Buying Real Estate in Houston? Yes, Virginia… its a great idea!

February 11, 2009

5-10 years from now when the financial crisis has ended and housing prices are up once more, we will look in the rear view mirror and realize that we missed the golden age for buying the dream home or being the “first time home buyer”. 

Smart people say, that moment of knowing we have hit rock bottom is only indicated by the time when everyone is the most pessimistic. That moment is certainly getting closer. 

“Smart buyers are buying now.” Why?

1.       We are in the midst of the best interest rates we have seen since we are told, the 1950’s! 4.5% is an amazing rate to lock in for 30 yrs! Jumbo loans at 7%!

2.       Sellers are watching the national news and know they are not in the driver’s seat right now so they are willing to negotiate. Even though we are not in a depressed or declining market, the sellers watch national news stories that say otherwise. Buyers can take advantage of the negative mindset of the seller right now about his property not moving fast enough.

Facts:
National employment 3rd qtr 2008, down 500,000 vs. Houston employment at 60,000 new jobs. 

Stable pricing is between 6-7 months of inventory according to A&M Research Center and Metrostudy. Same period facts of 3rd qtr. 2008, 6.5 months of new home supply in the market according to MLS and MetroStudy. 

State Resale Supply Statistics

State/City Months Supply
South Florida 28 Months
Chicago 15 Months
Atlanta and Phoenix 13 Months
Charlotte and San Diego 10 Months
Santa Fe, Albuquerque 9 months
Colorado Springs and Raleigh Durham 8 months
San Antonio 7.5 months
Dallas Forth Worth and Houston 6.5 months
Austin 5.5 months
Sacramento 5 months


I hit the largest cities and within these stats we have Raleigh and Charlotte in top 10 Recession Proof cities in the Nation and so is Houston, DFW, Austin, San Antonio but our inventory of homes is smaller.

Texas Markets 2008 through 3rd qtr. overall appreciation metrostudy
Austin: 5%
Houston: 4.4%
San Antonio: 4%
Forth Worth: 3.1%
Dallas: 2.1%

Where are you doing business?

10 year average home appreciation for Houston: 5.31%. Houston does not have the huge appreciation but it is not a depreciating market.

Multi-Market Closings for New Homes by Annual Closings

City Annual Closings
Colorado Springs less than 3,000
Santa Fe 4,000
Tampa 7,000
Denver 9,000
*Salt Lake City 11,000
*(#1 Recession proof city in the US according to Forbes Mag. 2008)
Austin 11,000
San Francisco 12,000
Raleigh/Durham 13,000
San Antonio 13,000
Las Vegas 14,000
Chicago 15,000
Charlotte 16,000
Orlando 24,000
Atlanta 25,000
Phoenix 29,000
DFW 29,000
**Houston 35,000
**Most Flourishing Market in the Nation and State with Annual New Home Closings


Texas has had and continues to have an overall escalating market.  
From 1st qtr. 2000 – Homes in Houston, San Antonio, Austin and DFW were basically selling at $200,000.

Today DFW is around $270,000; Houston is close to $300,000; While San Antonio and Austin sell at close to $310,000. Slow and Steady… 

Why Buy?

  • Affordability – Texas and specifically Houston is among the most affordable in the US
  • More choices in Houston than most other cities – single family, condo, high rises, lofts
  • The Meltdown is in Other Markets – not Texas “We have a Stable Local Market”
  • Good time to trade up – you may sacrifice on selling end but capitalize on the buying end
  • Interest Rates are affordable “right now”…we don’t know about summer or fall 09
  • Homeowners are very realistic right now about home pricing – we could say homes are “on Sale” right now!
  • Home prices in Houston and Texas are stable.
  • Houston’s economy is strong

While others in cities that have enjoyed great appreciating markets are concerned they will not be able to build equity as rapidly as they did in real estate years past, in Texas, we have never seen the high appreciating markets, we only have seen in the past 10 years, slow and steady…If you plan to stick around in your home, you will see an appreciation of your property. NAR statistics show the average first time home buyer plans to stay in their home for 10 yrs. now as compared to last year’s survey of 7 yrs. Maybe people have become more realistic about how long it takes to earn equity or maybe they have more confidence in real estate assets they can see and feel than other market assets. 

