The Woodlands Blog

posted on October 9, 2008

Houston Real Estate Market for September YTD 2008

Houston has been a bright spot in real estate on the national scene this year, and in September, Hurricane Ike knocked some of the wind out of its sails. For much of the month, the city grappled with power outages, wind debris and restoration of homes and offices. Add to that the announcement from the U.S. Treasury Secretary Henry Paulson of government seizure of Fannie Mae and Freddie Mac immediately followed by the whole government bailout debacle and the recipe for real estate was not favorable. At this writing, the government continues its efforts to restore confidence in the financial markets and the secondary mortgage market. Houston is back in business and thriving on an economy blessed with energy, oil, world-class medical centers and a nationally strategic port. While we have much to be thankful for, Houston has been  impacted by the national credit crunch, and tightening credit scenarios that have restricted lending growth everywhere, but also has a hangover from Hurricane Ike.  It is strongly believed that sometime between now and the conclusion of the Presidential campaign and election,  Houstonians can refocus on its positive economy and enjoy a more normal real estate market.

Houston, pre-Hurricane Ike experienced 13% YTD August fewer home sales than in 2007, the best year in real estate in Houston history. September 2008, the month when Hurricane Ike paid us a visit, the city saw 30% fewer homes sales during the month, 27% less dollar volume sold, active listings went down 12% and contracts initiated during the month were down by 38%. The bright spot on the market for September was that average sales price for the month was 4% higher than found last September [$211, 660] and the median was 5% higher [$157,500]. The average and median sales price increase are the complete opposite of the nationwide declining home values.


September YTD 2008 in Comparison to September YTD 2007

As the above table depicts, the Houston single-family home sales are down by 15% in sold units in comparison to September YTD 2007 sales and has experienced 46,304 MLS recorded sold units.

Dollar volume sold in MLS through September YTD 2008 is $9,866,172,127, representing a 12% decline. With fewer home sales, it is logical that dollar volume sales would follow the same trend. The most amazing fact is that it appears that the hurricane had an overall year-to-date impact of 2% fewer sales than where the market has been trending. We most likely will see some catch-up activity in October and November that will bring this market aberration back to its trend pattern of 13% fewer sales. Again, the comparison of fewer home sales is a comparison to the best year in residential history for Houston, 2007.   It is also interesting to note that while sales are down by 15% from last year, the dollar volume closed is only down by 12% from last year.

Active listings are exactly the same as 2007 with 35,338 single-family properties currently available. Supply of homes on the market has definitely been impacted by Hurricane Ike. This is the first month during the year that supply of homes was not higher than last year.

Average sales price YTD is $213,074 or 3% greater than last year. Houston is not a market where average sales prices are falling. In contrast, they are rising as they have historically, at a slow and steady pace. For example, the average sales price in 2005 YTD September was $191,827. Houstons current average sales price is 11% higher than 2005.

The median price is $155,000 and that represents a 1% increase from last year. In 2005, the median sales price was $145,000 and so in 3 years, the median has risen 7%. This is proof positive that Houston was never a participant in the real estate bubble that was so prevalent in national markets.

Contracts written, which represent September YTD buyer demand in Houston are down by 16% over last year with 33,018 homes reported as pending year to date. This statistic and closed sales have been the most impacted by Hurricane Ike because the month saw such a huge drop in these areas in comparison to last year.

Average sales price per square foot is $90, which represents a 1% increase in value over last year.

Days on the Market have gone up by 10% since last year and the average time to sell a home in Houston is 84 days.

 All of the key drivers of a positive real estate market are present in Houston, and one of the reasons that despite a hurricane and a national credit crunch, Houston still boasts a positive median and average sales price. Future growth predictions and the current lull in the market indicate that today is probably the best time to invest in real estate in Houston.

Stay tuned for next months report on Houston.

posted on July 24, 2008

Houston Market Real Estate Report including surrounding areas:

June YTD 2008 Single-family home sales

Anyone sitting on the real estate sidelines from a media-induced coma needs to wake up and smell the future in Houston, Texas.  Yes, the Houston residential real estate market is experiencing a temporary lull as shown by the statistics below, but it is not from a lack of a robust job market and economy. Houston is the fourth largest city in the United States, located in a culturally diverse metropolitan region, which is home to 5.6 million residents.  The city is growing at twice the national pace.  It has one of the lowest costs of living, an educated workforce and is home to 88 consulates, which is a testament to its international influence.

For a concise picture of the Houston real estate market, go to www.Houston.org/rankings and you will find 26 national publication rankings of first place in job growth, business climate, health care and lower cost of  living.  The factors ranked are key drivers of any real estate market, and one of the reasons that despite a temporary slow down, Houston still boasts a positive median and average sales price. It also indicates that today is probably the best time to invest in real estate in Houston.


I predict that this year may end up the same or slightly above the third greatest year in residential history, based on the similar number of sales found June YTD 2008 as those found in June YTD 2005 and a 4.166% higher number of units pending this year than those found in 2005.  We are currently experiencing a more positive real estate market than 2005 in terms of higher dollar volume sold, higher average sales price, median sales price and pending contracts.

Jobs, interest rates and favorable home prices drive real estate, so we have an economy poised to not only absorb the additional inventory, but to move beyond previous growth cycles and set new records.
 
June YTD 2008 in Comparison to June YTD 2007

As the above table depicts, the Houston single-family home sales are down by 13% in sold units in comparison to June YTD 2007 sales and has experienced 30,857 MLS recorded sold units.

Dollar volume sold in MLS through June YTD 2008 is $6,465,919,739, representing an 11% decline.  With fewer home sales, it is logical that dollar volume sales would follow the same trend.

Active listings are up by 5% with 35,634 single-family properties currently available.  Last month, the increase was 6%, and in April it was 8% so it appears that supply is slowly moving in a more positive direction.

Average sales price YTD is $209,545 or 2% greater than last year.  While this is a small increase, it substantiates the opposite experience heard frequently in the national news. Houston is not a market where average sales prices are falling.  In contrast, they are rising as they have historically, at a slow and steady pace.  The average sales price in 2005 was $184,565, or 13.5% less than current.

The median price is $152,000 and that represents no change from last year.  In 2005, the median sales price was $139,500 and so since that time, the median has risen 9%.

Contracts written, which represent June YTD buyer demand in Houston are down by 13% over last year with 23,138 homes reported as pending year to date.  Contracts written in 2005 were 4.166% fewer than found this year.  This indicates that 2008 will either exceed or at least stay even with the third greatest year in residential history, 2005.