HOUSTON – (Realty News Report) – Houston’s real estate world has changed dramatically since Hurricane Harvey visited Houston last year. The storm is tied with 2005’s Hurricane Katrina as the costliest tropical cyclone on record, inflicting an estimated $125 billion in damage — primarily from as much as 50 inches of rain. Harvey’s waters inundated more than 100,000 homes, displacing thousands of Houstonians. While the economic factors could be estimate, the psychological damage remained. Has Houston real estate finally weathered Harvey? Realty News Report talked with Shad Bogany of Better Homes and Gardens Real Estate Gary Greene. Bogany served as Chairman of the Board – Houston Association of Realtors in 2002 and chairman of the Texas Association of Realtors in 2013. He hosts the Real Estate Corner, a radio talk show KWWJ 1360 and 96.9 FM. He formerly served on the board of the Texas Department of Housing and Community Affairs.
Realty News Report: It’s a year after Harvey. What’s been the impact on Houston real estate?
Shad Bogany: I don’t think we’ve seen the final impact yet. We’ve seen change and devastation in neighborhoods around Houston, but we haven’t seen the total impact because foreclosures have not hit the market yet. Right now, we have a vibrant real estate market in Houston. But that feeling is tempered and will probably change when the foreclosures hit the market. Some Houston areas were neighborhood of owners, now will become a neighborhood of renters because their homes flooded so many times. You’ve got homes in those neighborhoods that may have flooded, and people don’t want to live in the house. So, investors come in and buy the house and lease it.
Realty News Report: Were there any hidden side effects that we didn’t find out about until months after Harvey had passed?
Shad Bogany: That’s the hidden side effects – the havoc that Harvey caused in neighborhoods that were once strong but were greatly weaken by the storm. A year later, we have not done anything to stop the flooding! What are you going to do with people living in hotels and motels and now the government says they’re not going to pay more? Do they go back to their home and attempt to live there and deal with the mold? I just had a 77-year-old call me who’s living upstairs in his house. The upstairs is the only place he could live; the rest of the house was gutted. He didn’t have flood insurance. The SBA said it would give him $100,000, it won’t be enough to fix his house. You can’t buy another house for $100,000. It’s a quagmire here. I don’t think the city will recover for years. Yes, the trash is off the streets, but you drive though some places in Meyerland and it looks like a ghost town.
Realty News Report: So, as of today, Houston has not fully recovered from the storm?
Shad Bogany: No. it has not and won’t be for many years. Selling a home today is different from a year ago. The first question potential home buyers ask is, “Has this home flooded?” Our city was devastated, and it will take years to recover. We don’t have the infrastructure in place yet. Things are happening, but they are moving very slowly. Big government always moves slowly and then you’ve got the politics that goes with it — which neighborhood to fix first, which bayous. We’ve had money given to the city and our city government says we’re going to see some of the money, but there are so many things to do. Maybe the city will buy out seniors who can’t afford to live in their home and who are on fixed income and can’t afford to buy another home. Where does that citizen go? Look at areas all over Houston which have flooded in the last 20-30 years. The county bought some of the people out, but now the neighborhood has been gutted and you’re seeing a lot more neighborhoods the same way. They could be turned into retentions ponds because nothing is being done. The damaged homes are just sitting there.
Realty News Report: Will some neighborhoods be scarred forever by the storm? Will some Houstonians who have experienced flooding several times find it difficult to sell their house in the future?
Shad Bogany: I think a whole lot of neighborhoods are scarred. If they raise the cost of flood insurance, it will make it more expensive for people to buy a home or continue to live in their home. I believe we should be moving to disaster insurance covering fire and earthquake and flooding and other disasters. Congress has not been able to fix the flood insurance problem; they just continue to extend it 3-4 months. Flooding is not just a Houston or Texas problem. It happens all over the country. It just happened in Maryland. It’s everywhere. If you get enough rain in one spot, it’s going to flood.
Realty News Report: When someone’s house has been flooded several times, they rebuild. Why do you think they rebuilt rather than move on?
Shad Bogany: It’s a couple of things. People‘s houses may have been paid for. If it was a senior home owner, with home prices up in Houston, they may not have been able to afford another home. I know for a fact, if I sold my home right now, I could get a smaller house but pay more for it. Other people are going to remain there because they can’t afford another area. People believe it was a once in a lifetime flood. People are creatures of habits; they want to stay where they know everything in the area, and where they know everybody. It’s an affordability issue and the key to affordability is wages. If wages increase, then probably you can afford a home. But we’ve forgotten about the Middle Class. If you solve the wage issue, we won’t have an affordability issue. A lot of people have become the working poor and need to be able to afford to live and spending 40-50 percent of their monthly income on a home isn’t realistic. If you live in a two-bedroom apartment on minimum wage, you can’t afford to buy a house. That situation has to change!
Realty News Report: What will the Hurricane Harvey flooding mean for the real estate market/and development in the years to come?
Shad Bogany: Mayor Turner pushed for new rules requiring new homes within the city’s 500-year floodplain to be built 2 feet above the floodplain. Before that homeowners in the 100-year floodplain were required to have flood insurance and build new homes 1 foot above the floodplain. But doing so comes at a cost. If you lift all the houses up, it’s going to add a lot more to the cost of a home and affordability is already a problem here.
Realty News Report: Can you describe the impact Harvey had on affordable housing in Houston?
Shad Bogany: We had an affordability problem before Harvey, but after Harvey it got worse. The Mayor’s new rules about lifting houses up will probably add $20,000 to $30,000 to the cost of a home. Home buyers in Houston already are having problems finding a house for $200,000 and below. If your home flooded, and you renovate it, the whole question comes down to ‘who wants to live there?’ Who’s to say it won’t flood again. If we’d just fix the infrastructure, it would help solved the problem — take the money that’s coming in and widen bayous, make them deeper. We need to do the things we need to do. The city is starting to make inroads in commercial buildings with most now having a retention pond, I don’t understand it, it’s very simple to me — solve the root of the problem. Of course, we’ve got to compromise! We don’t have any statesmen in Congress. If we did, we wouldn’t be having this issue. Everybody has to compromise; nobody gets all of what they want.
Realty News Report: Houstonians from all walks of life pulled together during Harvey. What makes Houstonians different? Is it the resiliency of their souls; their tenacity; their ability to bounce back.; their ability to rebuild? All of those traits?
Shad Bogany: I think term “Houston Strong” describes the efforts. Everybody pitched when storm hit — people helping people. People from all over country rushed here to help. Houston is the home of the oil wildcatters, who were took risks and chances, and it’s in our spirit to overcome challenges So, when things happen, we all pull together. What I love about this city is that the people are so incredibly strong. That’s because I believe Houston is a state of mind, not just a place. During Harvey, everybody came together. The Harvey difference was people from all over the state and the country came to assist. The opposite occurred in New Orleans when they had Katrina. It wasn’t the same. I think it’s the can-do attitude we have here. People learned from Katrina, from Rita, and from the other disasters. In real life, you can’t survive alone. We all need to come together.
