Real Estate Rumblings
Houston's real estate dilemma: Home prices hit a record high, but there just aren't enough houses to sell
Houston home prices hit a record high in April as an exceptionally low inventory of homes for sale prompted many buyers to engage in bidding wars and make higher offers.
Houston’ average price of a single-family home in April increased 7 percent to $270,505, up from $252,725 a year ago, says the Houston Association of Realtors. The median price — the midpoint where half the homes sold for more and half for less — rose 5.4 percent from a year ago to $195,000.
The Houston Association of Realtors says home prices have never been higher in the Bayou City.
Single-family home sales were up slightly in April, with 6,438 single-family homes sold, up 0.3 percent from the sales total in April of last year, the association reports.
Sales could be much stronger considering the fundamentals: Houston’s strong job growth and a continuation of low mortgage interest rates.
“It’s still extremely hot,” says Shad Bogany of Better Homes and Gardens Gary Greene. “Anything that his the market is selling very quickly right now. I am getting multiple offers.”
A home that remains listed for sale for 90 days or more is probably a house in poor condition or one that is extremely overpriced, Bogany says.
The supply of homes for sale has remained at 2.6 months of inventory since December — lower than it’s been in more than 30 years. A year ago, the Houston had a 3.4-month supply in April 2013. On a national basis, supply of inventory is 5.2 months of inventory.
Sales could be much stronger considering the fundamentals: Houston’s strong job growth and a continuation of low mortgage interest rates.
The lack of inventory is putting a lid on home sales, says HAR chair Chaille Ralph with Heritage Texas Properties. “We also believe consumers may be waiting for more homes to hit the market in the price range they can afford before taking action.
"Many continue to rent in the interim, as reflected in our April report showing a further increase in single-family and townhome/condominium rentals.”
Some homeowners have been deciding against putting their homes up for sale because they refinanced their homes when rates were around 3 percent. Letting go of those favorable mortgage rates can be hard to do.
Experts say an increase in home building may be the only way to solve the low inventory problem. Local builders have faced a shortage of labor and lots to build on. The homebuilding market was nearly dismantled during the recession and tradesmen moved into other lines of work and land developers did not start many new communities, from around 2008 to 2011. Getting the industry ramped up again cannot happen overnight.
However, Houston area home builders are getting into high gear in 2014. Houston area home starts are running 9 percent ahead of last year’s pace, according to Metrostudy.
“Builders started construction on 7,146 new homes the first quarter, the fastest pace since the third quarter of last year,” says David Jarvis, regional director of Metrostudy’s Houston Market. “Houston hasn’t seen this many new homes started in the first quarter of the year since 2007.”
The low inventory issue is the main thing controlling the housing market right now. Until that situation changes, Realtors will be singing the same tune .
Ralph Bivins, founding editor of Realty News Report, is a past president of the National Association of Real Estate Editors.