Economy Pings Houston Home Sales

HOUSTON – (By Michelle Leigh Smith for Realty News Report) – Houston home sales, under the weight of higher mortgage rates and wild inflation, slipped in June from the torrid pace that has amazed Houston Realtors in recent years.

The Houston Association of Realtors reported 9,728 single family homes were sold in the Houston area in June, an 8.6 percent decline from June of 2021.

Although last month’s sales were off, June 2022 was still the fifth best month for home sales in the history of Houston realty.

And the median price of Houston home hit an all-time record-high in June – $355,000, up over 13 percent from a year ago. By comparison, a decade ago, in June of 2012, the median home price was $170,000.

Despite some signs and headlines about a slowing market, the Houston market still sizzles for homebuyers, with new records set for speed of sales in some markets. And the Houston home sales totals in June were up 1 percent over sales in May.

“With higher interest rates (and increasing for sale inventory), we have noticed some buyers reassess their price range and urgency while touring and making offers on homes recently,” says Mike Brombacher, Owner/Broker at Brombacher & Company. “Well-located and reasonably priced listings are still receiving multiple offers, but fewer contracts than several months ago. It seems some buyers are still waiting on more inventory and/or lower interest rates. Rentals throughout town are in high demand and often landlords are receiving multiple applications with some tenants offering higher than asking price for leases.”

Noticeable Decline in Homebuyer Traffic in June

“After the latest interest rate hike on June 15, 2022, there was a noticeable decline in buyer traffic, scheduled showings and contracts,” says Blake Hillegeist of Blake Hillegeist Real Estate. “So far in July, I have noticed more scheduled showings and more buyers requesting help to find a new home. Homes seem to stay on the market for longer periods of time. I am getting email flyers from Houston, Austin and Hill Country agents promoting their listings which tells me that the Houston, Austin and the Hill Country real estate markets have slowed from their frenzied pace. To most buyers this is a welcomed change. In my opinion we are heading towards a more normal real estate market,” Hillegeist says. “I feel positive about the Houston real estate market through the end of year 2022.”

In June, a majority of Houston homebuyers paid above the original listing price because of high demand, the Houston Association of Realtors reported.

“I have been in real estate for 25 years and I have never seen anything like this,” says Kathy Matt of Elite Texas Properties. “The market is still strong and there is still a shortage of listings for buyers to consider in northwest Houston. I’m seeing multiple offers, still the higher interest rates have hurt the first-time buyers somewhat. They have come down in the past two weeks so that is helping.”

More Consistency in the East End

“July inventory and price has been consistent with market,’ says Loren Miner, Principal at Eastwood Realty. “Buyers have been wary as interest rates have ticked up. We are seeing this affect the higher price markets, as 1-2 percent increase in rates will change monthly payments more than lower priced markets. People still need to buy homes & people still want to move. We see the change as buyers are more particular on what they would like to buy, creating higher days on market than before.”

Some buyers Lack Motivation

“I expect July home sales to be a bit slower than in the past several months.,” says Amanda Anhorn, Greenwood King Properties. “The buyers are tired and interest rates are rising. On top of the hot weather, buyers are simply not motivated to go “house shopping”.

“I think a recession is in the cards but there have been many recessions where the real estate market did not crash,” says Lucie Ogdee of Keller Williams Realty Metropolitan. “I don’t expect a crash this time because the supply of homes is not equal to the demand. We will see a deceleration in the annual price appreciation of houses and a return to the normal 4 percent appreciation. I welcome a return to a normal market because a lot of buyers gave up in the past two years with so much competition. As for Bellaire, listings continue to be very low. Also, many people took advantage to refinance between 2.25% for 15-year mortgages to 2.75-3 percent for 30-years and are not motivated to sell.”

What are the July Houston Housing Market Predictions?

“Since 2020 low inventory, market competition and a massive price upswing have battered buyers, but now rising mortgage rates have made it even harder to purchase a home for some of those buyers,” says Courtney Burns, President and Broker at Houston Realty.

“What does this mean for some? Higher mortgage rates mean some buyers can no longer afford homes in specific price ranges. Now even a modest single-family home could cost as much as a luxury home did a few years ago. Some buyers are stuck either waiting for more inventory or moving to a more affordable area; and there are many who are hoping prices will drop, however I don’t believe that will happen anytime soon; the Houston real estate market is just as hot as it was last summer.

“If you’re waiting for home prices to suddenly plummet to what they were in the past, you’re making a mistake,” she notes. “If you’re ready to buy, make that choice a very considerable option. Don’t wait as prices aren’t headed dramatically downwards to what we have paid in the past. Pricing may dip a bit, but there’s no significant cliff dive that’s going to happen.”

“The economics of home-ownership in Houston began to shift in the early ’10s,” says Patrick Jankowski, Senior Vice President of Research in his latest report for the Greater Houston Partnership. “The cost of labor and materials rose. Land suitable for development became more expensive. And developers faced new regulatory hurdles after Hurricane Harvey. All the while, an influx of new residents into the region, 1.1 million between ’10 and ’19, demanded more housing.

“The law of supply and demand kicked in and home prices began to rise faster than household incomes. From ’10 to ’19, the median price for a home sold through the Houston Association of Realtors jumped from $153,000 to $259,000, a 69.3 percent increase. The annual median household income for the region rose only $15,250, a 28.3 percent increase, over the same period.”

File: Economy Pings Houston Home Sales