The Houston real estate market continues down a path of stability. With home prices seeming to hold as August saw another increase in the Median home sale price. The drop in the average home sale price for the Houston real estate market coupled with an increase in the Median home sale price lays credit to the idea that sales in luxury market continue to be slow. If we continue to see first time home buyers entering into the Houston real estate market we should slowly see luxury home inventory burn off. It will be interesting to see whether the federal government continues the $8,000 federal tax credit after it expires the end of November. If the federal government does let it expire we will get an interesting case study in whether offering these incentives really has an impact on consumer behavior. It is my assumption that it does. If you would like to read the entire report released by HAR you can find it directly below.
Complete HAR Report Of Market Data For August 2009:
| The Houston real estate market showed continued signs in August of attempting to break free from the downward trend in property sales that first began in September 2007.Boosted by seasonal summer home buying, including an influx of first-time home buyers taking advantage of the federal government’s soon-to-expire $8,000 tax credit, the August volume of single-family home sales across the greater Houston area slid 10.1 percent compared to August 2008, according to new monthly data compiled by the Houston Association of REALTORS® (HAR). That follows July’s 6.1 percent (corrected) drop, which was the smallest decline since the market downturn began in September 2007. Total property sales tumbled 11.0 percent in August on a year-over-year basis following last month’s 5.1 percent drop, which was the smallest rate of decline since November 2007 when it was off by 10.2 percent.
At $160,880, the August single-family home median price—the figure at which half of the homes sold for more and half sold for less—rose 0.6 percent from one year earlier to the third highest level of 2009. That’s the fourth straight monthly increase in the median price. The average price of a single-family home in Houston dipped 4.2 percent last month to $213,396 compared to August 2008. That represents the third highest average price of the year. Foreclosure property sales slowed again in August, making up 16.7 percent of all single-family home sales in the Houston area compared to 18.3 percent in August 2008 and the 12-month peak of 34.0 percent in January of this year. The median price of August foreclosure sales reported in the Multiple Listing Service (MLS) declined 7.5 percent from $93,000 to $86,000 on a year-over-year basis. Sales of all property types in Houston for August totaled 5,904, off 11.0 percent compared to August 2008. Total dollar volume for properties sold during the month was $1.0 billion versus $1.2 billion one year earlier, representing a decline of 13.9 percent. “We knew going in that recovery would be a gradual process, however overall indications continue to show the Houston real estate market on strong footing, particularly when it comes to price appreciation,” said Vicki Fullerton, HAR chair and broker of record at RE/MAX of The Woodlands & Spring. “Our REALTOR® members report that many first-time homebuyers have been taking advantage of the $8,000 tax credit, but time is running out with that incentive set to expire on November 30.” The number of available properties, or active listings, at the end of August fell 12.9 percent from August 2008 to 46,023. That is 575 less active listings than one month earlier, in July 2009, and considered an indicator of balanced housing inventory levels. Month-end pending sales—those listings expected to close within the next 30 days—totaled 3,901, which was 9.3 percent lower than last year. While that most likely means sales will be down again in September, the effects of Hurricane Ike on the local real estate business one year ago make it difficult to forecast. The month’s inventory of single-family homes for August came in at 6.5 months, down from 6.7 months one year earlier, and remains much healthier than the national month’s inventory of single-family homes of 9.4 months, reported by the National Association of REALTORS® (NAR). |
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| * 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 UpdateAt $160,880, the median sales price for single-family homes reached the third highest level of 2009, up 0.6 percent from August 2008, when it was $159,900. August also marked the fourth consecutive monthly increase in the median price. The national single-family median price reported by NAR is $178,300, illustrating the continued higher value and lower cost of living that the Houston market offers consumers. The average price of single-family homes in August was $213,396, slipping 4.2 percent from one year earlier. | ||||||||||||||||||||||||||||||||
August sales of single-family homes in Houston totaled 5,058, down 10.1 percent from August 2008, and accounted for the 24th consecutive monthly drop. However, on a month-over-month basis, that volume is the third highest of 2009, and the 10.1 percent decline is the second smallest fluctuation of the year following July’s 6.1 percent (corrected) slide.
