Supply, supply, supply……..or lack thereof
The Houston Chronicle:
Houston-area home sales were stronger than ever in July, demonstrating a striking resilience in the face of stubbornly low oil prices that threaten jobs in the region’s dominant industry for the foreseeable future.
Buyers closed on an estimated 8,147 single-family homes last month, the Houston Association of Realtors said in a report released Wednesday. That’s the most on record, underscoring the dichotomy between housing and oil that became evident after oil prices started slipping last summer and local energy companies began cutting jobs and spending. Demand for homes also continues to outstrip supply.
“Unless the downturn gets a lot worse for Houston, the supply side is going to put upward pressure on prices for a while,” said Jesse Thompson, business economist for the Houston Branch of the Federal Reserve Bank of Dallas.
While shopping for a house these days isn’t quite as intense as it was a year ago when desperate buyers lined up for open houses and many made offers within the first day, there’s been little sign of the kind of slump that many would associate with a weakening economy.
Now, some folks might be worried about sales at $HHC’s MPC’s in Houston. I’m not and here is why:
Bridgland sales fell YOY but the reason is simple, the MPC just opened for sale in 2014 and builders bought huge tracks of lots to start initial development. Sales will slow as those lots are developed and sold. That condition will probably last for the remainder of the year (a least Q3). Sales will then continue but at a more steady pace.
The Woodlands sales are slowing just as the company has said they would for a year now. Why? The MPC is nearing completion for SF homes. Sales there will continue to fall (condo and apartment sales are strong). Now the good news is that the retail/commercial developments they have done in the area is doing great as NOI continues to rise, significantly (hotels and more retail/office continues to be built to satisfy demand….more NOI).
Conroe, the final Houston MPC won’t even begin lands sales until late 2015. Based on the Bridgeland example, we should see a large suge initially and then a drop off as the initial lots are developed. Sales after that will be more steady. Due to its location, and the fact it is new, lot sales will be for lower price points than in The Woodlands, when this happens, nothing negative should be read into it. MPC lot sale prices are always lower
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