Single-family sales in Houston Buoyed by Tax Credit

Houston single-family home sales in May increased by 19% with 5,693 homes sold.  While that is a very healthy increase over May of last year, contracts written tell an even more significant story.  There were 2,474 contracts written in May, which is down 20% from last year.  This indicates that the 2010 Tax Credit, [eligibility required a fully executed contract in place by April 30^th]  brought home buying demand forward that may otherwise occur in May and June.  Year-to-date, the Houston real estate market is far ahead of last year - the only exception being a 1% decline in contracts written. 

 

Houston – Best Homebuying Opportunity is Now.

Who would have known?  Immediately following the buying flurry before the April 30^th deadline, interest rates dropped dramatically in May, giving home buyers that were too late for the tax credit thousands of saved dollars over the life of a loan and dwarfing the tax credit incentive.  The Houston real estate market now has the best home buying opportunity not only due to lower interest rates but also, as you can see in the table below, more homes available from which to choose.  The 17% higher inventory is also a motivator for sellers’ to become more competitive in their asking price. 

Many economists agree that current positive economic indicators may cause the Fed to raise interest rates in the not too distant future.  Clearly, there is a window of opportunity in the market that savvy home buyers will capitalize on before it is too late.

 

Here is a table overview of the month and year-to-date:

Greater Houston MLS [HRIS] Single-Family Residential Real Estate
	May 2010		May 2010 YTD
Metric	Amount	% Change From 5/09	Amount	% Change From 5/09 YTD
Sales	5,693	19%	21,750	11%
Dollar Volume Sold	$1,195,074,560	18%	$4,463,633,628	19%
Contracts written	2,474	-20%	14,922	-1%
# of Listings	32,226	17%	29,758	7%
Average Sales Price	$209,920	-1%	$205,225	7%
Median Sales Price	$154,780	-1%	$150,070	3%

Contracts written for May 2010 indicate that closings next month most likely will decline.  Contracts written represent current buyer demand and is a precursor of closings that will occur in the next month or so. With fewer contracts written in the pipeline, fewer closings will occur in the future.

 

What home price classes are the hottest selling in Houston through May YTD? 

The following table indicates by price class the top ten hottest selling price ranges in Houston in 2010:

 

Ten Hottest Selling Price Classes Houston Single-Family Real Estate May YTD 2010
Price Class	Sales Year to Date	Active Listings	Months of Inventory
1. $200,000-$249,999	2,147	3,401	7.0
2  $250,000-$299,999	1,561	2,640	7.7
3. $300,000-$399,999	1,487	3,072	8.9
4. $120,000-$129,999	1,297	1,654	5.9
5. $130,000-$139,999	1,221	1,597	5.9
6. $110,000-$119,999	1,160	1,538	6.3
7. $140,000-$149,999	1,059	1,414	6.1
8. $150,000-$159,999	1,034	1,450	6.4
9. $90,000-$99,999	982	1,274	6.1
10$80,000-$89,999	978	1,012	5.2

As you can see from the table above, Houston’s hottest selling home prices range from $80,000-$399,999.  What is also interesting to note is that the months of inventory, on even the hottest selling price classes has risen slightly from last month. This is once more an indication that sellers should stay tuned to activity in their market area, and consider price adjustments to stay competitive.

The High-End Market is Still Hot.

The 2010 paradigm in Houston’s hottest selling home prices is the high-end market.  Most price classes $80,000 and above have experienced double-digit increases in sales over last year. Contrary to norm, the higher the price class, the higher the percentage increase in sales, in most categories.  Homes priced $900,000-$999,999 are up in sales by 43% over last year, the highest increase in sales of any price class.  Homes priced $1,000,000 or more are up 40% over last year.  This represents an incredible comeback from a gloomy high-end market in 2009.

The Low-End Market is Not so Hot.

The other new 2010 paradigm in Houston’s hottest selling prices is the low-end market.  The majority of price classes $70,000 and below are experiencing double-digit declines.

Keep in mind that these statistics are sweeping generalities of a large major metropolitan market. The Houston Metropolitan Statistical area covers over 10,000 square miles. Houston is so large, it is like a mosaic.  Some areas are shining brightly while others are not as lustrous.  For a breakdown of activity by area with a map of the area, click here.

What about Houston’s future real estate prospects?

The short version is that Houston recorded 2.55 million payroll jobs in May 2009, more than the job counts of 29 U.S. states, including Arizona, Colorado and Alabama.  Jobs are the biggest driver of real estate sales in any community. While there is uncertainty out there now with the future of NASA  and the impact the B.P. oil spill will have on Houston, long-term future job prospects for Houston are one of the brightest in the nation.  For a more detailed analysis of Houston’s future in real estate, go to www.GaryGreene.com/blog and read the April 20^th article entitled: Houston, Best Place to Buy Real Estate Right Now.

To search for homes by price range, map and/or even foreclosures, go to www.GaryGreene.com.

Data provided by the Houston Association of Realtors® Multiple Listing Service, and The Real Estate Center for Texas A&M and written by Toni Nelson, Director of Strategic Initiatives for Prudential Gary Greene, Realtors®