HOUSTON – (By Michelle Leigh Smith for Realty News Report) – Houston homes sales demonstrated significant strength last month, as realty recorded its best September ever.
The Houston Association of Realtors reported 9,226 single-family home sales in September, up 1.5 percent from the 9,086 sales in September of 2020.
Home prices continued to rise as the demand remained high and the inventory of homes for sale remained low.
The single-family home average price rose 13.4 percent to $372,408 in September and the median price climbed 13.3 percent to $300,000.
People are moving to Houston from all over the country,” says Emelie Mavligit of Compass. “Home prices are also staying strong and sellers are commanding a premium since inventory continues to be low.”
Neal Hamil with Martha Turner Sotheby’s International Realty sees home prices still going up, but not skyrocketing. “I think we have reached or are nearly reaching the ceiling,” says Hamil. “I expect the market to hold so I don’t anticipate prices to go down in the near future.” He is not seeing the crazy multiple offers as frequently and the prices way are not way above asking price.
Hamil attributes the strong sales to low mortgage rates – with mortgages available at less than 3 percent – and a diminished inventory. “The turnover has been extraordinary,” he says.
“Money has been very affordable, people have ample savings, and people want change from current living situations,” says Loren Miner, Principal with Eastwood Realty HTX. “It’s basic consumerism.”
Is Houston still a “sellers’ market,” with sellers having the upper hand over buyers? With the inventory of homes for sale so tiny and homes selling so quickly and prices going up – it’s been a sellers’ market.) “Houston remains a seller’s market and I anticipate that to be the same at least over the next several months,” says Hamil.
“It’s a sellers’ market only if sellers position themselves properly,” observes Miner. “I have had several clients talk about a friend in Katy who received multiple offers while trying to sell a home in East End. It’s very situational to product and location. With those things aligned and can still be a sellers’ market.”
Are prices still going up? “Yes, but believe consumers are slowing down wanting to pay record prices.,” says Miner. He does not predict prices decreasing. “Depending on COVID we might see higher days on market. But prices should hold strong.”
Greenwood King’s Tracie Parzen, says she is seeing home prices level off a bit. “If interest rates increase, home prices will likely start to moderate rather than decrease which could start to (ever so slightly) cool buyer demand,” she says.
“Sellers still are hearing multiple offers, depending on how desirable the neighborhood is and whether the home is priced correctly,” Parzen notes. “Sellers who insist on a listing price that is far above market value are still less likely to get multiple offers or any offers at all until they are priced within the market.”
Market No Longer Graded A+ …Now, It’s a ‘Hot-Minus’
“September’s market appeared to be what I would call, “hot-minus,” says Cynthia Wolff with Beth Wolff Realtors Real Living. “Although Houston’s market remains very active and inventory remains low, prices and sales are stabilizing. Sellers who were reaching for the moon with list prices are adjusting those prices to a more stable list price. There are not as many multiple offer situations. Some of the stabilization may be attributed to the fact that summer is over, and families are settling into school routines.”
The growth is not only found in Houston proper. Communities throughout the region are strong.
A Beach Home, Perhaps?
“We’ve hit a plateau on home prices here on the island,” says Kimberly Gaido, Realtor at Sand ‘n Sea Properties and daughter of longtime Galveston Realtor Carolyn Gaido. “Sellers are more willing to negotiate if not offered full price or over the asking price – which is all that we saw in the past 18 months. The island market remains strong and there are still a lot of qualified buyers looking for second homes and investment property under $1 million.”
“Unfortunately, there are not enough homes coming to the market fast enough to keep up with the demand,” Gaido said. “Because of this we are seeing multiple offer situations occur on the most highly sought-after properties. Those would include properties closer to the beach and those that are considered having “good vacation rental potential.”
