The Houston realty market welcomed 2014 with surprising vigor, recording the second-best January for home sales in Houston real estate history.
Coming out of the always-slow holiday season, a total of 3,957 single-family homes were sold in January, a two percent increase over January of 2013, according to the Houston Association of Realtors. The sales total last month represented the second-highest January on record, topped only by January 2007.
January realty activity often provides an accurate glimpse of what lies ahead for the rest of the year. The prevailing market trends are higher prices, brisk sales and an extremely tight supply of homes for sale. Last month’s average sales price was the highest ever for a January.
Houston, along with Dallas and Chicago, reported the biggest declines — by far — in the inventory of homes for sale last year.
“January is traditionally a slow time of year for home sales, but throw a depleted supply of inventory into the mix and you get exactly what the Houston market experienced last month,” says Houston Association of Realtors chair Chaille Ralph with Heritage Texas Properties. “Until more housing inventory hits the market, we are likely to continue seeing lower sales volume and higher pricing than we did throughout 2013.”
The inventory of homes for sale remained at 2.6 months supply, the same all-time low that was reported in December. A year ago, the inventory stood at a 3.6-month supply.
With inventory this low, buyers often have to move quickly and pay more when a house they like finally comes on the market.
“Buyers watch the computer, hour-by-hour, minute-by-minute, waiting for something to come on the market,” says Amy Bernstein of Bernstein Realty. “Inventory is incredibly low.”
Houston, along with Dallas and Chicago, reported the biggest declines — by far — in the inventory of homes for sale last year, according to ZipRealty.
Quick Home Buys
In many desirable neighborhoods, would-be home buyers miss out on the home they want because another buyer gets their first or offers to pay more. Many homes sell over list price as bidding wars erupt over great houses in popular neighborhoods.
Bernstein said 10 buyers put in offers for a house she sold recently. The house was listed for $1.3 million and it eventually sold for about $1.4 million — some $100,000 more than asking price.
The median sales price in January was $177,000, the highest price level ever for a January, the Houston Realtors association reported.
"People who have discretionary income are willing to invest in real estate and real estate in Houston, Texas is a great investment right now.”
Houston’s strong jobs growth energized the local housing market significantly since the recession and many energy companies are relocating employees to Houston. The supply of homes is also restricted because home building activity had been slow to pick up since the economic downturn. In addition, many buyers had locked in super low mortgage rates by refinancing a couple of years ago when rates dropped below four percent, the lowest rates in 50 years, and they are hesitant to part with those favorable home loans and put their homes on the market.
These conditions super-heated the local housing market and Houston recorded all-time record home sales in 2013. Houston also led the nation in housing starts last year. This year’s local housing may not surpass last year by huge margins, but many expect 2014 to be better than last year.
The upper-end home was also strong in January. The Realtors association reported exceptionally heavy sales activity for homes priced between $200,000 and $600,000. Sales of homes priced at $500,000 and higher were up 45 percent over January of last year.
“We are as busy as we’ve ever been,” says Cheri Fama, president of John Daugherty Realtors, which specializes in the luxury market. “People who have discretionary income are willing to invest in real estate and real estate in Houston, Texas is a great investment right now.”
Ralph Bivins, former president of the National Association of Real Estate Editors, is founding editor of RealtyNewsReport.