HAR also reports existing home statistics for the single-family home segment of the real estate market. In August 2009, existing single-family home sales totaled 4,328, an 8.3 percent decrease from August 2008. At $155,000, the median sales price for existing homes in the Houston area rose 4.0 percent compared to last year. The average sales price of $202,477 for the month dipped 1.6 percent from its August 2008 level.
Townhouse/Condo Update
The number of townhouses and condominiums sold in August fell compared to one year earlier. In the greater Houston area, 452 units were sold last month versus 555 properties in August 2008, translating to an 18.6 percent decrease in year-over-year sales. However, that still represents the third highest month-over-month sales volume of 2009.
The median price of a townhouse/condominium fell 10.3 percent year-over-year to $122,000. The average price dropped 9.7 percent to $153,184 from August 2008 to August 2009.
| Lease Property UpdateDemand for single-family home rentals rose slightly in August, up 1.2 percent compared to a year earlier. Year-over-year townhouse/condominium rentals climbed 5.9 percent. Houston Real Estate Milestones in August |
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| The computerized Multiple Listing Service of the Houston Association of Realtors® includes residential properties and new homes listed by 23,000 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.) |
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September 26th, 2009 at 7:32 am
You got to love Texas. We have always been the most stable market. Glad to see Houston is doing as well as Dallas
October 2nd, 2009 at 7:22 am
First of all, great article. Very informative and well-oriented.
The topic of foreclosure statistics is interesting. In particular, when we refer to average prices and percentage of overall market sales, we should also consider the effect of the “Phantom Inventory”.
Banks (big and small) across the country are holding back foreclosed homes from the marketplace creating a commodity effect or “Phantom Inventory” and manipulating the supply portion of the supply/demand equation.
Despite the fact that real estate investors may see this as an OPEC-style tactic to manipulate prices (in the bank’s favor), the fact is that the banks need to recuperate some portion of the original balance of the note. A surplus of houses would certainly dilute prices, especially in healthier markets like Dallas. Furthermore, a glut of houses on the market may lead to a lack of adequate credit facilities and worsen the “Credit Crunch”.
The reason for the Credit Crunch is that reinsurance firms are not sufficiently capitalized to provide the insurance that banks and lending institutions seek to cover systemic risk. Additionally, the lower bond ratings ultimately reduce the value of the bonds held in Mortgage Backed Security (MBS) investment portfolios. Lower bond values means a weaker ROI for the reinsurer.
If the access to reinsurance is restricted for large credit facility packages, more capital needs to be raised to cover those positions, thus increasing the cost of the insurance to cover the risk factor.
The net result is that companies like AMBAC, SwissRE, and MBIA have a lower market cap and pay out the claims from toxic assets from 2007, 2008 and now retreat to safer investments.
In summary: to the consumer, all they see is that it is more difficult to get a loan and they may not understand why.
October 9th, 2009 at 12:01 am
I agree. It will be really interesting to see what happens to the numbers (especially for first-time buyers) when the November 30 deadline is reached. I’ve heard that recently there’s been a strong push by some government officials to renew the tax break again for 2010. If it doesn’t renew, then I guess we’ll get a better picture of how effective it was.
October 9th, 2009 at 12:18 am
Thank you for taking the time to post such a meaningful comment. I agree with many of your points. Shadow inventory is a major concern of mine. I feel this class does not just hold those homes the banks have not foreclosed on but also a number of homes they have foreclosed on. I think the banks will likely manage and move this inventory well but there is another component to shadow inventory that few people discuss. That being the number of home owners that would like to sell but have chosen not to at this time. I think this number could be very large but difficult to quantify.
October 10th, 2009 at 2:28 am
I wonder if local campaigns by realtors directed at those home owners who want to sell but choose not to know would work? Most people are either downsizing or trading up when they sell a home, right? If you can show them some numbers that if they wait, for example, their property price may go up, but so will the property they inevitably move into. Yeah, it’s not that simple; you have to take payments into account, but it was just a thought I had.
November 2nd, 2009 at 11:30 pm
Wow, Houston sounds like an incredible market compared to the rest of the markets in the country. Your use of graphs with your information is excellent for consumers in your market. Great article!