Following my reading of the Houston real estate market report for April I was left once again a bit disappointed with the depth in which they covered the statistics. Once again HAR tried to blame the drop in the median and average home sale prices for the Houston real estate market on the number of foreclosures. In this months report there is more evidence that this cannot explain away the changes in the market place, but we will get to that later. Two other components that are actually positive notes did not get covered well in Aprils report either, the first of those being the fact that the drop in home sales in March of 2009 when compared to March of 2008 was only 18.9 percent and the drop between the respective years for Febuary showed a decline of 25.9 percent. Next HAR did not cover the fact that we saw a 26.1 percent increase in sales when comparing Febuary 2009 to March of 2009 when there was only a 20.7 percent increase when comparing those months last year. These two different statistical comparisons suggest that the decrease in home sales is falling off. Meaning that the downward trend in total number of sales is decreasing. In fact the second set of statistics suggests we maybe poised to see an increase in home sales.
Now to discuss the largest flaw I noted in HAR’s report was that they tend to be trying to shift all the blame for the drops being seen in the median and average home sale price on foreclosures. Two pieces of data make it obvious that this is not true and that HAR is either ignoring or covering up the fact that there are substantial troubles in the luxury home market above $700,000. The overlooked statistics are the fact that total sales are down 18.9 percent when compared to last year this time, but total dollar volume is off by 23.2 percent. This fact suggests one of two things, either Houston saw a drop in home values or a major shift in consumer buying habits. There is more evidence for the later when we look at the inventory change for the luxury market. Our last inventory report noted 18.8 months of inventory in the $700,000 and above market place. The inventory for this price point as of today was 19.5 months of inventory. That jump in inventory shows that Houston consumers are buying far fewer luxury homes priced above $700,000. This on its own may account for the fact that the total revenue of all properties sold decreased more than the total percentage decrease in home sales. However, I find it likely that we also have seen price declines in this market sector as well since the 19.5 months of inventory far out strips what is considered by most economist to be an evironment for price drops. You can read the entire HAR Houston housing market report below and come to your own opinion of what is occuring in the market place.
Complete HAR Houston Real Estate Market Press Release:
Declines in the sales and pricing of homes throughout the greater Houston area eased in March, matching a trend that the Federal Reserve noted in several markets around the country in its Beige Book survey released last week. Overall March property sales fell 18.9 percent and sales of single-family homes dropped 16.1 percent versus March 2008, according to new monthly data prepared by the Houston Association of REALTORS® (HAR). However, from February to March of this year, overall property sales volume increased 26.1 percent while sales of single-family home rose 27.8 percent as we enter the spring and summer seasons, a period that traditionally produces higher sales volume than the fall and winter months.
At $145,000, the March single-family home median price – the figure at which half of the homes sold for more and half sold for less – fell 4.4 percent year-over-year, but still attained its highest level of 2009. When foreclosures are removed from the analysis, the median price of traditional single-family homes was flat at $168,000. The average price of a single-family home in Houston dropped 6.0 percent last month to $193,880 compared to March 2008. The median and average price declines mark the smallest drop since levels first turned negative last October.
While sales of foreclosure properties, which typically sell below market prices, continued to weight home prices last month, the effect was milder than in previous months. In March 2009, foreclosures made up 24.5 percent of all single-family home sales in the Houston area compared to 34.0 percent in January and 28.0 percent in February. The median price of March foreclosure sales reported in the MLS tumbled 11.3 percent from $94,700 to $84,000 on a year-over-year basis.
Sales of all property types in Houston for March totaled 5,022, off 18.9 percent compared to March 2008. Total dollar volume for properties sold during the month was $940 million versus $1.2 billion one year earlier, a 23.2 percent decline.
Demand for rental properties rose again in March, with leases of single-family homes up 4.3 percent on a year-over-year basis and leases of townhouses and condominiums up 26.6 percent. Leases of high rise units rose 82.0 percent, a figure that tends to be more variable because of the comparatively small number of units involved.
