Every week, we ask a Houston real estate professional for their thoughts on the top three stories from the week before. This week, we spoke with Dale Ross, Realtor at Keller Williams Signature Realty and CEO of the Dale Ross Realty Group.
Houston Agent (HA): We’ve seen recent reports suggesting that housing is becoming less accessible for middle class buyers in the Houston market. Is that what you’re seeing in your market?
Dale Ross (DR): No. The only reason housing would become less accessible would be buyers’ credit qualification, but there is plenty of housing available in all price ranges. The prices are on the rise, but there are still $80,000 – $100,000 homes out there for sale.
HA: Is there any concern that prices are rising too fast?
DR: Being in the business for 33 years, I think we’ve got some excessive appreciation. However, when you compare Houston to other major metropolitan areas, it’s still very affordable. It is difficult to say whether it’s too fast or not.
What is spurring the higher prices are the lower interest rates. The lower interest rates kind of create a double edged sword. Sure, they allow people to afford more expensive homes at a lower monthly payment, but at the same time, they cause the prices to go up because people can afford more, which creates more demand across the board. When interest rates start going back up, I think we’re going to see some depreciation, simply because, $2,000 a month on a $200,000 home is right now the same as $2,000 a month on a $350,000 home.
When interest rates start going back up, we’re going to see the affordability index drop. Rising interest rates will create a softening of the market. I’ve been to several study groups regarding when interest rates will rise, and what the study groups say is that the government really wants the interest rate to be around the 5.5 percent – 6 percent range. I don’t think they’ll raise it this year because it would be too unpopular, and the economy isn’t as stable across the country as everyone is indicating.
The economy in Houston and Katy is doing very well because of the petroleum industry; were it not for the petroleum industry, I’m sure our market would be suffering as much as or if not worse than anywhere else in the country. We’re just in the right place at the right time.
HA: What are some ways that you’ve been distinguishing yourself from your peers from a marketing perspective?
DR: I’ve always been big into listings; that’s what I go after. I do a lot of phone prospecting. I do a lot of marketing in the way of farming; I use direct mail to send a 12-page, full-color, single-agent newspaper to 10,500 homes every month. That’s how I market locally.
Internationally, I use pay-per-click advertising on Google in order to draw buyers to my website. Internet leads are not very high quality leads, so you really need to incubate them. About 23 percent of Internet leads don’t buy for as long as 12-13 months. You really have to incubate those and nurture them along. The closure rate on those, if you’re really good, is around 6 percent or 7 percent. If you’re not really good, then you’re closing 2 percent or 3 percent – maybe.