“I DON’T KNOW WHAT TO DO ABOUT BUYING A HOUSE”
Are you wondering why you can’t predict the real estate market right now? No surprise, there are multiple variables that factor into the calculation of home prices across the board, some of which you might not know about. Uncertainty bedevils markets, and rational actors hesitate to make bold decisions when they can’t predict outcomes.
Let’s look at some of the things we know with confidence. Builders are slowing down based on increased costs of materials and uncertainty in their minds of how quickly the market will accept the higher prices. With mortgage interest rates going up significantly and still rising, first time home buyers are either having to lower their expectations or get out of the market completely for now. Rental rates are skyrocketing. Inflation and gas prices are eating a big part of everyone’s budget. Sellers are taking their time putting their home on the market for now out of caution. Prices went up faster during the pandemic than anyone can remember, fueled in part by emotional decision-making. Is the opposite─a market free-fall happening? No, the sky is not falling, and we are on much sturdier ground than we were in the bust of 2008.
Let’s look at reality. Houston continues to have steady population growth generating a large demand for homes. From the first of this year until now (a period that saw the biggest spike in mortgage rates), the average price of a single-family home in the Houston MLS was $418,245. From May 1st until now, the average price of a home was $438,143. Not bad. Let’s take a quick look at the Heights. From January 1 until now, the average price: $716,763. From May 1 until now: $778,359. These are the real numbers from HAR. The same trend follows in the Woodlands and Katy Southwest.
What I think you will see is homes that were priced higher than expectations (where the owners went fishing looking for a buyer to bite) are seeing price reductions to more rational levels because the intensity of buyers has slowed down. Yet there continues to be a steady upward trend in pricing. The good news is that there are a lot fewer bidding wars in most areas. I also think the November elections will bring a more stable feel to our economic circumstances and we will continue to see positive growth. For individuals who equate buying a house with making an investment, there are plenty of opportunities to get in on housing growth. I don’t think there is a better alternative to being a homeowner at this time in terms of protecting your money and growth.
Not sure what your area is doing? Just let me know and I will send you a neighborhood-specific report that is easy to read.