Houston’s real estate market is booming, setting records and reflecting yet another consequence of a pandemic that caused people to re-evaluate their lives.
The movement in real estate stems from several factors, some personal and some business-related. Together, they equal a market that – to use a term from the pandemic – is unprecedented.
According to the Houston Association of Realtors (HAR), “sales of single-family homes rose for the twelfth straight month in May and represent the biggest one-month year-over-year sales volume increase of all time. On a year-to-date basis, home sales are 29.5 percent ahead of 2020’s record pace.”
In addition to volume increase, prices are on the rise as well. HAR reports that the single-family home average price in Houston rose 29.7 percent to $387,105 and the median price increased 21.7 percent to $304,000.
This sellers’ market makes it tough for buyers, who can forget about negotiating tactics and focus instead on being ready to offer asking price or above. They will also contend with all-cash offers and multiple competing offers, leading to bidding wars and a lot of stress.
What has led to this real estate boom? Several factors, actually.
Nationally, record-low mortgage rates are enticing to buyers who have the opportunity to purchase a new home at a much lower rate than what they currently pay.
But above and beyond the financials, realtors are seeing a more curious trend: the post-Covid re-evaluation of homes and lifestyles taking place across the country.
Barbara Lee Cochran, a longtime realtor with Hometown America Incorporated, explained, “With Covid, people really evaluated their lifestyle and what’s important to them. They contemplated the importance of their home – its location, its size, whether or not it really meets their needs – and many realized that they wanted to make a change.”
Add to that the fact that fewer people are reporting to the office and instead working from home, and you have an extra incentive to make the space where you spend 24 hours a nice place to be. Cochran reports that home offices are now in big demand, with some couples looking for two office spaces so they can both work from home.
Others are tired of their local area and ready for a change. “I had some empty nesters who decided to pursue their dream and move to the country. I have a young couple that is moving to Dripping Springs because they can now work from anywhere. So many people are moving as a result of changes experienced during the pandemic,” said Cochran.
It doesn’t hurt that the Houston area, and Katy in particular, are very attractive to buyers from all over the world. This area beckons to families and businesses as far away as China and Nigeria. Katy schools are highly rated, and international buyers do thorough research before coming to America. Suburbs such as Katy are sought after for these good schools, and the additional square footage and ability to own some land seal the deal.
According to Realtor.com, “In May 2021, Katy home prices were up 29.5% compared to last year, selling for a median price of $325K. On average, homes in Katy sell after 7 days on the market compared to 38 days last year.” Part of this is due to the fact that Katy hosts 17 public schools rated good and higher by GreatSchools, along with 7 private and charter schools.
According to Cochran, these buyers are snatching up homes here sight unseen and marveling at what they can get for their money in Texas. In the current market, Cochran shared that one of her buyers had to compete with 23 other offers, and one of her sellers had 16 offers on her home.
And Texas is experiencing what a lot of big-acre states are: a rush of buyers from major cities such as California, Seattle, and Portland. After a year of rioting, violence, and political upheaval, along with being confined to small apartments in high rises, people are fleeing city life for the calmness of the outdoors.
Buyers are willing to pay higher prices and sellers are getting multiple offers, but Houston still remains well below the cost of living in other major cities, making it even more attractive. Houston had the in the country between 2018 and 2019, adding more new residents than Miami, Atlanta, and Charlotte. Year after year, people keep moving to Houston, with the population growing another 1.5% last year alone.
And why not? Houston ranks #4 among U.S. metro areas in Fortune 500 headquarters with a pro-growth government, low costs and regulations, and no corporate or personal income tax at the state level. With major industry presence in aerospace and aviation, advanced manufacturing, energy, life sciences and biotechnology, headquarters, and transportation and logistics, Houston attracts professionals and corporations from around the world, all needing housing and all willing to pay.
And there’s also one other factor driving sales in the Houston area. In addition to the Covid factor, Houston also had a deep freeze and continues to feel the effects of both. Builders are unable to complete construction due to backlogged materials, particularly wood, appliances, and plumbing supplies. It’s even hard to get workers right now. With the increased costs of these supplies and the downtime on the market, builders don’t even know how to price their properties, so they are choosing to let them sit.
“The dearth of new homes drives buyers to existing homes that have been upgraded,” said Cochran. “No one, other than investors, is looking for a fixer-upper right now. So if you’re looking to sell, make your home move-in ready and it will go fast.”