As much as we discuss appreciation, truth be known: People buy for Life style…not investment. 

You couldn’t be in a better State or better City for selling real estate. The facts are crystal clear:

  • You will have the best year ever if you believe in psychology of real estate.
  • If you tell yourself it is a bad time – it will be.
  • If you tell yourself it is a great time – it will be.
  • But the facts say, “it has been and will be a great time for real estate”.


The Most Flourishing Market in the Nation and State with Annual New Home Closings is Houston. 
Facts from MetroStudy 11/08 

Investing in real estate assets right now is the best placement of your money; it is a better hedge than gold.
Dr. Dotzour, TX A&M Research Center 1/12/09 

You couldn’t be in a better State or better City for selling real estate than Houston Texas. 
TX A&M Research Center Data 1/12/09 

More than 2 million jobs were lost between Nov 2007 – Nov 2008 in the Nation; representing 1.2 % of its labor force. The Texas economy gained 222,900 jobs during the same time period; an increase in labor force of 2.1%. 
Real Estate Center RECON 1/13/09

Houston has the strongest job market in the US. 
Metrostud, Jan. 12, 2009

Texas has the strongest job market by State in the US exceeding the nearest competition by 1000%. 
MetroStudy, Jan. 2009. 

Houston’s inventory of homes is 5-6 months on average. This is the lowest average days on market in the US. 
TX A&M Research Center Data 1/13/09 

“We are half way through our recession in Texas. It started out last Jan. 2008.” 
Dr. Dotzour, TX A&M Research Center 1/13/09 
Dr. Gilliland, A&M Research Center Jan. 12, 2009 

Texas is the #2 Destination State for Retirees. 
Dr. Gaines, TX A&M Research Center Data 1/12/09 

Houston has the most affordable median home price of any MSA. 
TX A&M Research Center Data 1/12/09.
 

“The Texas Land Sales Market is short of Phenomenal.


Houston Real Estate Market – Single-Family – January 2009

February 11, 2009

Houston residential real estate now has the lowest inventory of single-family homes on the market since January 2004. In comparison to January 2008, Houston has seen a 20% drop in overall number of homes on the market and a 26% drop in new listings taken. New listings taken in January were the lowest ever taken since January 2002. This is good news amid a nationwide overabundance of homes on the market and an economic stimulus plan targeted at mitigating the rising tide of inventory. Houston never experienced a bubble and its’ economy is one of the strongest in the nation;

You couldn’t be in a better City for selling real estate than Houston Texas. TX A&M Research Center Data 1/12/09
More than 2 million jobs were lost between Nov 2007 – Nov 2008 in the Nation; representing 1.2 % of its labor force. The Texas economy gained 222,900 jobs during the same time period; an increase in labor force of 2.1%. Real Estate Center RECON 1/13/09
Houston has the strongest job market in the US. Metrostudy, Jan. 12, 2009
Texas has the strongest job market by State in the US exceeding the nearest competition by 1000%. MetroStudy, Jan. 2009.
Houston’s inventory of homes is 5-6 months on average. This is the lowest average days on market in the US. TX A&M Research Center Data 1/13/09
“We are half way through our recession in Texas. It started out last Jan. 2008.” Dr. Dotzour, TX A&M Research Center 1/13/2009
Houston has the most affordable median home price of any MSA.
TX A&M Research Center Data 1/12/09

Despite the good news amidst the bleak national economic scene, Houston got off to a slow start in January.

There were 2,827 single-family home sales, a figure 23% below January 2008.
Dollar volume for the month was $466,234,494, a 33% decline over last year.
Contracts initiated during January 2009 experienced 2,774 units or a 23% decline over last year.
The median sales price of sold homes in January 2008 was $127,850, representing an 8% decline over January 2008.
The average sales price was $164,922, or 13% lower than found in January 2008.
Home prices in Houston are not depreciating, there is simply a different demand in home prices classes.

