HOUSTON – Ralph Bivins of Realty News Report: The latest edition features an interview with Carlos Bujosa of Transwestern.
RALPH BIVINS: Welcome, this is Ralph Bivins with the Ralph Bivins Project. Today, we’re going to address the uncertainty in the world, the economy, the real estate market. Oil is over $110 a barrel; gas is more than $4 a gallon. Inflation is going crazy and there is talk of a possible recession.
We are here today with Carlos Bujosa, vice president of Transwestern. He’s been selling real estate in the Houston area for quite a few decades. Carlos specializes in the acquisition and disposition of land, free-standing buildings and multi-tenant assets. His 40 years in commercial real estate ranges from land and investment property sales to valuation and consulting.
CARLOS BUJOSA: Thank you, Ralph. I’m happy to be on your podcast. You and I have known each other a while, from the early 1980s when I started in the business, and I knew Ralph Bivins as the real estate reporter for the Houston Chronicle. It was always quite an honor to be mentioned in the Chronicle, thanks to Ralph.
RALPH BIVINS: I know one of the many things that you’ve done was winning the award for forecasting future the land market in the competition presented by the CCIM group. We are now halfway through 2022. Where do you think we are going from here?
CARLOS BUJOSA: First, we ought to talk about where we have been. Where we’ve been – we’ve had one of hottest real estate markets that you and I have ever experienced. Everything seemed to be selling. I am involved on the brokerage side, in sales. Our batting average was 80+ to 90 percent for making deals. That’s pretty good. There have been times that were dismal, but these recently concluded times have been good.
The most recent problem was one of a lack of inventory. We ran out of homes to sell because of the speed at which properties were selling. Land, buildings. You name it; it was selling. Really, the only difficulties were in the office market, and they are likely to continue. That’s where we are at now.
A few months ago, maybe since the first of the year, we started to notice some indications that things were changing. We’ve been around long enough to know that good times don’t always last. It came to a point where we were asking: When is it going to be, when is it going to be? Now, we’re getting some headwinds, from inflation, rising interest rates and uncertainty in supply chain issues causing major problems for home builders and anyone involved in construction.
This combination is going to probably cause some pain in the lower end of the single-family housing market. We sell land, large tracts of land, to single-family home developers. We know from some discussions with them that they are having some problems – some hesitation – from buyers – that they have never had before.
If you look at the economy, you see some really great things going on, like 3.6 percent unemployment rate. I heard talk that two jobs are available for every one person who’s looking. Six percent wage growth and all that type of stuff. But it’s kind of like two things happening at once. For all the great things going on, there are also things that are pulling us back. We have to see where all this takes us.
RALPH BIVINS: In the Houston area and the surrounding counties, land is in high demand. Add to that the fact that many people work three days a week in the office and two days from home. People are saying they wouldn’t mind a longer commute if they only had to do it two or three days a week. The commuting pressure is less. Is it your sense that developers are backing away from the emphasis on suburban home construction?
CARLOS BUJOSA: I’m not sure if it’s actually happening. My guess is that they are all trying to figure out what will happen in the future and to rethink any moves they are planning; moves that were easier to make last year. They are being really, really, careful.
RALPH BIVINS: Homebuyers have seen mortgage rates increase from the 3 percent range at the beginning of the year to 5 percent today. For some people – like young people and starter purchasers – this may mean being priced out.
CARLOS BUJOSA: I saw an online seminar a few days ago, one that focused on single-family housing research for home builders that mentioned mortgage rates increasing from 3 to more than 5 percent. Add to that inflation, and the impact on Houston area homeowners’ monthly payments is up about 30 percent. That’s a pretty substantial amount. It may not impact people buying more expensive homes, but it could affect people in the entry-level market.
A lot of people are turning to ARMs (adjustable-rate mortgages) which we haven’t seen in a while.
RALPH BIVINS: Carlos, you have a lot of expertise working with infill projects close to the downtown. Tell me what’s going on with infill projects in the metro area.
CARLOS BUJOSA: It’s continuing. People want to be close to town, close to where they work. Some areas may be experiencing a little more growth. Downtown, unfortunately, has been hit pretty hard because of the decline in the office market, with many offices closing down and occupancy low. It has had an impact on the retail stores and restaurants that relied on office workers to maintain their businesses. Those people are beginning to come back.
But there are other areas where we see growth. Like the Heights. It’s one of the most active properties we’ve got, a parcel on North Shepherd Drive. It’s amazing how much action there is there. A couple of contracts fell out, but that was mainly because of the things we’ve been talking about. One fell through because of rising construction costs while another was lost because of something that happened on another property. These are things we would not have experienced last year.
Carlos Bujosa’s biography
Carlos Bujosa is a graduate of the University of Texas at Austin. Prior to joining Transwestern in 2010, he was a shareholder with McDade, Smith, a boutique brokerage firm. He previously held positions with a large commercial brokerage firm and a commercial appraisal firm, and he also established a brokerage and consulting firm.
May 30, 2022 – Realty News Report Copyright 2022.
File: Finding Opportunities in 2022
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