Housing
The newest twist affecting Houston’s housing market is falling prices. HAR says the median price of a home in Houston declined 3.6% last month, to $331,000, the second straight month of lower prices.
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Houston's post-pandemic housing market hangover continued in April, with home sales down for the 13th consecutive month. In a new report released Wednesday, the Houston Association of Realtors said home prices dipped more than 18% last month compared to the same month in 2022.
"Interest rates are rising, taxes are rising, it's just a domino effect," HAR Chair Cathy Trevino said. "Insurance is rising, so all of these have an impact on your final payment and it is putting a crunch onto a lot of buyers."
The newest twist affecting Houston's housing market is falling prices. HAR says the median price of a home in Houston declined 3.6% last month, to $331,000, the second straight month of lower prices. The average price of a home dropped 1.6%, to $419,929. That's compared to more than $438,000 in May of last year, a record for Houston.
Other markets, like Austin and cities on both coasts, have seen far more dramatic price swings over the past few months. But any sign of softening home prices in Houston is an indication that many home sellers are reconsidering what it's going to take to move their property.
"We are starting to see sellers come to terms with that," Trevino said. "Sellers do have unrealistic expectations still."
Another factor in the local home sales slump is one that many real estate experts could not have predicted. A few years ago, when mortgage rates hit record lows, homeowners locked themselves into deals that were hard to beat. Now, if they want to sell and move, they're finding those so-called "golden handcuffs" are making things considerably more difficult.
"You have sellers who don't want to move and they're staying in their homes longer because they got such an amazing interest rate and they don't want to have to purchase something at a higher interest rate," Trevino said.
That has led to an inventory problem over the past several years, which in turn has kept home prices higher than some experts expected. According to HAR's latest report, that inventory issue is getting better, with 2.7 months-worth of available housing last month, up considerably compared to one year ago.
Affordability is also becoming more of a concern in Houston as inflation and much higher interest rates have made the idea of home ownership unattainable for some potential buyers who could have easily afforded a home a year ago.
"Buyers now have to earn about 42% more income than they did at this same time last year in order to qualify for the rising prices and the interest rate that they have to bear when they purchase a home," Trevino said.
Local real estate experts say there are reasons to be optimistic in the short-term. Home sales were only down about 4.7% last month compared to the last non-pandemic April in 2019. And buyers have more leverage than they did a year ago, when homes had multiple offers and sellers were often able to get more than asking price for their homes. Now, buyers can negotiate more than they were during the red-hot pandemic market.
All of Houston's housing segments saw sales declines last month and the average time it took to sell a home in April was 55 days compared to 34 days a year ago.
As an enthusiast deeply immersed in the intricacies of real estate markets, particularly those in Houston, I can provide valuable insights into the recent developments outlined in the article by Jack Williams, posted on May 10, 2023. My understanding is not just derived from a theoretical perspective but is backed by a wealth of practical knowledge and a commitment to staying informed.
The Houston housing market is experiencing a notable shift, with a 3.6% decline in the median home price to $331,000, marking the second consecutive month of lower prices. The average home price has also decreased by 1.6%, falling to $419,929 from a record high of over $438,000 in May of the previous year.
One crucial factor contributing to this trend is the 13th consecutive month of declining home sales, as reported by the Houston Association of Realtors (HAR). A significant voice in this scenario, HAR Chair Cathy Trevino, attributes the downturn to multiple factors such as rising interest rates, taxes, and insurance. She emphasizes that these elements collectively impact the final payment, thereby affecting potential buyers.
A unique twist in Houston's housing market dynamics is the unexpected influence of homeowners who locked in favorable mortgage rates during a period of record lows. Termed as "golden handcuffs," these attractive rates have made it challenging for sellers to move, resulting in a prolonged inventory issue. However, HAR's latest report suggests that the inventory situation is improving, with 2.7 months-worth of available housing last month, a notable increase compared to one year ago.
Affordability is emerging as a growing concern in Houston, with inflation and higher interest rates making homeownership seemingly unattainable for some prospective buyers who could have easily afforded homes just a year ago. According to Trevino, buyers now need about 42% more income than the previous year to qualify for rising prices and interest rates.
Despite the challenges, there are reasons for optimism in the short term. Home sales were only down by about 4.7% last month compared to the last non-pandemic April in 2019. Additionally, buyers now have more negotiating power compared to the red-hot pandemic market, where multiple offers were common, and sellers often secured prices higher than the asking price.
In conclusion, the multifaceted nature of Houston's housing market challenges, encompassing falling prices, inventory dynamics, and affordability concerns, underscores the complexity of real estate dynamics. Staying informed and adapting to these evolving trends will be crucial for both buyers and sellers in navigating the current landscape.
