Our Houston market, and Katy in particular, is very strong and looks to be great for 2008. While we do have certain areas that have a higher than normal foreclosure rate, you will usually see a direct connection between the rate of foreclosures and the problem of overbuilding in the same area.

I feel that inexperienced developers and builders are very much a party to the foreclosure mess as they have continued to over-build in certain areas and allowed (encouraged, I should say) unqualified buyers to purchase homes using loan vehicles (ARM's, Balloon Notes, etc.) that the buyers could not afford then or now. This is exactly what has happened in the North Katy area, (North of Interstate 10) and has had a negative impact on appreciation and days on market for both new and resale homes.

Now, to see the effect of controlled growth, take a look at the South Katy Market (South of Interstate 10 and North of 1093), which remains very strong and has consistently been the hottest market in Houston. Why is that? Our well-known developers have built master planned communities with respected builders as opposed to throwing up a fence, building 100 identical boxes and calling it a "neighborhood". Drive the neighborhoods along Fry Road or Mason Road, both north and south of I-10 to see what I am talking about.

In the North Katy market (Area 25 and KISD schools only), today there are currently 75 Foreclosure properties listed on the HAR MLS, 13 of which are under contract, leaving 62 properties to compete against non-foreclosure resale homes. Compare that to the South Katy area with 30 Foreclosures listed, 5 under contract - leaving 25 foreclosure properties to compete in this market.

When I work with buyers in our area, I tell them that the neighborhood is as important, if not more important, than the property itself. I need to repeat that: The neighborhood is as important, if not more important, than the property itself.

This is why it is crucial to work with an experienced local Realtor when purchasing a home, one who knows the areas as well as the inventory. Otherwise, you may end up owning a lovely lemon.

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