Houston Real Estate Trends, March 2016 Update
Despite the energy downturn, the February 2016 numbers remain identical to the record-breaking sales of February 2015.
Single-family homes priced between $150,000 and $500,000 recorded positive sales volume while the luxury home segment experienced the biggest decline.
Here are a few highlights:
- March 2015 to February 2016 had the highest number of total property sales of any 12-month period over the prior 5 years.
- February 2016’s total dollar volume and property sales were nearly identical to (record) February 2015 numbers.
- For February 2016, the average single-family sales price remained almost the same as February 2015 ($260,872 to $259,676).
- While still well below the national average, Houston’s single-family “months of available of home inventory” is creeping up 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 (January 2014 – January 2015).
February Houston Real Estate Milestones:
- Single-family home sales rose 2.2 percent compared to last February, marking the first increase since September 2015;
- Total property sales were unchanged at 5,548 units;
- Total dollar volume increased 1.2 percent to $1.4 billion;
- At 260,872, the single-family home average price reached its highest level ever for a February;
- The single-family home median price was unchanged from a year earlier at $200,000;
- Single-family homes months of inventory climbed to a 3.4-months supply versus 2.7 months a year earlier;
- Townhomes/condominium sales fell 17.8 percent with the average price down 1.3 percent at $199,205 and the median price up 2.8 percent to $150,000;
- Leases of single-family homes soared 14.6 percent with rents up a fractional 0.6 percent at $1,688;
- Leases of townhomes/condominiums climbed 10.3 percent with rents up 2.5 percent to $1,545.
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- Why Use Us To Sell Your Houston House?
Houston Real Estate Updates In February
The Houston real estate market managed to resist most of the effects of the energy downturn in February, with home sales up over two percent compared to the same month last year. Single-family homes priced between $150,000 and $500,000 recorded positive sales volume while the luxury home segment experienced the biggest decline.
According to the latest monthly report compiled by the Houston Association of Realtors (HAR), February single-family home sales rose 2.2 percent versus February 2015, with a total of 4,602 sales compared to 4,505 a year earlier. New listings helped inventory grow from a 2.7-months supply to 3.4 months.
“So far in 2016, the Houston housing market has remained healthy despite the ongoing strains facing the energy industry,” said HAR Chairman Mario Arriaga with First Group. “Sales are still down in the luxury home market, but, just as we saw in January, mid-range housing performed well and inventory levels grew. There was also a lot of activity among rental properties.”
Last week, the Greater Houston Partnership (GHP) reported revised Texas Workforce Commission data showing that the Houston metropolitan area gained 15,200 jobs in 2015, not the 23,200 jobs previously estimated. The GHP report also stated that nearly 51,000 jobs were lost in January, a 1.7 percent decline and slightly above what is considered average for that time of year.
The single-family home average price squeezed out a fractional 0.5 percent year-over-year increase, reaching $260,872, the highest figure ever for a February. The median price—the figure at which half of the homes sold for more and half sold for less—was unchanged at $200,000.
February sales of all property types in Houston totaled 5,548, statistically flat compared to the same month last year. Total dollar volume for properties sold in February rose 1.2 percent to $1.4 billion.
February Monthly Market Comparison
Houston’s monthly housing market measurements were largely positive in February compared to those from a year earlier. On a year-over-year basis, single-family homes sales, average price, total dollar volume and inventory levels rose while median sales price was flat.
Month-end pending sales for single-family homes totaled 6,801. That is up 1.3 percent compared to last year. Total active listings, or the total number of available properties, at the end of February rose 17.6 percent from February 2015 to 32,914.
An increase in new listings in February gave single-family homes inventory a boost, with levels climbing from a 2.7-months supply to 3.4 months. For perspective, the national supply of homes reported by the National Association of Realtors (NAR) currently stands at 4.0 months.
|CATEGORIES||FEBRUARY 2015||FEBRUARY 2016||CHANGE|
|Total property sales||5,538||5,548||0.2%|
|Total dollar volume||$1,364,211,035||$1,380,586,269||1.2%|
|Total active listings||27,990||32,914||17.6%|
|Single-family home sales||4,505||4,602||2.2%|
|Single-family average sales price||$259,676||$260,872||0.5%|
|Single-family median sales price||$200,000||$200,000||0.0%|
|Single-family months inventory*||2.7||3.4||30.5%|
|Single-family pending sales**||6,717||6,801||1.3%|
* 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.
Single-Family Homes Update
Single-family home sales totaled 4,602 in February, up 2.2 percent from February 2015. That marks the first increase in sales volume since last September.
The average price increased a fractional 0.5 percent to $260,872, a record high for a February in Houston, while the median price remained unchanged at $200,000. Days on Market (DOM), or the number of days it took the average home to sell, edged up to 62 days versus 61 in 2015.
Broken out by housing segment, February sales performed as follows:
- $1 – $79,999: decreased 1.1 percent
- $80,000 – $149,999: decreased 7.3 percent
- $150,000 – $249,999: increased 9.5 percent
- $250,000 – $499,999: increased 4.4 percent
- $500,000 and above: decreased 12.0 percent
HAR also breaks out the sales figures for existing single-family homes. Existing home sales totaled 3,869 in February, up 4.6 percent versus the same month last year. The average sales price rose 1.0 percent year-over-year to $238,961 while the median sales price climbed 2.6 percent to $185,000.
Sales of townhouses and condominiums dropped 17.8 percent in February. A total of 398 units sold compared to 484 properties in February 2015. The average price declined 1.3 percent to $199,205 while the median price rose 2.8 percent to $150,000. Inventory grew from a 2.6-months supply to 3.3 months.
Lease Property Update
Demand for single-family lease homes shot up 14.6 percent in February while townhomes/condominiums saw demand increase 10.3 percent. The average rent for single-family homes edged up 0.6 percent to $1,688 while the average rent for townhomes/condominiums rose 2.5 percent to $1,545.
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.