Is the Houston housing market in limbo?
If you live in the Houston area, you may have noticed the “for sale” sign staked in your neighbor’s yard now reads “SOLD.” Drive down a few more blocks to a Higher end neighborhood and the same homes that were for sale months ago still have not sold. Why are some homes selling while others sit on the market for months on end? The short answer is that Low End Homes are HOT right now, while the Higher-End Homes are moving very slow.
High End Houses (>$300k) = Buyers Market
If you are currently looking to purchase a High-End home, you may have discovered that there are plenty of houses for sale. This is called a “buyer’s market.” A buyer’s market occurs when the number of homes on the market exceed the number of buyers looking to purchase homes.
How to know if you are in a buyer’s market:
You will see the signs of a buyer’s market when you see the following:
- Increase of homes for sale
- Houses are marked down
- Homes are relisted as “new listings”
- Sellers compete in price and amenities to entice perspective buyers
Low End Houses (<$200k) = Sellers Market
If you are looking to purchase a Low-End home, you may notice that there is a limited number available. This is called a “seller’s market.” A seller’s market occurs when the number of BUYERS exceeds the supply of homes on the market.
How to know if you are in a seller’s market:
You will see the signs of a seller’s market when you see the following:
- Inventory is low
- Bidding wars
- Sales price is higher than the list price
- Low amount of days on the market
Houston Housing Market: Bad News and Good News
Bad News: There are a couple of things negatively affecting the High-End Home Market: natural disasters and economic events.
Hurricane Harvey: In August 2017, Hurricane Harvey dumped up to 50 inches of rain in and around the Houston area. During the aftermath, homeowners were eager to sell their flooded homes instead of making costly repairs. Lower-End homes fared well as investors gobbled up these attractive deals. However, Higher-End homes are more risky, and most investors avoided these. The only bright spot for Higher-End homes, were those that did not flood–these had a temporary increase in demand.
Oil Slump: Houston’s economy is heavily dependent on the oil industry. When crude oil prices hit rock bottom after 2015, the Houston community took a major hit. Many Houstonians working in the oil and gas industry suffered layoffs. People who could once afford to pay the mortgage on their $300,000 plus home soon found themselves quickly downsizing.
These two events have greatly contributed to a buyer’s market for High-End Homes. Many of these homes are still being put on the market while Days On Market remains high. Sellers are cutting prices in order to get a sell, and and this is driving Comparable Sales Prices down.
Good News: Lower end homes are being impacted positively by a few factors: Overall Economy, Demand, and the Investor Market.
Overall economy: The overall economy plays a huge factor in housing, and interest rates affect affordability and home sales. As of April 2019, the current rate in Houston for a 30 year fixed mortgage is 4.10%, a reduction from April 2018. So rates are relatively low, and the overal economy in the United States is good.
Demand/inventory: Lower-end homes are in demand as empty nesters and baby boomers are choosing to downsize or as families tighten their budget to live in an affordable housing. In Houston, inventory is low at 2.9 months for single family homes priced $200k and under, and the average days on market for a single family home is a respectable 64 days. Limited inventory is driving demand for these lower-end homes.
Investor Market: There are several reasons why an investor would jump at the opportunity to buy a lower end home. They are affordable, rent easily, and sell fast. It makes financial sense to snag a low end home, especially if held as a rental. The average rent for a 3 bedroom home priced in the $150k range is $1,440 per month. All investors know that properties under the $150k price point “cash-flow” better than more expensive homes.
The Housing market in Houston Texas is a “mixed bag” right now, but it’s really in pretty good shape. High-end homes are still tough to sell and sellers are having to drop their prices, but Lower-end homes are pretty HOT right now.
If you’re considering selling a Houston area home, you have options.
High-End Homes: 1.) If you go the traditional route (through a realtor), get ready for some stiff competition, picky buyers, and a long ride ( 6 mos to 1 year or more is common). To be competitive, you will have to fix the home up with “WOW” updates and still sale at a discount from what the home was worth in 2015 before oil dropped and Harvey came to town.
2.) Another option is to go ahead save yourself a lot of time and headache. You can sell the home “as-is” to an investor, and be done with it. You will likely have to discount the home even further, but you can literally close within a week or two, without the hassles or commissions. As they say “time is money.” (Just make sure you deal with a credible investor. For more info, read: We Buy Houses Companies, Are They Credible?
Lower-End Homes: 1.) Again, if you go the traditional realtor route, you should do pretty good as far as price and speed of sale. You may not even have to do much updating. However, expect to give up a good piece of the pie in commissions and closing costs.
2. If you chose to sell to an investor, you can expect very fast results, no commissions or closing costs, and you wont have to fix anything. You can even leave whatever you want behind, and skip the “clean-up.” For more on this topic, see: Should I Use A Realtor Or Sell To An Investor?
Here’s My Shameless Plug For AMERICAN HOME BUYER:
I work for American Home Buyer and we have been buying homes in the Houston area since 1998. We have bought and remodeled hundreds of homes, and we would love the opportunity to buy yours. We have an A+ rating with the Better Business Bureau. We have the funds to pay cash for your house, and we can close as fast as 3 days or we can close in 60-90 days…whatever time table you’re on! We buy homes in ANY CONDITION and regularly purchase homes in Probate, Divorce, Foreclosure etc. Visit our Who We Are page for more info on our company.