While the national housing recovery is nice, if you own stock in a housing play, what really matters is how business is where they are operating. A company building and selling homes in Hawaii little affected by homes sales in Illinois. The Howard Hughes Corporation (Howard Hughes Corp (NYSE:HHC)) has master planned communities in Houston, Vegas and Honolulu.
Now, the theme out there now is that higher interest rates will kill demand for homes and snuff out the housing recovery. Again, while that may be true in some areas, what matters to stockholders of Howard Hughes Corp (NYSE:HHC) is how it is effecting the above mentioned areas. The bottom line is that at least through August, there hasn’t been any affect.
Let’s look at each of the markets:
Houston home sales showed no signs of a slowdown as August sales were up over 16 percent over the same month last year. The 7,504 single-family homes sold last month was the fourth month in a row sales have topped 7,000 — a pace not seen since 2007, according to the Houston Association of Realtors.
“This has definitely been a summer sales season unlike any we have seen before,” says HAR Chairman Danny Frank with Prudential Anderson Properties. “It’s difficult to say exactly when Houston’s boiling real estate market will begin to cool down.”
The inventory of homes for sale has tightened to a 3.3-month supply, down from a 3.4-month supply in July. A year ago, the inventory stood at 4.9 months.
The tight supply of homes for sale pushes prices higher and puts pressure on buyers who may be having a hard time finding a home in their price range and preferred part of town.
Mortgage interest rates have risen significantly since spring. In late May, the average mortgage interest rate was about 3.5 percent, but that has jumped to 4.5 percent today, according to the Freddie Mac survey of 30-year mortgage rates.
Houston Realtor Shad Bogany, chairman of the Texas Association of Realtors, says the higher mortgage rates have not dampened the hot market.
“No, not at all, really. Nobody is complaining about the rates. People are happy to get their deals done,” Bogany says.
The main challenges to the market are appraisals and mortgage availability, says Bogany. Mortgage lenders continue to have overly restrictive requirements on buyers who are trying to get approved for a mortgage, he says. And appraisers often fail to adjust to the current market with rapidly rising home values, says Bogany, who hosts a real estate call-in radio program on KWWJ 1360 AM.
Home prices have been rising sharply. The single-family median price in Houston rose 13 percent in August to $186,200, up from August of 2012, when the median was $165,000, the Realtors association reports. It was the highest median home price ever for an August in Houston.
The high-end of the local housing market registered remarkable gains. For homes priced at $500,000 and up, sales were up 51 percent in August, compared to August of last year.
The rental market was also strong. The August average rental rate was $1,748 in for a single-family home in Houston, a record high for an August.
Houston’s real estate market is one of the strongest in the nation. Major expansion in the energy industry is helping the city’s economy generate some 100,000 new jobs over the last year. That expansion, with the large number of energy company employees being transferred to Houston, has injected a lot of momentum into the housing market.
Home sales traditionally taper off as the holiday season approaches, so milder sales activity is expected this fall.
By Dave Tina
2013 GLVAR PRESIDENT
Q: How many homes are listed for sale these days in Summerlin? Also, do you think the Shops at Summerlin (proposed mall that recently resumed construction by Howard Hughes Corp) will raise property values in this area? — Steven S., Las Vegas
A: The short answers to your two questions are not enough and yes.
At any given time in recent months, there are only a few hundred existing homes listed for sale in the traditionally popular master-planned community of Summerlin on the western edge of Las Vegas.
This is not even close to enough supply to meet the continued strong demand for homes in this area. Of course, I could say the same for all of Southern Nevada, where we continue to face a shortage of available homes listed for sale.
The good news on this front is that we’re seeing a slight uptick in inventory during the past month or two.
Still, according the Greater Las Vegas Association of Realtors, the number of existing single-family homes available for sale by the end of July without any sort of pending or contingent offer on them was 4,681. That’s for all of Southern Nevada. This housing supply is up 22.3 percent from 3,828 such homes listed in June and up 9 percent from one year ago.
For condos and townhomes, the 1,609 properties listed without offers in July represented a 9.9 increase from 1,464 such properties listed in June and a 31.5 percent increase from one year ago. Basically, we have about a six-week supply of homes available for sale. During “normal” times, we would like to have about a six-month supply.
This housing shortage is even more pronounced in areas like Summerlin, Green Valley, Anthem and other master-planned communities that typically generate strong demand and where homes in good condition often sell faster and for higher prices than in other parts of town.
As for your second question, I would suspect property values in the immediate area to increase once the Howard Hughes Corp. finishes building what looks to me to be a first-class regional suburban shopping mall called the Shops at Summerlin.
As someone who lives and works in this area, I’ve been following this Shops at Summerlin development closely for years.
In recent public comments, developers of this outdoor suburban shopping mall have said they hope to open at least the initial phase of this project by the end of 2014.
The Oahu housing market heated up in August with close to double-digit increases in all segments, including a 25 percent jump in the number of sales for single-family homes, according to the Honolulu Board of Realtors.
There were 366 single-family home sales last month, compared to 293 the same time period last year.
The median sales price of a home last month was $665,000, a 9 percent increase from $609,000 in August 2012.
Meantime, there were 460 condominium sales last month, which was 12.5 percent more than the 409 during the same time month last year.
The median sales price of a condo in August was $350,000, a 9 percent increase from $320,000 in August 2012.
“With double-digit percentage increases for both single-family homes and condominiums, we really experienced a boom in number of sales