. ROTC program.

The team, which is part of the school’s Junior ROTC program, will be sending 36 students to the parade.

“It’s a privilege, and I also look at it as a responsibility,” Crum said. “We’re privileged to have some of America’s finest young men and women right here. It’s a responsibility because they represent what a lot of people don’t think we have: a bright future.”

What an historic and tremendous opportunity for the 36 kids who will attend. All of Houston should be proud.

For five consecutive years, the Flying Tigers have been named best Air Force Unit in the American Legion-Coca Cola National championship drill meet in Montgomery, Ala.

The team also has been a winner at the Air Force Academy’s National Invitation Drill Meet, which draws both high school and college drill teams.

Most recently, the team won its second Armed Sweepstakes Award in three years, and the Unarmed Sweepstakes Award at the event.

Crum attributes much of the team’s success to retired Master Sgt. Ray Watson, the drill team instructor. “He puts his whole heart and soul into it,” Crum said. “He’s out there with the kids every step of the way.”

Sounds like Klein Collins ROTC is accustomed to success and very high praise. Still, I think this takes the cake.

As an Alumnus of the Klein School District myself, congratulations team!

Sunday Followup: The Culture of Corruption

Here's another pathetic example of what fuels the current cynicism about "American" culture that has been undermining everything from our neighborhood lives to our national politics. It's not all because of politicians, political parties, or fatheads on Wall St:

An insurance company with a potential $25 million liability from a 2007 Houston office fire is claiming smoke that killed three people was "pollution" and surviving families shouldn't be compensated for their losses since the deaths were not caused directly by the actual flames.

And so here's the even more hideous part that makes my point for me. The name of that insurance company? Great American Insurance Company.

That's right, ISYN.

So does this make you think of our great nation, our "Great America"? Or does this make you think of cruel, inhumane, greedy corporate money-grubbers who are exploiting the foundational ideals of our truly great nation in order to get away with their unconscionable business practices?

Lest you think I make mountains of molehills, check out these choice 'graphs:

Seth Chandler, a University of Houston Law Center professor who teaches insurance law, said while the insurance company's maneuver wasn't out of bounds, it will test the limits of the law.

"This is pushing the boundaries of the absolute pollution exclusion," Chandler said. "We're going to have a battle between the literal language of the policy and the way people speak of pollution."

Really? The "insurance company's ["Great American's"] 'maneuver' wasn't out of bounds?" Really? So they're only "pushing the boundaries" of a technical contract exclusion? Just semantics? Ugh. This is why it hurts sometimes to think of what some people call "American."

Like I said Sunday, until this stuff gets exposed clearly for what it is, until we as a nation vilify the corrupt un-American perpetrators of these crimes against our nation, we will not have a sufficient base on which to stand in order to turn things around culturally and economically. Sickening. I think we all know who caused pollution in this story.

From the most popular reader comments online:

miesque wrote:
...The name of this insurance company, Great American, is a insult to America. They should call themselves "Traitors Insurance Company," and the management should be thrown in jail. If the courts let them get away with this swindle, then there is NO JUSTICE IN AMERICA anymore!
12/17/2008 1:15:50 AM

joseplummer wrote:
unbelievable. I'm not sure what the latest statistic is, but it is a well known fact that MOST deaths in a fire are from smoke inhalation. Even I know that.
12/17/2008 1:26:25 AM

bullwhip wrote:
What the ...? They need to rename themselves. It is against the law reguarding truth in advertising. #1. they are far from great. #2. They are unAmerican...
12/17/2008 1:10:36 AM

getrealfollks wrote:
All insurance companies pull this... When insurance was started, the concept was that you paid a premium and they took on the chance that something might happen, in which case they would lose and pay off. Now the concept is that they charge high premiums and they exclude any situation where they stand a chance of losing... Insurance was meant to be a gamble. sometimes they win, sometimes, they lose. NOT anymore. The courts need to slap this company with a fine...
12/17/2008 2:59:46 AM

And my personal favorite because of its ending:

johncoby wrote:
Please people, what do you expect? you live in Texas where the state is run by the insurance industry.

I mean seriously, have you even notice how much you are paying for insurance? And that Texas has the highest rates in the nation? And that our supreme court has ruled in their favor 85% of the time?

And you are SHOCKED that this is happening? Gosh.

I wish you guys would for once take this shock and awe into the voting booth.
12/17/2008 5:35:03 AM

We still live in a democracy, and as far as I can tell, the ultimate check on corruption -- and those who allow it -- are good common-sense citizens in elections. We don't get change until and unless we demand it. One of America's most beautiful attributes, however, is that we can achieve this by stepping no farther than into the voting booth. We're America. Unlike other nations, we control our own destiny. It's why we're the land of the free, and democracy is why we're the home of the brave.

"If Your Income Goes Up, Will You Watch TV in the Bathroom?"

Author of the popular book Freakonomics Daniel Hamermesh writes a regular column for The New York Times online featuring his witty log of counterintuitive economic observations.

In his book, for instance, he tells of a daycare center that, when faced with parents habitually late for picking up their kids, implemented a "punishment" fee policy to keep parents on time. Instead, however, parent pick-up tardiness actually increased, and the authors speculate that the "fee" actually served as an incentive for parents to be late because a) it ridded them of any guilt they felt for being late (since they were paying the fee), and b) the fee wasn't high enough, evidently.