Last year, million dollar home sales in January were up by 58% over the previous year and anything over $600,000 experienced double-digit increases. This year, those same home price classes have experienced double-digit declines as high as 61% for $600,000-$699,999 and homes over $1 million experienced a 57% decline over January 2008. This change in price class demand directly affects the average sales price overall. This year price classes under $60,000 are in positive territory whereas all others experienced a decline over January 2008.

What home price classes experienced the highest demand by number of sales in January 2008?

RANK
PRICE CLASS
# OF SALES 01/09
1$200,000-$249,999/220
2 $120,000-$129,999/182
3 $100,000-$109,999/163
4 $250,000-$299,999/156
5 $90,000-$99,999/153
6 $80,000-$89,999/148
7 $70,000-$79,999/145
8 $300,000-$399,999/143
9 $130,000-$139,999/134
10 $60,000-$69,999/128
11 $140,000-$149,999/124

It is interesting to note all price classes in the table above that are over $80,000 were in double digit decline last year. In short, Houston has experienced an aberration in sales by price class over the last few years. We see buyer demand returning to atypical price classes seen during normal Houston markets.
While normal is not as much fun as exuberance, any Houstonian gladly accepts our market as it is because it is currently the best that it gets.

Opportunities are ripe for Houston real estate. Houston does not need an economic stimulus package to stop home price depreciation or to absorb excess inventory, but Houston will benefit from national stimulus programs designed to do so. The biggest boost residential real estate could receive would be a boost in confidence and certainty about the future economy


Houston Hotness Index for November 2008

December 11, 2008

Index of market activity in the Greater Houston, TX areas. Katy is currently # 2 on this index.


Houston Real Estate Update – November 18

November 18, 2008

The Houston housing market continued to feel the effects of the troubled national economy in October and residual business interruptions caused by Hurricane Ike. New monthly data released by the Houston Association of REALTORS®  (HAR) reflects improvement from market performance in September, when Ike derailed thousands of real estate transactions. However, the number of property sales across the greater Houston area declined last month when compared to October 2007, with sales of single-family homes down 20.1 percent.

The average price of a single-family home dipped 1.6 percent last month to $194,607 from $197,751 in October 2007. That still marks the second highest average price for an October in Houston. At $142,000, the median price of a single-family home in October fell 2.7 percent. Year-to-date home prices are still up compared to 2007 and national figures show Houston continues to fare better than many other U.S. markets, some of which have experienced deprecations of as much as 40 percent.

Sales of all property types for October 2008 totaled 4,962, down 21.6 percent compared to October 2007. Total dollar volume for properties sold during the month was $943 million versus $1.2 billion one year earlier, a 22.9 percent decline.

“Houston remains the envy of real estate professionals around the country, who discussed their sales and pricing concerns with us at this month’s National Association of REALTORS® conference in Orlando,” said Michael Levitin, HAR chairman and principal of HTownRealty.com. “Month’s inventory in Houston is about half the national average, and on a year-to-date basis, prices here are up about three percent from 2007. Nonetheless, we must watch closely to see what further action the federal government may take to stimulate the economy, particularly on behalf of homeowners.”

October Monthly Market Comparison
The month of October brought Houston’s overall housing market disappointing results when comparing all listing categories to October of 2007. Total property sales and total dollar volume fell, as did average and median single-family home sales prices.

The number of available properties, or active listings, at the end of October fell 8.2 percent from October 2007 to 49,016. That’s 1,139 fewer active listings than September 2008, and is seen as an indication that inventory levels are balanced and that home prices should remain stable.

Month-end pending sales – those listings expected to close within the next 30 days – totaled 3,579, which was 21.5 percent lower than last year and suggests another likely sales decline next month. The month’s inventory of single-family homes for October came in at 6.3 months, the lowest level since March of this year. That compares to the October 2007 single-family homes inventory of 6.2 months.

