Houston Real Estate Trends, Sept 2016 Update: Home Sales Rebound
A healthier supply of inventory helps meet strong buyer demand as sales volume reaches historic high.
Here are a few highlights:
- September 2015 to August 2016 had the highest number of total properties sold of any 12-month period over the prior 5 years. August 2016 is the first August in five years that total property sales went over 9,000 homes.
- August 2016 had the highest average single-family sales price compared to similar months, the last 5 years.
- While still well below the national average, Houston’s single-family “months of available of home inventory” has reached 4 months for the second consecutive month (last time it was over 4 mos was 2012).
- 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 (August 2015 – August 2016).
August Houston Real Estate Milestones:
- Single-family home sales rose 8.2 percent with a total of 7,914 units sold —the greatest one-month sales volume of all time
- On a year-to-date basis, single-family home sales are up 1.5 percent;
- Total property sales rose 7.1 percent to 9,319 units;
- Total dollar volume shot up 10.6 percent to $2.6 billion;
- At $225,000, the single-family home median price rose 4.2 percent to an August high;
- The single-family home average price increased 2.4 percent to $289,519, which was also the highest level for an August;
- Single-family homes months of inventory climbed to a 4.0-months supply;
- Townhome/condominium sales rose 5.1 percent, with the average price up 1.0 percent to $202,669 and the median price up 4.0 percent to $156,000;
- Leases of single-family homes were down 2.2 percent with average rent down slightly to $1,878;
- Leases of townhomes/condominiums rose 5.7 percent with average rent down 2.6 percent to $1,604.
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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 August
After a down month in July, Houston single-family home sales roared back in August with an 8.2 percent year-over-year increase that was fueled by a growing supply of inventory for buyers. August also marked the highest one-month single-family home sales volume of all time, and the first time in a year that homes priced above $500,000 experienced a sales gain. In fact, only homes priced below $150,000 saw sales volume decline.
According to the latest monthly report prepared by the Houston Association of Realtors (HAR), a total of 7,914 homes sold in August. That is the greatest one-month volume since July 2015, when 7,898 homes sold. On a year-to-date basis, home sales are up 1.5 percent compared to this point in 2015.
Inventory levels rose from a 3.5-months supply to 4.0 months.
“August proved to be a strong month for the Houston real estate market, which was welcome news after the slowdown in July,” said HAR Chairman Mario Arriaga with First Group. “It’s possible that summer vacations meant consumers put home buying on the back burner in July, but whatever the cause, home sales appear to once again be moving at a healthy pace.”
The single-family home median price—the figure at which half of the homes sold for more and half sold for less—rose 4.2 percent to $225,000. That is the highest median price ever for an August. The average price climbed 2.4 percent to $289,519, which is also an August record high.
August sales of all property types in Houston totaled 9,319, up 7.1 percent from the same month last year. Total dollar volume for properties sold in August surged 10.6 percent to $2.6 billion
August Monthly Market Comparison
Houston’s monthly housing market indicators were positive across the board compared to August 2015. On a year-over-year basis, single-family homes sales, total property sales and total dollar volume all rose while both the median and average home prices climbed to record August highs. August also marked the greatest one-month single-family home sales volume of all time.
Month-end pending sales for single-family homes totaled 7,359, an increase of 10.1 percent compared to last year. Total active listings, or the total number of available properties, at the end of August rose 12.4 percent from August 2015 to 38,056.
Single-family homes inventory jumped from a 3.5-months supply to 4.0 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||AUGUST 2015||AUGUST 2016||CHANGE|
|Total property sales||8,699||9,319||7.1%|
|Total dollar volume||$2,321,458,169||$2,567,194,524||10.6%|
|Total active listings||33,856||38,056||12.4%|
|Single-family home sales||7,314||7,914||8.2%|
|Single-family average sales price||$282,613||$289,519||2.4%|
|Single-family median sales price||$216,000||$225,000||4.2%|
|Single-family months inventory*||3.5||4.0||14.7%|
|Single-family pending sales**||6,685||7,359||10.1%|
* 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.* 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 7,914, up 8.2 percent from August 2015. That represents the highest one-month sales volume of all time.
The median price rose 4.2 percent to an August high of $225,000. The average price climbed 2.4 percent to $289,519, also a record high for an August. Days on Market (DOM), or the number of days it took the average home to sell, edged up to 50 days versus 45 last year.
Broken out by housing segment, August sales performed as follows:
- $1 – $79,999: decreased 32.5 percent
- $80,000 – $149,999: decreased 10.0 percent
- $150,000 – $249,999: increased 13.5 percent
- $250,000 – $499,999: increased 12.7 percent
- $500,000 and above: increased 5.8 percent
HAR also breaks out the sales figures for existing single-family homes. Existing home sales totaled 6,815 in August, up 8.2 percent versus the same month last year. The average sales price rose 3.4 percent to $272,720 while the median sales price increased 5.0 percent to $210,000.
Townhome and condominium increased 5.1 percent with 656 units selling in August versus 624 a year earlier. The average price rose 1.0 percent to $202,669 while the median price climbed 4.0 percent to $156,000. Inventory grew from a 3.1-months supply to 3.7 months.
Lease Property Update
The lease market had a mixed performance in August. Single-family home leases declined 2.2 percent, while townhome/condominium leases rose 5.7 percent. The average rent for single-family homes was down 1.2 percent at $1,878 and the average rent for townhomes/condominiums fell 2.6 percent to $1,604.
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.