The latest real estate market news for Houston was published on June 1. It recaps all the data as of March 2023. Here are some of the highlights:
The number of single family home sales fell 18.3% year over year, meaning March 2023 as compared to March 2022.
The number of days it takes to find a buyer (also called Days on Market) for a single family home rose to 62 days from 38.
Total property sales (single family homes, condos and townhomes, land) fell 20.9% with 9589 units sold, with total dollar volume dropping along with it, about 20.2% to $3.7 billion.
As for prices, the single family median price dropped 3% to $325,000 and the single family average price stayed pretty falt at $408,647.
As for townhome/confominium sales, they fell for the 10th straight month, for number of units sold. But, median pricing was actually up 4% to $223,500 and average pricing was up 6% to $270,294.
One of the goals of Annoura Realty Group is to help newcomers relocate to their new homes in Houston. This does not only mean finding the actual home and doing the lease paperwork. This also means helping them settle down and settle into the home. We understand the first few days and weeks may be tough and confusing so we decided to create the Annoura Realty Welcome Bucket. The “shinseikatsu” bucket includes everything some needs as soon as they move in to a new place so we try to make sure every new tenant gets a Welcome Bucket delivered to their home the day they move in! Many people wonder what is inside the bucket! It is things such as toilet paper, paper towel, a sponge, dish soap, dishwasher detergent (different than dish soap!), washing machine detergent, water, Texas beer, juice, chips, ramen, a cutlery set, trash bags, shampoo, conditioner, body wash. We also have a partner company participating in the Welcome Bucket project! Laura Haines with AMCAP Mortgage is our partner company and she donates a measuring tape and a small tool kit. That way if any of our tenants end up buying a house, they are acquainted already with the best lender in town!
Bob Hale, CEO of HAR.com shared this article from the Wall Street Journal and thought it was very interesting. It says that three million U.S. households making over $150,000 in income, still choose to rent instead of buy a house. A combination of factors has led to a large increase in high-earning renters during the last five years, according to the U.S. Census Bureau. While the median income for all households was nearly $71,000 in 2001, there were about 44 million households that rented. Of that number, more than three million households had an income of $150,000 or more, which was an 87% increase from 2016 to 2021. The rising property prices coupled with rising mortgage interest rates have put homeownership out of reach of even relatively high-income households. The city that experienced the largest increase in high-income renters was Austin, which rose by 154% during the five-year period. But, even with the number of high earners growing, some still choose to rent instead of to buy because: they cannot find a house that meets their needs, they want the flexibility to remain mobile, or they want to rent first after moving to a new city.
For a summary of Houston’s Rental Market, see the picture of this article. These numbers reflect rentals for single family homes, and townhouse/condos. Numbers are up for category!
It is always good to know about possible real estate investment opportunities abroad. In 2020, we actually almost bought a small property in Belize, but pulled out when COVID hit, afraid tourism would freeze. When I travel to conventions, I often hear from Mexican developers building lucrative turnkey properties in Playa Del Carmen or Tulum. I have actually been wanting to go to the Riviera Maya area to have a look myself. There is a place called Isla de Mujeres that I heard is really nice and could be a good place to have an investment property. Well, these past 4 days I was invited to go Roatan, Honduras to check out a real estate opportunity on that island. I have never been to Roatan nor Honduras and did not know what to expect. I invited one of my favorite investors to join me so that we could both listen to the special tax incentives of this project. Interestingly, the amenities have all been built already: a golf course, several swimming pools, a private beach, fitness center (now being remodeled, so my excuse for not working out during this trip…haha), even two restaurants overlooking the Carribean Sea. The area is called Pristine Bay and the place we stayed at was called Las Verandas Hotel & Villas, which is completed and very nice. The new project will be next to the hotel and will be individually owned condominiums. People can buy them and rent them or of course they can buy them and live in them. The special location of Pristine Bay allows investors to avoid capital gains tax when they sell, and it also only taxes them on the small fraction of the land they own (there is no property tax on the improvement above).
Apparently, Roatan is a scuba diver’s paradise and while we were there, we checked out the golf course, kayaking, and snorkeling. The water was beautiful and the people we met were all very friendly. Pristine Bay is a project that I will be watching over the next few months. Many thanks to Holly Fitzgerald for being our hostess while on the island and to my colleague Ed Eakin for the invitation to learn about this development.
January is the most popular month for economic forecasts. Economists analyze the data from the previous year, crunch data, and create trends to guess the future of the economy. So far in the first two weeks of January, I have heard several different forecasts from various different people. All of them have very interesting perspectives and reasonings and I will share some of what I heard.
First of all, COVID stimulus package after package after package (there were 3) injected too much money into the economy. In addition, the extremely low interest rates (under 3% for mortgage rates at one point) encouraged heavy spending for everything including home buying. In all, the government injected $5.4 trillion of stimulus money into the economy, effectively over-stimulating the economy. This resulted in inflation. But overstimulating the economy was not the only thing that caused inflation. Labor shortages also caused prices to go up. Why did we have labor shortages? Because COVID made some people decide to retire early or to quit their salary jobs. The labor shortage also caused prices to go up. Other causes that affected our economy last year included: the war in Ukraine which disrupted supply chains, the spike in COVID cases in China, an extraordinary cold Europe using more than expected natural resources. So here we are with high inflation.
In an attempt to control inflation, last year, the government raised the interest rate 7 times in a row with sometimes quite aggressive increases (June 2022 they hiked it 0.75%!). The logic is that increased interest rates makes it more painful to borrow money, hopefully resulting in less spending, hopefully resulting in lower prices. The housing market has definitely seen a difference. Home sales are down 9 months in a row here in Houston.
What we need to be careful of is to not confuse this situation with a full blown recession. Once the general public believes we are in a recession, it affects their behavior and they become conservative and stop spending. Their thoughts and behaviors can create a kind of recession that actually is not there yet. The economist for the Greater Houston Partnership believes that even if we do have a recession, it will be short and shallow in Houston. He cites purchasing managers still ordering supplies, no significant uptick in claims for unemployment, no uptick in layoffs, and car sales are actually up. This means that companies are not slowing down, and people are not losing their jobs, and that people are optimistic about keeping their jobs. Hopefully interest rates will stabilize and that will stabilize inflation. Once inflation is under control, affordability will come back, not only for homes but also for simple things like a bag of potato chips (now as much as $6!). To see the extremely interesting Economic Forecast by Patrick Jankowski, Chief Economist for the Greater Houston Partnership, click here.
