Coupling western charm with a fast-growing tech scene and everything in between. Houston’s population of over two million enjoys a wealth of experiences, opportunities, and lifestyles. As more people move out of expensive coastal cities in search of new ones without an outrageous cost of living, Houston and its impressive variety have remained a particularly attractive option. This is reflected in its real estate market with its enormous variety and enormous growth. With this in mind, let's take a look at what we can expect in Houston’s real estate scene in the coming year.
The current state
The Houston real estate market in 2021 was explosive. Record-breaking numbers of sales and offers for houses above asking, largely due to the pandemic.
While home sales in Texas had a 4.0% decrease in October 2021, Houston’s housing market actually grew by 5.3%. This maintained a seller’s market in the city, as there were fewer properties listed than there were buyers. Those searching for homes found it challenging to find a suitable property in their budget.
Additionally, Houston saw a boom in offers well above the asking price. Approximately 39% of buyers said they paid above the list price for their homes. While bidding wars aren’t uncommon in Houston, they nearly became the standard in the past year. This could eventually decrease in the future if more inventory inevitably becomes available, but it won’t slow down much and the market will likely still be in a similar state months from now.
Houston has always been considered a seller's market but it was more severe by the end of 2021. Buyers’ competition at the end of the year could only be described as fierce - but it was a bright spot for sellers all around the city. Most properties spent only a total of 26 days listed on average – a 10.3% decrease.
Many different cities throughout the country have seen a boom of buyers but not enough inventory to buy, and this started when the waves of COVID began sweeping through the United States. As the pandemic is still ongoing nearly two years later, it’s becoming exceedingly unlikely that we’ll “return to normal” any time soon, and the changes in the real estate market brought on by recent events are expected to say.
While home sales in Texas had a 4.0% decrease in October 2021, Houston’s housing market actually grew by 5.3%. This maintained a seller’s market in the city, as there were fewer properties listed than there were buyers. Those searching for homes found it challenging to find a suitable property in their budget.
Additionally, Houston saw a boom in offers well above the asking price. Approximately 39% of buyers said they paid above the list price for their homes. While bidding wars aren’t uncommon in Houston, they nearly became the standard in the past year. This could eventually decrease in the future if more inventory inevitably becomes available, but it won’t slow down much and the market will likely still be in a similar state months from now.
Houston has always been considered a seller's market but it was more severe by the end of 2021. Buyers’ competition at the end of the year could only be described as fierce - but it was a bright spot for sellers all around the city. Most properties spent only a total of 26 days listed on average – a 10.3% decrease.
Many different cities throughout the country have seen a boom of buyers but not enough inventory to buy, and this started when the waves of COVID began sweeping through the United States. As the pandemic is still ongoing nearly two years later, it’s becoming exceedingly unlikely that we’ll “return to normal” any time soon, and the changes in the real estate market brought on by recent events are expected to say.
Expectations for 2022
As said above, experts don’t think the market will show a decrease in demand or an increase in inventory in this coming year. Of course, real estate markets are constantly evolving and it’s adaptable to current events but, for the near future, it isn’t in the realm of possibility that it will become any easier for buyers.
If you look at the state of the market just a couple of months ago, it’s not shocking to see Houston is forecasted to rise in home values over the next twelve months. While it’s a good time to buy in Houston, it is difficult to find a home within a budget. Because of the limited supply of homes in the city, buyers are forced to compete which often results in higher prices and quicker sales. These circumstances tend to benefit sellers but setback buyers.
According to experts, there have been numerous price increases in the past year which are expected to roll over into this coming year.
If you look at the state of the market just a couple of months ago, it’s not shocking to see Houston is forecasted to rise in home values over the next twelve months. While it’s a good time to buy in Houston, it is difficult to find a home within a budget. Because of the limited supply of homes in the city, buyers are forced to compete which often results in higher prices and quicker sales. These circumstances tend to benefit sellers but setback buyers.
According to experts, there have been numerous price increases in the past year which are expected to roll over into this coming year.