“It’s too soon to predict exactly when the Houston real estate market will be in healthier territory, but the recent moderation in sales and pricing trends is an encouraging sign,” said Vicki Fullerton, HAR chair and broker of record at RE/MAX of The Woodlands & Spring. “For consumers with good credit, this is an outstanding time to buy a home in the greater Houston area because mortgage interest rates are at 50-year lows and there’s a plentiful supply of reasonably priced housing inventory. First-time home buyers also have until December 1st to take advantage of an $8,000 tax credit that does not require repayment,” she added.
March Monthly Market Comparison
The month of March brought Houston’s overall housing market negative results when all listing categories are compared to March of 2008. Total property sales and total dollar volume fell, as did average and median single-family home sales prices.
However, the number of available properties, or active listings, at the end of March fell 12.4 percent from March 2008 to 45,768. That is 1,021 more active listings than February 2009 and regarded as an indication that inventory levels remain balanced.
Month-end pending sales – those listings expected to close within the next 30 days – totaled 3,711, which was 19.1 percent lower than last year and suggests the likelihood of a decline in sales when the April numbers are compiled. The month’s inventory of single-family homes for March came in at 6.1 months, down 3.6 percent from one year earlier. The national month’s inventory of single-family homes remained flat at 9.7 months, according to the National Association of REALTORS® (NAR).
CATEGORIES MARCH 2008 MARCH 2009 PERCENT CHANGE
Total property sales 6,192 5,022 -18.9%
Total dollar volume $1,225,075,122 $940,261,434 -23.2%
Average single-family sales price $206,301 $193,880 -6.0%
Median single-family sales price $151,600 $145,000 -4.4%
Total active listings 52,270 45,768 -12.4%
Total pending sales 4,585 3,711 -19.1%
Months inventory* 6.3 6.1 -2.8%
* 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 $193,880, the average sales price for single-family homes dropped 6.0 percent from March 2008, when it was $206,301. However, the figure is at its highest level since last September. The median price of single-family homes in March was $145,000, off 4.4 percent from one year earlier, and equal to its December 2008 level. The national single-family median price reported by NAR is $164,600, illustrating the continued higher value and lower cost of living that prevail in the Houston market.
March sales of single-family homes in Houston totaled 4,355, down 16.1 percent from March 2008, and accounted for the 19th consecutive monthly drop. Year-over-year sales of single-family homes priced at $80,000 and below rose 20.1 percent in March, buoyed by foreclosure-related transactions.
HAR also reports existing home statistics for the single-family home segment of the real estate market. In March 2009, existing single-family home sales totaled 3,624, a 13.4 percent decrease from March 2008. At $178,477, the average sales price for existing homes in the Houston area fell 5.5 percent compared to last year. The median sales price of $133,000 for the month was down 4.9 percent from one year earlier.
Townhouse/Condo Update
The number of townhouses and condominiums sold in March fell compared to one year earlier. In the greater Houston area, 358 units were sold last month versus 547 properties in March 2008, translating to a 34.6 percent decrease in year-over-year sales.
The average price of a townhouse/condominium dropped to $159,733, down 10.4 percent from one year earlier. The median price dipped 4.7 percent to $134,000 from March 2008 to March 2009.
Lease Property Update
Demand for single-family rentals increased again in March. Single-family home rentals rose 4.3 percent last month compared to a year earlier. Year-over-year townhouse/condominium rentals rose 26.6 percent and rentals of high rise properties leapt by 82.0 percent. The latter figure has a tendency to be more variable because of the comparatively small number of transactions in that housing category.
Houston Real Estate Milestones in March
At $193,880, the average price of a single-family home reached its highest level since September 2008;
At $145,000, the median price of a single-family home rose to the highest level of 2009;
Sales of single-family homes priced at or below $80,000 jumped 20.1 percent, driven largely by foreclosure activity;
Single-family home rentals rose 4.3 percent;
Rentals of high rise units increased 82.0 percent;
Month’s inventory of single-family homes dipped from 6.3 to 6.1 months compared to the national average of 9.7 months;
Active listings fell 12.4 percent, representing a generally balanced supply of housing inventory.
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.)
