While the national media continues to sing the blues regarding the housing market, here in Texas, we're singing to a different tune. The Texas Real Estate Center published an article entitled, 'Bubble Watch 2008' by Ali Anari, which lends further credence that not only has there not been a bubble here, there are no signs of one occurring in the future.

It's all in the numbers
The article references a recent report showing the price-versus-rent ratio in the United States, Texas and all major Texas cities to back the argument. The normal P/R ratio for the U.S. in 2005 was 22.7 percent. The P/R ratio in Texas was 16.2, which was only 71 percent of the national average, according to the data. This suggests that the risk of a Texas home-price bubble is minimal.

The U.S. average home price in relation to rent ratio is 24.3 percent whereas in Texas, the average is 16.8 percent. A normal P/R ratio for the U.S. housing market is the median home price divided by the average (or median) annual rent for the nation. When the local housing market rises above the U.S. average P/R ratio, just like the stock market, levels rise to a point not likely to be sustained by fundamentals, a correction occurs, and the severity of the correction depends on how high the P/R ratios have been.

Quite simply, Texas is below the national average and therefore not in danger of experiencing what many markets have. Home price appreciation is slowing in the state, from 6.1 percent in 2005 to an estimated 2007 appreciation of 3 percent. One could expect 2008 to show similar or lower appreciation rates than found last year. But appreciation is the rule rather than the exception, for the most part.

Now is time to buy
Here in Houston, we are enjoying an economy based on oil, a multimillion dollar expansion of the Texas Medical Center and a port that is vital to the entire southwest region. Home sales year-to-date are down in Houston by 12 percent, but still ahead of 2005 levels.

That is a good market when one considers that 2005 is now considered one of the third-best years in Houston's residential real estate history. Our P/R ratio is 17.9 percent, which is a little higher than the state average. We could use a little less 'doom and gloom' from the national media, but smart people know that this is an opportune time to invest in real estate. Lower interest rates, waning home price appreciation, with the prediction of future growth in the Houston economy, all point to the fact that buying a home today in Houston may result in the best long-term investment available.

Toni Nelson, Prudential Gary Greene Realtors