Why do the housing market statistics look so good in Houston, even amid the pandemic? And how is all of this happening when some people are saying everything is great and others are saying it is slow?
Millennials are reaching home buying age, new buyers like the low mortgage rates, people are moving in from other states like California, and lately there is increased desire for larger spaces to live and recreate.
Houston follows the national trend of a flight to the ‘burbs. Houstonians are trading in hip high-dollar smaller homes in the city center for larger living spaces that are more affordable in the outskirts. What is interesting about Houston is that we gravitate toward perceived bargains, and the increased activity drives prices up in these areas, with as much as 11-12% increases year over year. When prices reach a certain tipping point, the boom slows down. (A good number to look for is when lot prices reach the $500,000 range.) First it was the Heights, then it was Oak Forrest, and now Cypress, Katy, Magnolia, and even Spring Branch, which are still amazingly affordable and where I see the crowds are moving.
Industry bean counters say that there are 29% fewer houses on the market this year so it is driving prices up. Homeowners tend to be a little older and do not want to take a risk during this Covid period, so they are not selling as much. Mortgage forbearances (7% of active mortgages are still in forbearance) also play a part. While the supply-shortage pricing increase is happening in the mid-ranges of home purchases, the rental market is in rough shape: it is overbuilt, many renters were not able to hold onto their jobs, and a whopping number of millennials have moved back in with their parents.
Navigating the real estate market is a little like making a complicated cake. Lots of ingredients to mix in and then you have to bake it to see how it all turns out. When you have been around in the business for a while, you can look at the directions and make a pretty good prediction as to how the cake will turn out. I still say this is a move up market in our area above $750,000. Homes below $750,000 are in demand. Everything else will likely remain as is until the spring. And there you have it.