Houston’s home market is making a comeback.
It’s not a smooth take off. There have been bumps and stutters. The statistics are mixed. But some very positive sales stats are being reported by the Houston Association of Realtors.
Home sales were up 17 percent in July. Home prices hit a record high this summer. And the inventory of homes for sale is about 10 percent smaller than last year.
“We are in the early part of a recovery,” says Wayne Murray of Weichert Realtors – Wayne Murray Properties, which just opened its fourth office in the Houston area. “We have consistently stayed above last year.”
"Our open houses are well attended," Mueck says. "The people who are there are not just viewing home décor. They are people who wish to buy and there is an abundance of them.”
Houston, with some of the strongest economic fundamentals in the nation, added 65,000 jobs over the last year, as the robust oil and gas industry expanded. Thousands of energy company employees have been relocated to Houston, a significant boost to the housing market.
The bottom line: home sales in Houston this summer are up sharply from the summer of 2010.
“Our phones have been ringing much more,” says Robin Mueck, owner of Heritage Texas Properties. “Our open houses are well attended. The people who are there are not just viewing home décor. They are people who wish to buy and there is an abundance of them.”
Upper End is Hot
The hottest part of the market, Mueck says, is the upper-end of the market. Energy company executives, doctors, and buyers with entrepreneurial wealth have been buying the expensive homes, she says.
The Houston Association of Realtors reported home sales for homes priced above $500,000 were up 25.7 percent in July, compared to a year earlier.
By the way, Mueck has spotted a new wrinkle in the doctor market. As hospitals have been expanding in the distant suburbs, more doctors have been shopping for million-dollar homes in outlying areas.
Still, the real estate industry has been hesitant to declare that the market has taken a full upward turn.
As hospitals have been expanding in the distant suburbs, more doctors have been shopping for million-dollar homes in outlying areas.
With sales in July up 17 percent over last July, typically there would be more hubbub and hype about the market strength. A 17-percent increase is an eye-popping figure. But realtors have tamped down any euphoria over the statistics because last summer was a nuclear disaster. Home sales plummeted after the expiration of the home buyer tax credit in the spring of 2010. So even though home sales this July were up sharply over July 2010 — you have to remember the summer of 2010 was truly abysmal.
The market has suffered some blows this summer, mostly as a result of gloomy national economic news. This summer’s federal budget debt ceiling battle in Washington, D.C. and Standard and Poor’s downgrade of the nation’s credit rating, injected a lot of fear into would-be buyers, Mueck says. The federal debt controversy impacted home sales for at least 45 days, she believes.
“The headlines shake people’s confidence,” Mueck says. “But the local reality is Houston, Texas has fared much better than the rest of the country.”
Even though the sales of the summer of 2011 are good, they still fall far short of the sizzling hot market in the summers of 2006 and 2007. A total of 5,962 properties were sold in July 2010, compared to the 8,114 properties in July 2007 at the height of the boom, according to the Houston Association of Realtors.
“I think the market is steady and we are seeing some appreciation in certain areas,” says Shad Bogany, owner of ERA Bogany Properties. Homeowners should wait longer, if they can, before putting their home up for sale, because the market will be improving, Bogany advises.
One segment that remain tough is existing suburban homes that are near new homes being sold by builders, Bogany says. Home builders provide some tough competition.
Home Building Tough
The home building business remains slow. Houston-area builders started 5,100 homes in the second quarter, a 13 percent decrease from a year earlier, according to Metrostudy, a home building consulting firm. However, builders are working off their inventory and the number of finished vacant homes was down 16 percent in the second quarter.
Only a few new communities have been started in the last year, says housing consultant Kent Dussair of CDS Research. But developing land is a long-term process and developers are beginning to pull together plans for starting new communities, he says.
Extremely low mortgage rates, with 30-year home loans below five percent, have been encouraging people to buy houses. But lenders have much more strict lending standards and it’s more difficult for buyers to get approved for home loans. What good is a low rate if you can’t get a loan?
Despite all the challenges, the Houston home market does appear to be rebounding on its fundamentals. The national economy could slip into a full-bore recession and pull Houston housing into another decline and that would be disastrous for everybody.
But Houston’s residential market appears to have turned the corner and it may snap back faster than expected. At the very least, the summer of 2011 was a lot better than last summer.
Ralph Bivins, former president of the National Association of Real Estate Editors, is founding editor of RealtyNewsReport.com.