HOUSTON – (By Michelle Leigh Smith for Realty News Report) – The Houston real estate market reached new highs in 2021 as more than 100,000 homes were sold and home prices hit a record high.
Houston’s median single-family home price was $319,000 in December up 17.2 percent over the median price of $272,125, the Houston Association of Realtors reported.
But despite the rising prices, homes sold briskly, even though Covid continued to cast negativity over the market.
A total of 106,229 homes were sold in Houston in 2021, up 10.3 percent from the 96,271 sold during 2020, the Realtors said.
$40 Billion in Houston Residential Sales in 2020
Another sign of the Houston market strength is the record of total sales revenue. A total of $40 billion in home sales were recorded in 2021, up 28.2 percent from the total dollar volume of 2022.
“Limited inventory and shortages of building supplies and labor on the new construction side also posed serious challenges, but the market powered through it all to achieve a record year. As we enter 2022, inventory and affordability are definite concerns.” said HAR Chair Jennifer Wauhob with Better Homes and Gardens Real Estate Gary Greene.
Affordability is becoming a pressing issue as mortgage rates increase while nation is facing overall inflation that is projected to be around 6 percent this year.
Mortgage Rate Forecast for 2022
CoreLogic Chief Economist Frank Nothaft forecasts that the 30-year mortgage will remain under 4 percent in 2022.
“Our forecast for 2022 is mortgage rates up only a little bit about 30 to 40 basis points, averaging maybe 3.4 percent over the course of 2022. Now that’s still historically very low, because when we look at three decades prior to the pandemic, 30-year fixed-rate mortgage rates, averaged 4.1 percent,”said Nothaft, who formerly served as chief economist at Freddie Mac..
Nothaft said the inventory problems will ease somewhat in 2020.
In Houston, single-family homes inventory narrowed from a 1.8-months supply to 1.4 months last year. For perspective, housing inventory across the U.S. currently stands at a 2.1-months supply, according to the latest National Association of Realtors (NAR) report.
“I see buyers lining up as rates rise,” says Frank Ferrara, Senior Loan Officer in Houston with Republic State Mortgage. “I believe inventory might improve if sellers think they can get higher prices. Interest rates probably have a little more to go before a brief rest to see determine inflation and its consequences.”
With the inventory tight, sellers often received multiple offers in 2021.
“The market is very challenging,” surmises Jean Shabot with Berkshire Hathaway Premier Luxury Collection. “Too many agents chasing too little inventory.”
Greenwood King’s Broker Associate Cathy Blum says she had many closings in December and her January is already very busy. Her buyers want to look at homes that are further out, in less dense neighborhoods.
2022 – The Best Year in The History of Houston Home Sales
“December was crazy because everyone was trying to close before the end of the year, many for tax purposes,” says Emelie Mavligit with Compass. “I had several new construction homes that had significant closing delays (30-60 days) due to supply chain issues on materials. Builders were scrambling to close these homes.
“Interest rates have already started to creep up as predicted,” says Mavligit. “I have buyers ready to go but nothing to sell them and prices are high. A lot of buyers who had the flexibility to wait until the market calmed down from the insane summer frenzy are starting to rev up again. Even lease inventory is super low and owners are getting multiple applications. Everyone is predicting another really strong Spring market.”
Galveston remains a hot market as buyers seek second homes.
“Despite the expected rise in mortgage interest rates, the increase is predicted to be small and we expect that demand for vacation homes in Galveston is going to remain strong,” says Alison Christenson, an agent with Sand ‘N Sea Properties. “I don’t believe the second-home market has yet been affected by inflation concerns. The inventory of homes for sale has been microscopic for over a year – so home prices may go up.”
Jan.12, 2022 Realty News Report Copyright 2022
Check out the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins. Available on Amazon http://tiny.cc/4a2g6y
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File: Houston Realty Sets Records in 2022