Houston Real Estate Trends, July 2016 Update
The Houston real estate market continues to display healthy equilibrium despite instability in the energy industry.
Here are a few highlights:
- July 2015 to June 2016 had the second highest number of total properties sold of any 12-month period over the prior 5 years. The difference from last year is less than 350 homes.
- June 2016’s total dollar volume and property sales were nearly identical to (record) June 2015 numbers.
- For June 2016, the average single-family sales price remained almost the same as June 2015. The difference is only $3,000.
- While still well below the national average, Houston’s single-family “months of available of home inventory” is almost identical to 2013-territory.
- Here’s the best 2016 forecast that I’ve seen recently.
- Learn the value of your home and see what’s going on in your neighborhood.
We recently completed an analysis of over 400,000 home sales in Houston since 2000 (email me if you’d like a copy) and found several key themes:
- Pundits are notoriously bad at calling either the top or bottom of a market.
- On average, if you bought a quality home in a quality neighborhood and held for at least 5-7 years, you’ve broken even on your investment – regardless of when you purchased.
- Quality matters. Quality was ranked in multiple categories including: location, construction type, floor plan and avoiding being along either a railroad, highway or major thoroughfare.
- Home buyers who did the worst financially purchased properties that violated two or more of these conditions. Interestingly, over two thirds of buyer who purchased these “disadvantaged properties” bought directly from a builder, didn’t use a Realtor or used the seller’s real estate agent to do “both sides of the deal.”
Key Seller Tips:
- For sellers, in a declining market (regardless of how long a declining market lasts) pricing just below the recent comparable sales (“comps”) is your best option for selling fast for the most money.
- As the market “normalizes”, it makes sense to price your home based on how the market “trended” the last time it started to slow down. Comparable sales (“comps”) help sellers stay ahead of the curve.
- Comps are a “rear view” mirror approach of what the market has been, not what the market will be.
- In declining markets, each month that passes will mean that the value declines as well.
- To maximize value in a declining market, you want to price where the market is going, not where it’s been, so that someone sees you as a deal, moves quickly and negotiates less on price.
- In addition, if someone sells faster than you for a lower price, then they “re-set” the comps to a lower amount, and then you’ll have to sell under that.
- So, in many cases, it’s better for you to be the first one out so you can set the trend, rather than lagging behind.
Key Buyer Tips:
- The key lesson from our study of 400,00 home purchases since 2000, is not to try and “time the bottom” but instead to buy the highest quality home while not overpaying for where the market is at that point in time.
- Local trends matter. The spike in home inventory is most prominent in the mid-range housing category. Single-family homes priced between $150,000 and $250,000 saw year-over-year sales increase by nearly 9% while total property sales remain unchanged
- As you’ll see in the below graph, historically, Houston’s “best properties” don’t come on the market in large volumes during major downturns (Houston real estate trends).
- What has happened historically during downtowns is that prices stagnate and transaction volume falls materially.
- In the graph below, compare the similarities between the trends between 2014 – 2015 and 2007 – 2008.
- No one knows what future oil prices will bring. It may or may not be worse than the “Great Recession.”
- If it is similar, we can use 2007 as the proxy. In 2008, we saw price stagnation and in 2009, we saw price appreciation.
- I believe the key here is to not “chase the market” and buy wisely – both in terms of property quality and appropriate pricing.
- Contact me for more about what this could mean for you.
The following is the most recent Houston MLS Report, published by the Houston Association of Realtors. The data covers Houston homes for sale and real estate trends from the last twelve months (May 2015 – May 2016).
June Houston Real Estate Milestones:
- Single-family home sales were basically unchanged with a total of 7,696 units sold;
- On a year-to-date basis, single-family home sales are up 2.7 percent;
- Total property sales fell 0.9 percent to 9,139 units;
- Total dollar volume declined 1.7 percent to $2.6 billion;
- At $230,538, the single-family home median price rose 2.5 percent to a record high;
- The single-family home average price declined 0.8 percent to the second highest level of all time, $300,178 (the highest was $302,599 in June 2015);
- Single-family homes months of inventory climbed to a 3.7-months supply versus 3.2 months a year earlier;
- Townhome/condominium sales fell 5.8 percent with the average price down 2.4 percent to $197,937 and the median price up 2.1 percent to $164,450;
- Leases of single-family homes were up 4.8 percent with rents up slightly to $1,883;
- Leases of townhomes/condominiums soared 12.9 percent with rents down 5.6 percent to $1,658.
- Free Houston Relocation Kit
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- Impact Of Falling Oil Prices On Houston Real Estate
- Why Use Us To Sell Your Houston House?
Houston Real Estate Updates In June
June provided a continued boost to Houston’s housing inventory as new listings entered the market. Home sales volume was unchanged year-over-year, but as the local real estate market has seen for the past several months, most of the homes consumers purchased were priced in the $150,000 to $500,000 range.
According to the latest monthly report prepared by the Houston Association of Realtors (HAR), a total of 7,696 homes sold in June compared to 7,710 a year earlier— statistically unchanged. However, on a year-to-date basis, home sales rose 2.7 percent versus June of 2015. Inventory levels enjoyed another bump, rising from a 3.2-months supply to 3.7 months.
