HOUSTON – (By Michelle Leigh Smith for Realty News Report) – Houston’s housing market showed notable strength last month, producing the strongest September on record for local realtors.
The Houston Association of Realtors reported 9,226 single-family home sales in September, an increase of 1.5 percent from the 9,086 sales recorded in September 2020.
Demand remains high while the supply of homes for sale is very limited, pushing prices upward.
The average price for single-family homes rose 13.4 percent year-over-year to $372,408 in September, and the median price climbed 13.3 percent to $300,000.
Microscopic Inventory
“People are moving to Houston from all over the country,” says Emelie Mavligit of Compass. “Home prices remain robust and sellers are often able to command a premium because inventory continues to be tight.”
Neal Hamil of Martha Turner Sotheby’s International Realty expects prices to keep rising, but not at runaway rates. “I think we have reached, or are nearly reaching, the ceiling,” Hamil says. “I expect the market to hold, so I don’t anticipate prices to fall in the near future.” He adds that he’s seeing fewer extreme multiple-offer situations and fewer sales well above asking price.
Hamil attributes the strong sales to low mortgage rates—at times below 3 percent—and the reduced inventory. “Turnover has been extraordinary,” he says.
“Money has been very affordable, people have ample savings, and many want a change from their current living situations,” says Loren Miner, Principal with Eastwood Realty HTX. “It’s basic consumer behavior.”
Is Houston still a sellers’ market? With extremely low inventory, fast sales, and rising prices, many experts say yes. “Houston remains a seller’s market and I anticipate that to be the case at least over the next several months,” Hamil says.
Miner cautions, “It’s a sellers’ market only if sellers position themselves properly. I’ve had clients mention a friend in Katy who received multiple offers while trying to sell in the East End. It’s very situational—product and location matter. Where those align, sellers can still hold the advantage.”
Are prices still rising? “Yes, but consumers are slowing their willingness to pay record prices,” Miner says. He does not expect prices to decline, though COVID-related changes could increase days on market. “Prices should remain strong.”
Tracie Parzen of Greenwood King reports prices leveling off somewhat. “If interest rates rise, prices will likely moderate rather than fall, which could slightly cool buyer demand,” she says.
“Sellers still receive multiple offers in desirable neighborhoods and when homes are priced correctly,” Parzen notes. “Sellers who list far above market value are less likely to receive offers until they adjust to market pricing.”
Market No Longer Graded A+ … Now, It’s a ‘Hot-Minus’
“September felt like a ‘hot-minus’ market,” says Cynthia Wolff with Beth Wolff Realtors Real Living. “Although activity remains high and inventory low, prices and sales are stabilizing. Sellers who initially reached for the moon on list prices are adjusting to more realistic levels. Multiple-offer situations are less common, and some of that stabilization may reflect the end of summer and families settling into school routines.”
Growth is evident beyond Houston proper—suburban and regional markets are also showing strength.
A Beach Home, Perhaps?
“We’ve hit a plateau on island home prices,” says Kimberly Gaido, a Realtor at Sand ‘n Sea Properties and daughter of longtime Galveston agent Carolyn Gaido. “Sellers are more willing to negotiate if they don’t receive full or over-asking offers—unlike the previous 18 months. The island market is still strong, and there are many qualified buyers seeking second homes and investment properties under $1 million.”
Gaido adds that inventory is not arriving quickly enough to meet demand. “Because of this, multiple-offer situations still occur on the most sought-after properties—those close to the beach or with strong vacation rental potential.”
Many buyers from Austin, Dallas and Houston are looking for vacation homes they also plan to rent. “The pandemic highlighted Galveston’s appeal, and while prices may have plateaued for now, incoming inventory could rekindle intense buying activity. It’s always about supply and demand.”
Fulshear – The Boom Town Erupts
Fulshear is among the fastest-growing cities in the Houston region and in Texas, with 2020 Census figures showing dramatic population gains from 2010 to 2020. Johnny Quarles of Katy-Fulshear Real Estate, who has been selling in Fulshear for a decade, says demand remains strong. “We went through a period of low supply and very high demand, producing many multiple offers—an excellent time for sellers,” Quarles says. “It has calmed down a bit. Historically, November and December slow down, with activity picking up again in mid-January.”
The Jill Smith Team at Compass Real Estate, based in Cypress, reports brisk sales in northwest Houston as newcomers arrive from the West Coast. Ken Jones, who works with his wife Holly on the team, notes a slight slowdown in recent weeks but says homes priced at $300K and below still attract multiple offers.
Forget the Love Letters – Money Talks
“It’s a struggle for young and first-time buyers to compete,” says Realtor Holly Jones. In-migration from other states has brought buyers with more cash who can pay over asking and bridge appraisal gaps. “I haven’t written an FHA loan offer in eight months. Buyers are paying title costs, doubling earnest money, and forgoing home warranties. Love letters from buyers matter less when a listing receives dozens of offers—some sell after receiving 20 or more. It’s an aggressive market, and new construction is often a viable option. A committed agent keeps clients motivated through the search.”
Hamil forecasts that rising inflation in 2022 will affect much of the market, though the luxury segment may only experience a moderate cooling. “The best properties will always sell first,” he says.
Parzen believes that if interest rates and supply remain low, the market will stay active. “If rates tick up, buyer demand could moderate. With inventory still tight, Houston will remain a seller’s market, but it may calm enough for weary buyers to feel they have a chance.”
Low interest rates and a stronger financial position for many households support sales. Patrick Jankowski, GHP’s Senior VP of Research, notes that the share of households with subprime scores has fallen, accelerated by pandemic-era debt reduction using stimulus funds. “The share of Houston consumers with subprime credit scores is at the lowest level since records began in 1999,” he says.
Historically, real estate slows in the fall and during the holidays, but this cycle could differ.
“The Houston housing market continues to show strength as we enter the fall season, which traditionally slows activity,” said HAR Chairman Richard Miranda with Keller Williams Platinum. “We’re on track for another record year of sales, but higher prices and potential interest rate increases could affect buyer demand in the months ahead.”
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 compared to 2019.
That performance makes 2021 a near-certain record year for Houston home sales—realtors can begin planning how to celebrate strong results.
Oct. 13, 2021 Realty News Report Copyright 2021
For more about Texas real estate, see the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins (ebook and print editions available).
File: Record September for Realtors in Houston. HAR.