4 Signs That the Houston Housing Market Has Peaked – And How it Affects You

Should You Be Worried About The Housing Market Correction?

The Houston housing market is finally stabilizing. After a sudden two-year housing boom, the market is beginning to settle down.

Interest rates and home prices rose consistently last year, leading many buyers to pause their house-hunting.
Mortgage applications are at their lowest in 22 years, and refinancing interest has fallen by 75% than last year.

All these impact sellers, buyers, and homeowners. Has the Houston Market reached its peak?

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What Does It Mean For The Houston Housing Market To ‘Peak’?
What Are The Signs That The Houston Market Is Cooling Off?
What Does This Mean For You?
Note: A Cooling Market Isn’t The Same As A Market Crash

What Does It Mean For The Houston Housing Market To ‘Peak’?

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One of the most notable signs that the housing market is already at its peak is when strong growth rates start dropping — triggering a market correction. Lisa Iglesias, top real estate agent from Houston Properties, believes the Houston housing market peaked in March. "Our primary concern this 2022 was last year's buying frenzy," she said, "it led to some risky purchases that broke the 9 Kisses of Death — the 20-year study of what NOT to purchase in Houston."

Mark Zandi, the chief economist of Moody's Analytics, agrees. He stated that the industry has peaked and is now in a "house correction."

In some ways, housing correction benefits the Houston housing market. "We believe property prices will continue to fall until we reach a happy medium, giving the market much-needed stabilization," Lisa said.

The market correction hasn't affected housing prices yet. Typically, it could take a 6 to 12-month delay between national and global events and their impact on the local Houston market. We expect to see its prevalence in neighborhoods and housing segments where the demand was so high that properties became overvalued.

While the Houston market is slowing, there are no signs that the housing bubble will implode as it did in 2008. It’s essential to recognize the Fed's attempt to control the market as a factor. “The market is moving with such volatility because they're attempting to manage the economy deliberately, and that's different from 2008," Lisa states.

Compared to 16 years ago, the housing market was filled with predatory lenders who take advantage of consumers. The housing market also collapsed due to buyers lacking the equity required to sell those houses after they could not make their mortgage payments. For instance, 67% of home mortgages in the final quarter of 2021 went to debtors with credit scores higher than 760.

What Are The Signs That The Houston Market Is Cooling Off?

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The following indicators suggest that the Houston housing market is beginning to stabilize as we approach 2023:

1. Interest Rates Are Rising.
The Federal Reserve of the United States hiked interest rates several times this year, including the most significant increase over 30 years. These interest rates make borrowing more expensive overall, and they affect mortgage rates as well.

2. Houston's Housing Inventory Is Increasing.
While there is currently a higher demand for properties than what's available for sale, the gap is closing. Active listings of single-family homes in Houston have increased by 50% since last year.

3. House Sales In Houston Are Declining.
This September, the house sales for single-family homes in Houston dropped by 17% lower than the previous year.

4. Houston Property Prices Are Falling.
In June 2022, it was estimated that 38% of homes for sale in Houston had a price reduction.

These markers aren't always a negative thing. This softening Houston market can be seen as a "window of opportunity," particularly for buyers.

What Does This Mean For You?

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For The Home Sellers

Houston's housing market may have peaked, but properties remain in great demand. With property values beginning to fall, sellers can expect delays in receiving offers that meet their expectations. They must look out for pitfalls while selling their home and focus on marketing and promoting their house.

Sellers should also expect the reappearance of inspection contingencies, which have been mostly absent in recent years. As a result, proper cleaning, staging, and minor maintenance are becoming increasingly necessary.

For The Home Buyers

Buyers have backed out due to fast-rising property costs and financing rates. They believe they are either overpriced out of homes or waiting for the market to stabilize. "People are waiting because they believe prices will fall," Lisa added.

NAR estimated that the cost of buying a home today is 55% more than last year. Despite that, it's easier to purchase a home than a year ago.

For The Homeowners

The number of homeowners refinancing their mortgage has decreased as rates increase. According to Black Knight, refinancing activity would plummet by 80% within the first quarter of 2022.

Moving forward with refinancing makes little sense if you cannot lower your interest rate (many experts suggest savings of at least 0.75 points). If using their home's equity for substantial home repairs or debt repayment is the aim, homeowners should choose a home equity loan or line of credit instead.

Note: A Cooling Market Isn’t The Same As A Market Crash

"Buying a house in Houston with The Houston Properties Team was just the start of our relationship. They helped me build friends, relationships, and support as a new resident in Houston. They truly went above and beyond to help make our lives better even after our move." – Brandon, Google Review

Even though a housing crisis followed the last time the real estate industry peaked, analysts think that a recurrence of 2008 is unlikely. Instead, we're seeing a return to normalcy in the Houston real estate market after a few years of intense competition (and other unique circumstances).

A balanced market has about 4-6 months of home inventory. This September, the Houston housing market now has 2.7 months of inventory.

So, whether you're buying a new house or selling your present one, the reality that the industry has peaked doesn't mean you're joining it at the wrong time. It just means that you need to work with an experienced real estate agent who can help you understand the market and make the best home-buying or selling choice.

Houston Properties Team, the top real estate team in Houston, can help you navigate this uncertain market. We have the resources, data, and experience to help you navigate this changing market. Click here for a free home valuation guide, or contact us for an in-depth discussion and strategies to help with your needs.

4 Signs That the Houston Housing Market Has Peaked – And How it Affects You

Table of Contents

What Does It Mean For The Houston Housing Market To ‘Peak’?

What Are The Signs That The Houston Market Is Cooling Off?

What Does This Mean For You?

For The Home Sellers

For The Home Buyers

For The Homeowners

Note: A Cooling Market Isn’t The Same As A Market Crash

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