“We continued to see solid buying activity among middle-range housing in June,” said HAR Chairman Mario Arriaga with First Group. “Even though sales overall leveled off compared to last June, volume is up for the year, and we anticipate a sufficient supply of inventory and low interest rates to draw more home buyers into the market in the weeks ahead.”
The single-family home median price—the figure at which half of the homes sold for more and half sold for less—rose 2.5 percent to a record high of $230,538 in June. The average price declined a fractional 0.8 percent in June to $300,178, the second highest level of all time (the highest was $302,599 in June 2015).
June sales of all property types in Houston totaled 9,139, down 0.9 percent from the same month last year. Total dollar volume for properties sold in June declined 1.7 percent to $2.6 billion.
June Monthly Market Comparison
Houston’s monthly housing indicators were mixed in June compared to those from a year earlier, but nevertheless continue to reflect market sustainability. On a year-over-year basis, single-family homes sales were flat, the median price reached a record high while the average price hit the second highest level of all time, total dollar volume declined and inventory grew.
Month-end pending sales for single-family homes totaled 7,801, an increase of 8.6 percent compared to last year. Total active listings, or the total number of available properties, at the end of June climbed 13.8 percent from June 2015 to 35,857.
An increase in new listings in June elevated single-family homes inventory, with levels rising from a 3.2-months supply to 3.7 months. For perspective, housing inventory across the U.S. currently stands at a 4.7-months supply, according to the latest report from the National Association of Realtors (NAR).
|CATEGORIES||JUNE 2015||JUNE 2016||CHANGE|
|Total property sales||9,224||9,139||-0.9%|
|Total dollar volume||$2,636,457,773||$2,591,071,978||-1.7%|
|Total active listings||31,509||35,857||13.8%|
|Single-family home sales||7,710||7,696||-0.2%|
|Single-family average sales price||$302,599||$300,178||-0.8%|
|Single-family median sales price||$225,000||$230,538||2.5%|
|Single-family months inventory*||3.2||3.7||17.2%|
|Single-family pending sales**||7,181||7,801||8.6%|
* Months inventory estimates the number of months it will take to deplete current active inventory based on the prior 12 months sales activity. This figure is representative of the single-family homes market.
** Effective May 2015, in an effort to be consistent with industry standards, the Houston MLS is now including all categories of pending sales in its reporting. Previously, the Houston MLS did not include “option pending” and “pending continue to show” listings in its reporting of pending sales. The new methodology is now all-inclusive for listings that went under contract during the month.* Months inventory estimates the number of months it will take to deplete current active inventory based on the prior 12 months sales activity. This figure is representative of the single-family homes market.
Single-Family Homes Update
Single-family home sales totaled 7,696 in June, down a fractional 0.2 percent from June 2015.
The median price rose 2.5 percent to an all-time record high of $230,538. The average price declined 0.8 percent to $300,178, second only to last June’s record of $302,599. Days on Market (DOM), or the number of days it took the average home to sell, edged up to 51 days versus 45 last year.
Broken out by housing segment, June sales performed as follows:
- $1 – $79,999: decreased 20.0 percent
- $80,000 – $149,999: decreased 19.1 percent
- $150,000 – $249,999: increased 3.5 percent
- $250,000 – $499,999: increased 2.5 percent
- $500,000 and above: decreased 8.7 percent
HAR also breaks out the sales figures for existing single-family homes. Existing home sales totaled 6,669 in June, up 0.6 percent versus the same month last year. The average sales price edged up 0.5 percent year-over-year to $286,773 while the median sales price rose 4.6 percent to $218,750.
Townhome and condominium sales fell 5.8 percent with 665 units selling in June versus 706 a year earlier. The average price declined 2.4 percent to $197,937 while the median price climbed 2.1 percent to $164,450. Inventory grew from a 2.7-months supply to 3.3 months.
Lease Property Update
Renters were once again out in force in June. Single-family home leases rose 4.8 percent, while townhome/condominium leases jumped 12.9 percent. The average rent for single-family homes ticked up to $1,883 and the average rent for townhomes/condominiums dropped 5.6 percent to $1,658.
The computerized Multiple Listing Service of the Houston Association of REALTORS® includes residential properties and new homes listed by 25,000 REALTORS® throughout Harris, Fort Bend and Montgomery counties, as well as parts of Brazoria, Galveston, Waller and Wharton counties. Residential home sales statistics as well as listing information for more than 50,000 properties may be found on the Internet at http://www.har.com.
The information published and disseminated to the HAR Multiple Listing Services is communicated verbatim, without change by Multiple Listing Services, as filed by MLS participants.
The MLS does not verify the information provided and disclaims any responsibility for its accuracy. All data is preliminary and subject to change. Monthly sales figures reported since November 1998 includes a statistical estimation to account for late entries. Twelve-month totals may vary from actual end-of-year figures. (Single-family detached homes were broken out separately in monthly figures beginning February 1988.)
Founded in 1918, the Houston Association of REALTORS® (HAR) is a 26,000-member organization of real estate professionals engaged in every aspect of the industry, including residential and commercial sales and leasing, appraisal, property management and counseling. It is the largest individual dues-paying membership trade association in Houston as well as the second largest local association/board of REALTORS® in the United States.