- Houston - The Woodlands-Sugarland Metro home values have risen 18.9% over the past year and forecasts indicate they will continue to rise 13.8% in the next twelve months.
- Houston home values have risen 17.6% ($241,052, approximately) over the past year and will continue to rise at a steady and similar pace due to the lack of housing supply.
- Harris County home values have increased 18% ($253,365, approximately) over the past year and are expected to continue to rise throughout 2022.
Rent prices were also on the rise in Houston, increasing by about 28.8% – a significant bump from last year's decline of 1.0%.
While renters need to have a little more money in their monthly budget to get by, current homeowners are actually thriving. A total of 0.8% of Houston mortgages were reported as 30-89 days delinquent as of March 2021, and the average gain in equity by Texas homeowners was $43,000. Only about 1.6% of Texas homes lost equity within the same time frame. So, with these past trends in mind, it is believed new transactions will continue to rise as Texas continues to attract many residents who wish to move from out of state.
Experts want to reiterate the fact that for a long-term investment, Houston should not be ignored. It would build your equity and generate cash flow through rental income. If that is something a homebuyer is interested in, they should absolutely look into it.
While renters need to have a little more money in their monthly budget to get by, current homeowners are actually thriving. A total of 0.8% of Houston mortgages were reported as 30-89 days delinquent as of March 2021, and the average gain in equity by Texas homeowners was $43,000. Only about 1.6% of Texas homes lost equity within the same time frame. So, with these past trends in mind, it is believed new transactions will continue to rise as Texas continues to attract many residents who wish to move from out of state.
Experts want to reiterate the fact that for a long-term investment, Houston should not be ignored. It would build your equity and generate cash flow through rental income. If that is something a homebuyer is interested in, they should absolutely look into it.
Will it ever change?
The short answer is: no – at least not within the next year. This is largely because of the continuing pandemic. With many people moving to Houston from out of state, this strengthens the competition for buying a home in the city. With current homeowners in Houston doing so the likelihood of them listing their homes and adding to the inventory is low. Many residents are working from home nowadays and this is likely why there has not only been a spike in people moving to Houston from out-of-state but why homeowners are thriving.
According to Norada, it would take about five to six months for the supply of homes to dwindle to zero. In terms of months of supply, Houston can become a buyer’s real estate market if the supply increases to more than six months of inventory. This is simply not possible in 2022.
Of course, real estate markets are fickle in big areas like Houston, but there are conditions that will remain the same – the fact that it is a seller's market and will be competitive for buyers. While there might be a slight decrease in the amount of competition or list prices, that will most likely be due to the time of year as opposed to the real estate market evening out or going back to how it was pre-pandemic.
Regardless, Houston residential real estate remains an excellent investment opportunity. This is in large part because of the strong economy, low unemployment, and lack of inventory in many other market segments which all continue to push home prices in Houston.
If you want to learn more about what to expect from Houston real estate in 2022 or about luxury homes in Houston, please don’t hesitate to reach out to Natasha Valasek for expert guidance.
*Header Credit: Travel + Leisure
According to Norada, it would take about five to six months for the supply of homes to dwindle to zero. In terms of months of supply, Houston can become a buyer’s real estate market if the supply increases to more than six months of inventory. This is simply not possible in 2022.
Of course, real estate markets are fickle in big areas like Houston, but there are conditions that will remain the same – the fact that it is a seller's market and will be competitive for buyers. While there might be a slight decrease in the amount of competition or list prices, that will most likely be due to the time of year as opposed to the real estate market evening out or going back to how it was pre-pandemic.
Regardless, Houston residential real estate remains an excellent investment opportunity. This is in large part because of the strong economy, low unemployment, and lack of inventory in many other market segments which all continue to push home prices in Houston.
If you want to learn more about what to expect from Houston real estate in 2022 or about luxury homes in Houston, please don’t hesitate to reach out to Natasha Valasek for expert guidance.
*Header Credit: Travel + Leisure
