Houston Real Estate Trends, March 2016 Update

Houston Real Estate Trends, March 2016 Update

Five year Houston real estate trendsThe February Houston real estate stats are out.

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:

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.

Custom Report from a Top Ranked Houston RealtorHouston Real Estate Resources

 

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.”

 

houston neighborhood map

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.

CATEGORIESFEBRUARY 2015FEBRUARY 2016CHANGE
Total property sales5,5385,5480.2%
Total dollar volume$1,364,211,035$1,380,586,2691.2%
Total active listings27,99032,91417.6%
Single-family home sales4,5054,6022.2%
Single-family average sales price$259,676$260,8720.5%
Single-family median sales price$200,000$200,0000.0%
Single-family months inventory*2.73.430.5%
Single-family pending sales**6,7176,8011.3%

* 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.

Townhouse/Condominium Update

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.

Find Your Perfect Home

About the author:

Get More Details

Paige Martin

Our Recent Awards

Why We’re Different

  • #1 Keller Williams Realtor in Houston
  • #1 Keller Williams Realtor in Texas
  • #5 Keller Williams Realtor in the U.S.
  • "One of Houston's Top 25 Realtors," Houston
    Business Journal
  • "One of America's Best Realtors," RealTrends.com / WSJ
  • Over $500 Million in Houston residential home sales
  • We know this market, and this property.
  • We're candid.
  • We'll tell you the "bad' and the "ugly" about any property we show you.
  • Most often, we talk our clients into NOT BUYING.
- Gretchen & Brad Richter- Gretchen & Brad Richter
“We relocated to Texas from out of state 3 years ago, and Paige’s intimate knowledge of Houston neighborhoods, valuations, trends, and pitfalls was simply unmatched. We would never have been able to find our perfect home without her. She was calm and focused when everything seemed most challenging — a true professional and advocate who has become a dear friend. We are grateful to have met her!

Read More

- Peter McGillivray & Jillian Jopling- Peter McGillivray & Jillian Jopling
“Paige demonstrated all qualities you want in a realtor – knowledgeable, attentive, responsive, patient. She put us into our first dream home, and due to that experience, we’ve returned to her time and again for our other real estate needs. You will quickly realize after working with Paige that while she focuses on completing your deal, her endgame is to ensure her clients’ needs are preserved and satisfied.

Read More

- Gail & Ian Mackey- Gail & Ian Mackey
“As first time buyers in the US, we are delighted to have worked with Paige. She is a delight to work with, and I would recommend anyone to enlist her help if you’re looking to either buy or sell a property.

Read More

- Dr. Jen Shroff- Dr. Jen Shroff
“Paige is simply the best. She was patient with us throughout the process and took time to answer all of our questions! She knows so much about the housing market so we felt very confident that we were in great hands!

Read More

- Travis LeConey- Travis LeConey
“Paige has helped my wife and I twice now. I couldn’t think of a better person to have in your corner when buying or selling! She guided us through the process, and made it seem so easy that selling/buying was fun! Paige is a great person, very responsive, and great at what she does. I recommend Paige to all my friends and co-workers. If you are buying or selling in the area Paige covers, give her a call. You won’t regret it!

Read More

- Xavier Refunjol- Xavier Refunjol
“Paige is dedicated, thorough and caring to where you feel you’re their only client. Their best asset is their honesty, based on experience and data. We had a great time buying our first home largely because of them. We would not hesitate to recommend them to anyone.

Read More

- Taylor Lamb- Taylor Lamb
“Paige was wonderful to work with. She was thorough, knowledgeable and patient. I would highly recommend Paige to anyone looking to buy or sell a home.”

Read More

- Jeremy & Lynn Greene- Jeremy & Lynn Greene
“Paige Martin is the best Realtor. She is highly experienced and very knowledgeable. She made our buying experience an enjoyable one, not only for us, but for our daughter, son-in-law and several of our friends. We have bought and sold many houses, and Paige has been the best realtor we have ever worked with. We highly recommend her.

Read More

- Dr. Forrest Roth, MD- Dr. Forrest Roth, MD
“Paige is the best of the best when it comes to real estate! She has bought & sold many properties for us & we couldn't recommend her more highly!

Read More

- Tina Spiller, Chevron- Tina Spiller, Chevron
“I really enjoyed working with Paige on the sale of my townhome. The HAR listing was perfect and went up quickly and the sale was closed within 30 days. I definitely recommend Paige for any real estate transaction.

Read More

Read 100+ Testimonials: LinkedIn for the Best Houston Realtor

What We Can Do For You

CANDID ADVICE

Our promise is to always give you the most candid advice on any property, to help you make the best decision for your family.

EXPERTISE

Having sold over $500M of Houston homes, we've seen the good, bad & ugly and can help you avoid problems.

GREAT DATA

We built a proprietary data analytics package to help give you the best information on any neighborhood, building or home.

NETWORK OF EXPERTS

Built over fifteen years, our network of experts can help you through each step of the process plus help making living in your new home more enjoyable.

Latest Houston Real Estate Stories

Read more Houston real estate updates

Back to Top