“Houston, we don’t have a problem”: local agents say the metropolitan area market is balanced

Houston’s real estate market has certainly cooled since the height of the post-pandemic home-buying frenzy.

THE Search Violas The Market Action Index score for the Houston-Sugar Land-Baytown metro area fell from a 90-day average of 77 at the end of April 2022 to 38.88 at the end of May 2024. While Altos considers that A score above 30 is a seller’s market, the closest the 40 point drop is significant. But local agents say a cooler market isn’t necessarily a bad thing.

“When it comes to housing, I think the bottom line is, ‘Houston, we don’t have a problem,'” said Jemila Winsey, Houston’s CEO and principal broker. Legacy Life ERA. “During the COVID market, when interest rates were around 2%, it was not a normal market and expectations that it would stay that way were unrealistic. I think we are now in a balanced market, but things come in waves and it will come back.

Local real estate professionals say one of the biggest benefits of a slower housing market is a much-needed increase in housing inventory. After dropping to a 90-day average of 7,020 active single-family listings in May 2022 – an all-time low – the Houston metro area has rebounded. As of mid-May 2024, the 90-day average was 21,943 active single-family listings, about 4,000 listings below its May 2019 level.

“Stocks have really started to increase,” said Richard Garcia, a RE/MAX Signature II agent. “We went from two and a half months of inventory a year ago in April 2023 to almost four months of inventory next April.

“But in talking to sellers right now, it’s still difficult for many of them to want to give up that 3% interest rate for a 7% interest rate.”

Although local agents believe the market remains strong and fairly balanced at present, they say it is clear that the situation has calmed down over the past two years. One thing that hasn’t changed, however, is the number of out-of-town buyers looking for homes in the Houston area.

“I see a lot of people coming here from other cities in Texas, as well as from out of state,” Garcia said. “That’s where a lot of my leads are coming from right now. »

According to Shae Cottar, eXp Real Estate chief broker for Texas and president-elect of the Houston Association of Realtorsjob opportunities bring many of these buyers moving to the Houston area.

“I see a lot of new people in the area coming to look for jobs in energy and technology,” Cottar said. “There’s a ton of construction going on in the energy sector right now, so a lot of people are coming in for multi-year contracts, and some are choosing to rent, which puts additional pressure on rental markets. Others buy.

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While agents have no doubt the market is slowing, they said they are still seeing pockets with high activity levels.

“I spoke with an agent two weeks ago who had 25 offers at an open house, which makes it feel like we’re back in 2020, but there are other areas where homes remain on the market for 35, 40 or even 50 days, which is contributing to the growth of our inventory,” said Cottar.

Local real estate professionals said the majority of these market hot spots are in the suburbs.

“We’re seeing a lot of buyers gravitating toward suburbs away from the core of the city,” Cottar said. “This is due to several different factors – one being obviously the further you go from the city, affordability becomes less of a factor – but people also want more space.”

But even as some properties in these suburban neighborhoods see high levels of activity, local agents say mortgage rates continue to limit buyers.

“Some homes are pretty stagnant and we’re seeing days on market increase a little bit because interest rates are keeping some people from buying right now,” Winsey said.

Altos data shows that the 90-day rolling average for median days on market in the Houston metro area was 56 days at the end of May 2024. That was exactly the same as a year ago, but up compared to a 21-day low set in the summer of 2022.

This buyer hesitation, coupled with a strong new construction market, is keeping inventory levels in suburban markets healthy, despite continued strong demand.

In a part of Montgomery County just north of the heart of Houston, Cottar said 68% of home sales earlier this year came from new construction.

“Houston provides a good opportunity for builders because they can use this infill land because we have a land bank here and we have a community land trust with the land bank,” Winsey added. “And the city works with those builders to build inventory at certain price points, which helps keep (homes) affordable.”

As temperatures continue to rise in the Houston area, local professionals expect real estate market conditions to warm up as well.

“We had a pretty slow start to the year, but things really bounced back in April,” Cottar said. “As always, there are people in transitions of all kinds, and people will always be looking for their first home, or downsizing or upsizing. The trends are there, even if it’s a little cautious at the moment, but the second half (of 2024) looks pretty healthy.