“I have many clients – from Austin, Dallas and Houston – that are trying to buy vacation homes, and they plan to rent as well as use the house,” notes Gaido. “That is a trend we are seeing up and down the Gulf Coast. The pandemic came to town and allowed many people around Texas and other states to realize how amazing Galveston Island is and how much it has to offer. Prices may have plateaued for now but with more inventory forecasted to come to market we might be back in a buying frenzy. It’s always about supply and demand.”
Fulshear – The Boom Town Erupts
Fulshear is the fastest growing city in the Houston area and in Texas, according to 2020 Census data released earlier this month. The western suburb saw its population grow by 1,386.42% from 2010 to 2020. Johnny Quarles of Katy-Fulshear Real Estate has been selling homes in Fulshear for the past ten years, and sales continue to be hot. “We went through quite a bump as far as low supply, and very high demand, creating many multiple offers, so it was a really good period for sellers,” says Quarles. “At the same time, a lot of people were not selling. It has definitely calmed down quite a bit. The total number of buyers willing to fight over a single sale. If history tells us anything, November and December should see a little slowdown, with an uptick in mid-January.”
Compass Real Estate’s Jill Smith Team, with 13 agents based in the Cypress area, sees brisk sales in the northwest Houston, as they accommodate new arrivals from the West Coast. “My wife, Holly and I work together as agents on The Jill Smith Team,” says agent Ken Jones. “We saw a bit of a slowdown in the last couple of weeks, but homes at $300K and under still get multiple offers.”
Forget the Love Letters – Money Talks
“It’s a struggle to get young people and first-time home buyers into homes,” says Realtor Holly Jones. Part of that goes to the exodus from other states that don’t offer a strong economic incentive. These people have the excess cash to pay over asking price, and bridge the gap between the sales price and the appraisal price. I have not written an FHA loan offer in the last eight months. Buyers are offering to pay the title policy (usually a seller’s expense), put down double earnest money, and for go home warranties. So called “Love Letters” (warm personal notes from buyers seeking an advantage in competitive bidding) are having less of an impact now. When sellers are receiving 27 offers on their home…there is no time for that. It is an aggressive market, and I feel for my young buyers. But that is not to say that they cannot get a home. New construction is always an option, we recently got three of our clients under contract with new construction. A good agent will not give up, and will keep their client’s spirits up during the search.”
Hamil predicts, “In 2022, inflation will continue to rise which will impact a huge part of the market but less so the luxury market. I don’t anticipate much to change in the luxury market other than a cooling off. The best properties always sell first.”
Tracie Parzen foresees, “If interest rates and supply stay low, we are likely to continue to have an active market. If interest rates start to increase incrementally, it could have a moderating effect on buyer demand. With inventory still low, we will remain in a seller’s market but it could calm down enough for weary buyers to feel like they have a chance.”
The low interest rates and stronger economy also contributes to the strength in home sales. According to GHP’s Senior VP of Research Patrick Jankowski, “The share of households with subprime credit scores has steadily shrunk since the end of the Great Recession, but the trend accelerated during the pandemic as households used their stimulus checks to pay down debt. The share of Houston consumers with subprime credit scores is at its lowest level in records dating back to 1999.”
Throughout real estate history, sales have traditionally slowed in the fall during back-to-school time and get even slower during the holidays. This year may be different.
“The Houston housing market continues to show strength as we enter the fall season, which is traditionally the time of year the market slows,” said HAR Chairman Richard Miranda with Keller Williams Platinum. “We are on track for another record year of sales, however higher home prices and the potential of rising interest rates could impact buyer demand in the coming months.”
2021 – Guaranteed to be a Record Year
On a year-to-date basis, Houston area home sales are 15.3 percent ahead of 2020’s record pace and up 21.6 percent when compared to 2019.
This means 2021 will be a record year for Houston home sales. Realtors can go ahead and order their champagne now.
Oct. 13, 2021 Realty News Report Copyright 2021
For more about Texas real estate, check out the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins. Available on Amazon http://tiny.cc/4a2g6y
Houston 2020 Ebook version https://tinyurl.com/4xm7z8b5
File: Record September for Realtors in Houston. HAR.