At least once a month, the Houston Association of Realtors (or HAR), sends out a number of market reports about the real estate market here in Houston. You may have read them directly from HAR, or you may have read it via the articles the news organizations put out based on those reports. The problem is that the Houston MLS is a big place. It reaches from Galveston to Huntsville (and beyond), and from Columbus to Beaumont. As the saying goes, real estate is local, and while Southeast Texas seems local, that’s an area bigger than some states. So while HAR says sales are up, that may not necessarily mean that sales are up where you live.
This year is a great example of this. While HAR feeds us the good news and dozens upon dozens of real estate agents purchase a canned ‘market report’ to share, it just didn’t seem quite so rosy here in The Woodlands as I was been lead to believe. Houses were sitting, and even with price reductions, it was difficult to even get a showing on some of my listings. So I decided to dig deeper into the data myself, but this time, just our area. Here’s what I found.
When I carved out the data just for The Woodlands, I came across some eye opening numbers.
Looking at all prices, I graphed the number of active listings versus the number of houses sold in the last five years. This is what it looked like:
So while the number of homes sold stayed pretty consistent, the number of homes for sale climbed every year.
Anyone who has a basic understanding for economics can see that the supply is far too plentiful for demand. While we have about the same number of buyers out there looking, those buyers have 3 times the number of homes to choose from.
So what does that mean? Well, in the short term price per foot could start to soften. With so many options buyers will be quick to search out the bargains or the homes that are absolutely a perfect fit. So if you are looking to sell your home, you either need to be aggressive on your price or you need to be patient. If you want top dollar but also want to sell your home quick, then you will likely be frustrated.
The good news is that this isn’t the case at every price range. The bad news is that this isn’t the case at every price range. A graph of homes under 400k looks much better, and the graph of homes over 900K looks much worse.
Long term however, the news is better. This area is almost built out, meaning that you are competing with fewer and fewer new homes. You also have an uptick in oil jobs returning to the area with oil prices climbing. The other good news, or at least good news for those still selling, is that you can see a correction happening in the inventory. Look at that far right section of the graph. People are taking their homes off the market to wait until pricing gets better. That will help balance the supply and demand and get us back to a more neutral market. Questions? Let me have em.