 
ALL CATEGORIES October 2007 October 2008 PERCENT CHANGE
Total property sales 6,327 4,962 -21.6%
Total dollar volume $1,233,550,946 $943,444,534 -22.9%
Average single-family sales price $197,751 $194,607 -1.6%
Median single-family sales price $146,000 $142,000 -2.7%
Total active listings 53,407 49,016 -8.2%
Total pending sales 4,562 3,579 -21.5%
Months inventory* 6.2 6.3 +1.2%
* 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

At $194,607, the average sales price for single-family homes reached the second highest level recorded for an October in Houston, down 1.6 percent from October 2007 when it was $197,751. The overall median price of single-family homes in October was $142,000. That compares to the national single-family median price of $190,600 reported by the National Association of REALTORS®. These data continue to demonstrate the higher value and lower cost of living that prevail in the Houston market.

har-graph

Additionally, total October sales of single-family homes in Houston came in at 4,202, down 20.1 percent from October 2007 and the fourteenth straight monthly drop.

har-graph-21

HAR also reports existing home statistics for the single-family home segment of the real estate market. In October 2008, existing single-family home sales totaled 3,526, a 17.3 percent decrease from October 2007. At $175,392, the average sales price for existing homes in the Houston area fell 5.3 percent compared to last year. The median sales price of $130,000 for the month was also down 3.7 percent from one year earlier.

Townhouse/Condo Update

The number of townhouses and condominiums sold in October fell compared to one year earlier. In the greater Houston area, 421 units were sold last month versus 534 properties in October 2007, translating to a 21.2 percent decrease in year-over-year sales.

har-graph-3

The average price of a townhouse/condominium increased to $161,428, up 0.7 percent from one year earlier and the highest figure for the month of October. The median price dipped 1.5 percent to $129,000 from October 2007 to 2008. That figure is the second highest historically for the month of October.

Lease Property Update

Demand for single-family and townhouse/condominium rentals increased in October, continuing an upswing triggered by Hurricane Ike, as many sought short-term housing while engaging in storm-related recovery projects. Single-family home rentals rose 36.0 percent in October compared to a year earlier, while year-over-year townhouse/condominium rentals were up 34.1 percent.

Houston Real Estate Milestones in October

  • Second highest average single-family home sales price for an October ($194,607);

  • Highest average townhouse/condominium sales price for an October ($161,428);

  • Second highest median townhouse/condominium sales price for an October ($129,000);

  • Lowest month’s inventory of single-family homes since March 2008 (6.3 months).

  •  
    The computerized Multiple Listing Service of the Houston Association of Realtors® includes residential properties and new homes listed by 26,000 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 53,000 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 27,000-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 membership trade association in Houston, as well as the second largest local association/board of Realtors® in the United States.


    First Time Home Buyer Market Heating Up!

    November 11, 2008
    Houston and Katy market update:

    Overall, the October home sale market continued to show softness as the market pivoted away from some of the higher end homes.  Rentals once again were red hot – up 36% from this time last year with increasing rental rates. Inventory continues to decline the fewest homes available on the market for the last 18 months. This is good news, considering the smaller buyer pool we are currently seeing in our area.

    Sales to first-time homebuyers are at their highest in seven years. Over 40 percent of homes recently sold went to first-time buyers, according to a 10,000-person survey by the National Association of Realtors.
     

    Other survey findings include:

    • a record 32 percent of buyers found their houses first on the Internet;
    • almost 90 percent looked for information online during their home search;
    • almost 80 percent were concerned about commuting costs;
    • 43 percent said heating and cooling costs were very important factors when they made their purchase; and
    • more than 40 percent of sellers had to offer incentives to buyers, including assistance with closing costs and home warranty policies.

    What does this mean for Katy, TX? It means that homes in the lower spectrum price ranges: $ 250,000 and under are experiencing the most brisk activity in our area. Our current months of inventory of the South Katy area is 4.6 months. This means if homes sold at last years’ pace, it would take this long to sell all available homes if no more homes were added to the market. Our current average days on the market is running 70 or more days – and this will differ when we break down the various price ranges. Homes on the high end are experiencing over 9 months inventory – and that is a lot of homes to compete with. Custom homes over $ 1 million have over 16 months of inventory and must be very competitive on price and ready to wait for a very special buyer.

    Our market is so diverse and so fast paced, market information changes constantly. If you would like to receive my video newsletter from Realty Times, post your request here or email me at christi@christiborden.com.