Well this weekend Hamermesh recounted a recent trip to a nice hotel where he was stunned to find television screens in front of the urinals in the bathroom. I'm frankly stunned that he was stunned. Anyway, he mused in his column that perhaps as personal income goes up, so does a person's likelihood of installing media in their bathroom.

Color me unimpressed. I don't think it has to do with incomes rising so much as it has to do with technology prices falling. It's just not expensive anymore to put a television or any media anywhere one wants. The city of Shenendoah outside The Woodlands north of Houston has free Wi-Fi for all its residents. Soon they won't be exceptional for that at all.

Home builders now wire homes for surround sound -- basic homes -- because it costs them next to nothing. Production builders in recent years have been building niches for televisions in master bathrooms regularly, complete with cable hook-ups. A client recently told me of a friend in an older home who installed a television screen behind their master bathroom mirror (it shows through when the TV is on).

This isn't because people are getting rich. It's because technology is becoming ever more affordable. Cell phones used to be exotic, the idea of PC's on every desk used to be outrageous, and now we're entering an age where the desktop itself may go extinct and all software will be hosted and operated on the Internet. Check out live.com or google.com -- it's already started.

The idea is that technology is not an amenity like a swimming pool or wine cellar to be found in exclusive or more expensive homes. Instead, technology is like an amenity that starts out exclusive but then becomes a standard in short order. When my 2001 car was brand new, its navigation system was pioneering. I'm still grateful to have it, but nowadays it's far behind navigation systems that one can get inexpensively in a cell phone.

So rich or not, the day is fast coming when we'll all be watching television and surfing the Internet in our bathrooms -- and frankly anywhere else we can catch a signal. It's not a sign of wealth. It's a sign of the times.

Bonddad: Now is the Time to Spend

If you are not already familiar with famed online financial commentator Hale "Bonddad" Stewart, I'm glad to introduce you. Hale Stewart is a Houstonian and bond trader. He is also an attorney specializing in estate, international tax, M&A and business issues. He is a frequently recommended luminary for lay people at Daily Kos, which features his latest post in support of the Keynesian "spend now and spend big" arguments such as those featured on this blog.

The technical arguments against spending are obvious and reasonable under normal circumstances. However these are anything but normal times. Stewart takes a moment to address why threading this needle has a better chance of working at this point in time than other options (such as Hooverism).

The thrust of his arguments are this:

1. The US Dollar has, after a 20% run up in recent months, room to give up value in the wake of new spending;
2. 10-Year Treasury interest rates are at multi-year lows, indicating a continued strong demand for US debt; and
3. Nothing is certain and there are no sure-fire solutions

I couldn't agree more, except I think he's too cautionary, as if we have any other option. Like I've said previously, when a nation is in a deflationary spiral, the only sensible action is to apply inflationary pressures. If the inflationary demons start to rear their little heads, then deflationary controls must be put in place. Rinse and repeat until things stabilize. This is no time for nibbling around the edges or quibbling around theory.

Pay No Attention to Averages

Okay, seriously, this is getting way out of hand. The national media keep reporting national numbers related both to commercial and especially the housing market that are averages.

First, let's review the difference between an "average" and a "median," because you'll see both terms thrown about.

• An average is a generalized number meant to represent any particular instance as a generic example. So, if there are 3 houses on a street worth i) $100,000, ii) $200,000, and iii) 400,000, then the average is $100k + $200k + $400k divided by 3 = $233,333 is the average price. But how useful is that if you're trying to figure out what your house is worth one street over? (Hint: Not very useful at all.) So averages are generic. And they're fine when the set of numbers being averaged fall into a close range.

• A median is the number for which 1/2 of all things are above, and the other 1/2 are below. So in any neighborhood, if the median price of a home is $200,000, then that means that half of the homes in the neighborhood are priced above $200,000 and half of the homes are priced below $200,000. This is more helpful, but still does not tell the whole story.

So an average is really just a melting pot of statistics, and the bigger the pot, and the more things thrown in all melted together -- well how much does that average number really tell you? Not a lot, especially in real estate.

An "average" would be okay when talking about the national housing crisis if all parts of the country were experiencing basically the same problems and had the same history and outlook. But that's not at all the situation. There are parts of the country where the housing bubble absolutely exploded like Dutch tulips, beyond all reason. In other parts of the country, such as in Houston, housing prices never really accelerated all that much as new supply kept up with new demand.

Consequently, Houston is not seeing the same downturn that many other parts of the country are seeing -- because Houston never really saw the run-up that other parts of the country were seeing in the past 5 to 10 years. So Houstonians really need to look at their own local data to get a better grip on the local housing market and should really disregard the national reports when thinking about the local market.

The story in Houston right now is that while the number of sales are down over 20% year-over-year right now (last year there were about 20%+ more sales happening), the prices of those sales are actually holding firm within a couple percentage points, in stark contrast to the national statistics and especially the national averages.

In the future, we should discuss What Really Drives Real Estate Values of What You Own, and also what's behind the statistic "Average Months of Inventory." Both are confusing, even to people in the industry.

Update November 25, 2008: Here's another story with a big "price plunge" headline that Houstonians should ignore.