Is this a bad time to invest in the Houston market

[Anny Ann]

What is everyones opinion on the Houston housing market? I've noticed a slight downtrend in the market. Is this real and will this continue? Is this a bad time to buy for buy and hold investors?

[Andrew Johnson]

@Anny Ann Nobody can predict downturns.  The best you can get is an educated guess.  Even economists don't agree on what will happen and when with the housing market, stock market, interest rates, etc.  But even if you think there will be a downturn then you have to guess how severe it will be.  Let's say it happens in 18 months but interest rates have had another two hikes by then.  Will that downturn (which results in a lower purchase price) be offset by higher interest rates?  How will higher interest rates impact your cash-flow?  Do you think interest rates might drop?  Nobody is guessing that, I wouldn't bank on it, but I suppose it's theoretically *possible*.  

The reality is that history makes everyone who bought in ~2006 a fool who didn't see the subprime mortgage house of cards that was ready to fall.  It makes everyone who bought in ~2008 a genius when it comes to appreciation and being so clairvoyant that they knew they would be able to refinancing their 6% mortgage rate to under 4% in just a couple of years.  

Forums are littered with people who had a mix of smarts, guts, educated guesses, hunches, etc.  And right now it's filled with people desperate to find 2006 again.  It feels like prices are too high, it feels like it can't continue, affordability is dropping, etc.  Does that mean a plateau?  Does that mean a correction?  Does that mean a crash?  Who knows.

The net result is that what I would want to "hold" if I were a new investor is a low interest rates.  Markets will swerve up and down but even a 5% interest rates still looks awesome compared to most of the last 30 years.  Combine the right interest rate with the right property and you'll at least have some insulation from the bumps and bruises that will inevitably come with buy-and-hold real estate.

My two cents...