The spat I had a while back (read here) about whether or not the fall in the price of oil was going to derail the Houston housing market is beginning to look a bit silly now……
Inventory, inventory, inventory…..as long as it stays ~3mos and the population and the # of jobs in Houston keeps growing (they are) then there is a huge tailwind at the back of this housing market. The price of oil isn’t housing’s major problem, it is lack of supply.
People will see continual price increases and begin to yell “bubble” (that is what we do nowadays when anything goes up). Those people would need perspective. Houston is the 4th largest city in the US behind LA, NY and Chicago. The fact is it takes ~55% of the annual income for Houstonian to buy a home than it does in LA or NY and ~10% less to buy a home than it does in Chicago. Further, the annual salary needed to buy a home in Houston is only 4% above the current national average. If we filter the list to only cities in the US with >2MM people, then Houston ranks as the most affordable large city in America. No, Houston’s housing market has a very long way to go before we worry about a “bubble”
THE HOUSTON HOUSING MARKET FLEXES ITS MUSCLE IN JUNE
Sales rise, prices reach new historic highs, and inventory continues to grow
HOUSTON — (July 15, 2015) — The Houston real estate market’s see-saw ride continued following May’s sales dip, with June sales volume up 4.1 percent and home prices setting new record highs. Only homes priced below $150,000 experienced a sales decline.
According to the latest monthly report prepared by the Houston Association of Realtors (HAR), June single-family home sales totaled 7,935 units—the highest one-month volume ever— compared to 7,621 a year earlier. The time it took to sell the average home reached a record low of 43 days.
Months of inventory, the estimated time it would take to deplete the current active housing inventory based on the previous 12 months of sales, increased to a 3.2-months supply versus 2.9 months last June. That is the greatest supply since September 2013, but remains well below the current national supply of 5.1 months of inventory.
Home prices achieved historic highs, with the average price of a single-family home up 6.6 percent year-over-year to $302,942. The median price—the figure at which half the homes sold for more and half for less—rose 4.9 percent to $225,000.
June sales of all property types amounted to a record-setting 9,480 units, an increase of 3.3 percent versus the same month last year. Total dollar volume rose 9.5 percent to $2.7 billion.
“I think it speaks very well for the health of our real estate market when you have a month in which sales are up, rentals are up, inventory is growing, and you’re comparing it all to the record year of 2014,” said HAR Chair Nancy Furst with Berkshire Hathaway HomeServices Anderson Properties. “We still expect normalization in the marketplace later this year, and that may well mean these alternating up and down sales months, but the bottom line appears to be that there is no lack of interest in housing in Houston, Texas.”June Monthly Market Comparison
The Houston housing market enjoyed across-the-board gains in the June 2015 versus June 2014 analysis, with single-family home sales, total property sales, and total dollar volume all up, and prices reaching the highest levels of all time. Month-end pending sales for single-family homes totaled 8,063, a 10.0 percent increase compared to a year earlier.
Houston’s housing inventory expanded in June to a 3.2-months supply versus the 2.9-months supply of one year earlier. That matches the inventory level of September 2013, but is well below the current national supply of homes which stands at a 5.3-months supply, according to the National Association of Realtors.
CATEGORIES JUNE 2014 JUNE 2015 CHANGE Total property sales 9,177 9,480 3.3% Total dollar volume $2,477,752,487 $2,712,021,860 9.5% Total active listings 29,513 31,963 8.3% Single-family home sales 7,621 7,935 4.1% Single-family average sales price $284,289 $302,942 6.6% Single-family median sales price $214,500 $225,000 4.9% Single-family months inventory* 2.9 3.2 10.9% Single-family pending sales** 7,331 8,063 10.0%
* Months inventory estimates the number of months it will take to deplete current active inventory based on the prior 12 months sales activity. This figure is representative of the single-family homes market.
** Effective May 2015, in an effort to be consistent with industry standards, the Houston MLS is now including all categories of pending sales in its reporting. Previously, the Houston MLS did not include “option pending” and “pending continue to show” listings in its reporting of pending sales. The new methodology is now all-inclusive for listings that went under contract during the month.Single-Family Homes Update
Single-family home sales totaled 7,935 in June, up 4.1 percent from June 2014. Home prices reached the highest levels of all time in Houston. The single-family average price jumped 6.6 percent from last year to $302,942 and the median price climbed 4.9 percent year-over-year to $225,000. The average number of days it took to sell a home, or Days on Market (DOM), reached a record low of 43 in June, down from the DOM of 47 a year earlier.
Single-family home sales tracked on a year-to-date basis were flat in June at 35,632.
Broken out by housing segment, June sales performed as follows:
- $1 – $79,999: decreased 23.0 percent
- $80,000 – $149,999: decreased 16.7 percent
- $150,000 – $249,999: increased 16.8 percent
- $250,000 – $499,999: increased 10.6 percent
- $500,000 and above: increased 14.9 percent
HAR also breaks out the sales figures for existing single-family homes. Existing home sales totaled 6,887 in June. That is a 5.1 percent increase over the same month last year. The average sales price rose 6.5 percent year-over-year to $286,441 while the median sales price gained 7.1 percent to $210,000.Townhouse/Condominium Update
After suffering their first decline of the year in May, sales of townhouses and condominiums rose 6.7 percent in June. A total of 721 units sold compared to 676 properties in June 2014. The average price, however, dipped 2.5 percent to $201,557 while the median price increased 4.9 percent to $161,000. Inventory grew slightly from a 2.6-months supply to 2.7 months.