Houston Housing Market

Overall, inventory for the Houston housing market posted 6.0 months of inventory as of March 6th, 2009, which is slightly up from the 5.8 months seen at the beginning of February. An inventory level of 6.0 months is still considered to be at a neutral point. This means that neither sellers nor buyers have the upper hand when it comes to negotiations. The slight increase in inventory for the entire Houston metro area seems to be mainly due to a significant increase in homes coming onto the market in preparation for the selling season as total number of sales showed a slight increase as well. The global perspective of the Houston housing market does not give the whole picture of the status of the market. In fact, in the low end of the market, sales are way up and inventory is way down, however, the high end market has seen sales fall off further and inventory has again spiked for the third consecutive month.

Total Breakdown of Activity For The Houston Housing Market

Following the close out of February, the $80,000 and below price point had just 3.6 months of inventory as of March 6th, 2009, which is a major reduction of inventory compared to the 4.1 months of inventory posted at the end of January. The drop in housing inventory is accompanied by an increase in total home sales for the third month in a row. These occurrences are consistent with a sellers’ market and have likely been driven by investors scooping up low priced homes that make for excellent rentals. The credit markets’ tightening has boosted the rental market leading to a 15% increase in rents over the last year.
The $80,000 to $150,000 price point once inundated by foreclosures has continued to hold strong keeping the improvements in inventory seen over the last six months. This price point posted 5 months of inventory as of March 6th 2009, which is in keeping with the 5 months posted following the month of January. Most economists will tell you that inventory levels between 5-6 months of inventory are considered a neutral market, which means that neither buyers nor sellers have an advantage in negotiations. Total active listings increased during this period as did total sales which is really good news and shows a great deal of strength for the price point.
Inventory for the $150,000 to $300,000 price point moved up from 5.7 months of inventory to 6.0 months following the month of February 2009. This level of inventory is considered a neutral market where neither sellers nor buyers have the upper hand. The price points above this mark have not fared well over the last 6 months.
Inventory was up a great deal for the $300,000 to $700,000 price range, logging 8.5 months of inventory, as of March 6th 2009, in comparison to 7.9 months of inventory at the end of January. In addition, total sales were down slightly, while more active listings came onto the market. This will likely not bid well for sellers in the near term, as buyers are having increased negotiation power in transactions. These include getting the seller to make repairs, being able to get sellers to pay at least part of the buyer’s closing costs and in some transactions, reductions in price. I expect that in the near future, we will see modest price declines across this market price point.
The $700,000 and above price category has now had three straight months of large increases in inventory. This price range posted 16.7 months of inventory up which is a substantial increase from the 15 months of inventory posted following the month of January. This increase shows a deep buyer’s market, where we will likely see more price declines for this price range over the upcoming months.

Houston Homes Market Breakdown For 80,000 And Below

Houston Homes Market Breakdown For 80,000-150,000 Price Range

Houston Homes Market Breakdown For 150,000-300,000 Price Range

Houston Homes Market Breakdown For 300,000-700,000 Price Range

Houston Homes Market Breakdown For 700,000 And Above

Last months’ trends continue with the lower price ranges showing strength, despite these troubled times, and the higher price ranges getting weaker. They are moving very much along the lines I had anticipated six months ago, however, they just took a little longer to come into fruition than I had thought. That I can only explain with the strength of the Houston area economy. The growing inventory in the higher price ranges is likely due to two things. The first being potential buyers having a difficult time getting jumbo loans. Jumbo loans are loans in excess of $417,000. The second factor is that many consumers are minimizing their consumption. Essentially, a lot of people that would have bought homes in this price range are playing it conservative and purchasing a less expensive home. I expect this trend to continue, and so we will see notable drops in the average and median home sale prices. Our current market circumstances do provide unique opportunities for certain types of buyers. First time home buyers have a great opportunity in front of them, as they can get up to an $8,000 tax credit just for buying a house, interest rates are at historical lows, and the below $300,000 price point is holding stable with no current signs of notable price drops. The move-up buyer with a home priced below the FHA loan limit of $271,500 has a great opportunity as they will likely get top dollar for their home and be able to negotiate a great deal for themselves on their new purchase. There is one group that I would suggest stay out of the market right now, and that is those who are looking at downsizing. It is highly likely that they will take it in the shorts a bit due to having to grant concessions during the sale of the home and will have little negotiating power with their new purchase. I think if you have a more expensive home and you do not have to sell right now don’t. You will only cause yourself heartache if you try. I would suggest waiting until the market comes back around.
Information contained in this post was acquired from the Houston Association of Realtors via the multiple listing service database and archive. Data should be considered reliable, but is not guaranteed to be accurate.
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This entry was posted on Friday, March 6th, 2009 at 8:32 am and is filed under Houston Housing Market. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.