New townhouses fill the Midtown area on Webster near Bagby. Prices have soared in ever-changing Inner Loop neighborhoods.

By RALPH BIVINS
Copyright 2001 Houston Chronicle

The Rev. Kirbyjon Caldwell, a local pastor known nationally for delivering the benediction at the inauguration of President Bush, preaches to his south Houston congregation about benefits of homeownership.

It's a safe bet that the congregants have not been sleeping through the sermons at Caldwell's Windsor Village United Methodist Church. The pastor's homeownership message may have touched their hearts and minds a bit, but it has really fattened their pocketbooks.

The Windsor Village neighborhood was the leading gainer in home values last year in a survey of almost 800 Houston-area subdivisions. Home prices jumped 30.7 percent in Windsor Village, located near South Post Oak Road and West Orem Drive.

"I have been watching Windsor Village for 19 years," Caldwell said. "Windsor Village has been a proud, well-maintained neighborhood."

Caldwell declined to take credit for the rise in Windsor Village home values, which far outpaced last year's citywide home-price increase of 8.6 percent.

However, Caldwell's church has been a positive force in the neighborhood, said Richard Johnson, a Windsor Village homeowner and member of the church.

"The church helps out a lot," said Johnson, who bought his three-bedroom home in Windsor Village in 1975 for $28,000. That house is now appraised at $60,000.

Caldwell's church spearheaded a drive to redevelop an area shopping center, and it also helped to create the new Corinthian Pointe subdivision, building 100 brick homes just north of Windsor Village.

Caldwell has been a key figure in Bush's faith-based initiative, which would provide federal assistance to the social-help ministries of religious organizations.

Windsor Village was at the top of a long list of gainers in Houston home appreciation in 2000.

Last year, Houston home prices took their biggest jump in more than a decade as low mortgage interest rates, a record number of used-home sales and a strong local economy lifted home values significantly.

Overall, the Houston-area median home price went up 8.6 percent last year, according to a study by the University of Houston's Institute for Regional Forecasting in conjunction with Crawford Realty Advisors that was partly funded by the Houston Chronicle.

Homes inside Loop 610 were the biggest winners, achieving a 17.5 percent gain, according to the study, which was derived from data from the Houston Association of Realtors.

River Oaks, Houston's most expensive neighborhood, showed large gains in home values last year. Thirty-nine homes priced at $1 million or more were sold in River Oaks last year, and the median sales price was a whopping $245 per square foot.

Other Inner Loop gains were registered in neighborhoods like the Heights, Eastwood and Knollwood Village.

Homes in the Heights, one of the oldest neighborhoods in Houston, have seen large gains in recent years, with some houses doubling in value.

A Victorian-style home on Heights Boulevard recently sold for $360,000, over $100,000 more than it was purchased for two years ago, said realty agent Barbra Coffman of Coldwell Banker Swilley Hudson.

The Heights' price escalation seems to be moderating in 2001. But Heights prices aren't going down; they're just not rising as fast as they used to be, Coffman said.

With the Inner Loop land rush under way, pioneering Houstonians seek out close-in neighborhoods that might become the next Heights.

Craig Baudier, an accountant who works downtown, recently paid almost $90,000 to buy a 100-year-old house in the First Ward. Baudier is putting in new plumbing and wiring and refinishing the home's old claw-foot bathtub.

Baudier, 36, said he had planned at first to sell the house when the restoration is completed. But he is now thinking about moving into the house because he sees things changing in the First Ward, which is between the Heights and downtown.

"The area has really started coming around in the last couple of months," Baudier said.

Buyers are motivated to move to the Inner Loop because living there helps them avoid fighting traffic and suffering long commutes to their jobs downtown and at the Texas Medical Center, said realty agent Lisa Baer of Martha Turner Properties.

"The driving is killing people. People don't want to commute anymore," Baer said.

Centrally located, the area inside the Loop registered a 72 percent gain over the past five years. A little farther out, homes inside Beltway 8 were up 42 percent over the five-year period. And homes outside the Beltway were up 29 percent over the past five years, according to the UH study.

While the more distant suburbs may not be the leaders in price gains, they have not been left out of the trend of surging home values.

Most sections of Kingwood, on the far northeast side of Houston, have gained more than 20 percent in value over the last five years. That has left Ellie Csengery and her husband, Larry, convinced they are living in something much more than a house -- it's a good investment.

Four years ago, Ellie Csengery said, the couple got a good deal when they paid $310,000 for their new 3,600-square-foot patio home on a Kingwood golf course. A few weeks ago, she asked a realty agent about selling the house. The agent suggested it would bring $450,000.

She said they have not decided whether to put their home on the market, but if they do, the Csengerys could reap a handsome profit.

Many Houston-area homeowners are in the same position. The city's 7 percent gain in home prices in 1999, followed by a bigger gain in 2000, has left many area homeowners fat with equity.

Strong winners in home appreciation last year were a number of inexpensive neighborhoods.

The high cost of renting a house or an apartment encouraged many first-time home buyers.

With mortgage interest rates at 7 percent or lower, buying a house was an attractive option for renters. In many cases, a monthly payment to the mortgage company was lower than rent.

"First-time home buyers jumped on the bandwagon to take advantage of the low interest rates," said Amy Bernstein of Bernstein Realty.

Lower mortgage rates can make a difference in balancing a family budget. The monthly principal and interest payment on an 8 percent, 30-year mortgage for $100,000 is $734. At 7 percent, the monthly payment is only $665.

As the first-time buyers rushed out to purchase a house, the local inventory of lower-priced homes dwindled.

In today's market, finding a good home priced at less than $80,000 is difficult, said Shad Bogany of ERA Bogany Properties, which specializes in the lower end of the Houston housing market.

Schoolteacher Greg Mills, 32, and his wife, Dianna, recently decided to purchase their first house because it was a better deal than renting. They bought a three-bedroom, two-bath home in Atascocita North for $88,000.

The Millses pay $740 per month for the home, only slightly more than the $725 they paid to rent a house.

The opportunity to amass equity in their own home was hard to pass up, and it was better than being a contributor to their landlord's bank account.

"We just got tired of paying someone else's mortgage," Greg Mills said.

Some of the moderately priced neighborhoods that showed more than a 20 percent gain last year include Deepwater, Imperial Point, Mangum Manor, Timber Oaks and Westbury South. Those neighborhoods, mostly near Beltway 8, offer houses priced at less than $100,000.

The median home price in Houston last year was $116,100, the highest ever, according to the National Association of Realtors. Houston's median home price has been climbing steadily since the city's economic crash of the mid-1980s, when the median home price sank below $60,000.

But even with the increases, Houston's median still is less than the national median of $139,100. And it is far less than the most expensive market in the nation, San Francisco, where the median is $417,200. The median price indicates half the homes sold for more and half for less.

"Houston's home prices are still incredibly low compared to the rest of the country," said UH economist Barton Smith.

Houston's home prices will eventually catch up to the rest of the nation as the market continues to make big gains. The 8.6 percent overall increase last year was the biggest upward bump in 12 years, Smith said.

Despite the downturn in the national economy, Houston's housing market will perform well in 2001 because energy companies will be expanding, Smith said. Local home prices will rise at least 6 percent this year and the city should add 60,000 new jobs, he predicted.

But ongoing devastation in the stock market could put a damper on the local housing market, especially in the upper-end bracket. Losses in the stock market hurt consumer confidence and rob buyers of money they could roll into real estate.

"If the stock market stays down for the next 12 months or so, it's going to hurt Houston," said Todd Mason, chairman of the Houston Association of Realtors. "You can't stay an island forever."