Houstonians should look beyond the current economy to see what opportunities are ahead. During sluggish economic times, it is difficult to fathom what the future will bring.  However, David Crowe, Chief Economist for the National Association of Home Builders is predicting a severe housing shortage that will begin in the next 18 months and continue for a decade.  While his prediction may be slanted from a home builder industry perspective, the Harvard University’s Joint Center for Housing Studies has a similar prediction.

You can read more on these studies at:

1. HousingWatch.com
2. NationalBuilderNews.com
3. Harvard University Joint Center for Housing

The housing shortage prediction is based on

1.    Gen-Yer’s, 81 million strong, believe in homeownership and there are 5 million more than there were Boomers.  

2.    According to the National Association of Realtors®, 47% of home buyers in 2009 were first-time home buyers and they predict that in 2010, first-time home buyers will represent 52% of all homes sales.   The Gen-Yer’s housing impact has only just begun.

3.    According to their report, Harvard University’s Joint Center for Housing Studies anticipates household growth during the next 10 years to range between 12.5 million and 14.8 million. All those new households mean demand for many new housing units.   

4.    Bottom line, the number of homes being built simply is not enough to keep up with America’s growing population.

 Will the Greater Houston Metropolitan area be affected?

Houston’s median age is among the lowest of the nation’s major metropolitan areas.  The median age is 33.1. Almost one third of Houston’s population is Gen Y – 28.8% and 58% are of prime home buying age.  It’s estimated that 27.8% have college degrees – one of the highest in the nation.  Source:  Greater Houston Partnership – www.houston.org.

According to the Greater Houston Partnership, Houston is expected to see 1.9-2.7% GDP growth in 2010 and they anticipate Houston to be on the employment

upswing by 4^th Quarter 2011. 

Thereafter, the metropolitan area should return to vigorous growth.

Our conclusion, based on current demographics, Houston’s growth predictions and the reduction in home building, is that Houston could very well face a housing shortage in the future.

 And right now home buyers can capitalize on

1.    A good selection of affordable homes

2.    The 2010 Homebuyer Tax Credit for First-Time and Current Homeowners

3.    Lower interest rates, which are expected to rise after the April 30^th Tax Credit expires.

We invite you to conduct your own research on the best time to buy a home, but rarely in history have homes and the interest rates to buy them been “on sale”.  Waiting may prove to be very expensive indeed.

To search for homes or learn more about what your home is worth in todays’ market, go to www.garygreene.com.

When you first review the single-family residential market for January 2010, you might think everything you learned in Economics 101 is irrelevant.  How do you have fewer home sales, fewer contracts written and higher average and median sales price in comparison to last year?  The answer is in the price classes of homes that closed during the month.  Homes priced above $500,000 experienced double-digit declines last year, except for the $800,000-$899,999 price class which saw a 1% increase in number of homes sold. 

Now comes January 2010, and all price classes above $500,000 are in double-digit increases.  There are 2 exceptions: $700,000-$799,999 price class experienced a 9% decline over last year and $800,000-$899,999 price class experienced a 117% increase, the highest increase of all price classes.  That is perplexing – a price class just below a higher price class experiences a decline while the price class above breaks all records.  Go figure.  There were also 19 homes that sold for over a million giving that price class a 27% increase over sales the previous year.

All sales in January priced over $500,000 represented only 5% of the total units sold in Houston, however the impact these price classes sold had on average sales price and median sales price make it appear that there is home price appreciation in the Houston overall market.  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, go to http://garygreene.mediaroom.com/index.php?s=38&cat=14.

Prudential Gary Greene, Realtors® believes the housing market will pick up steam as we approach the Spring selling season for 2 reasons:

1. The IRS Home Buyer Tax Credit  benefits both current homeowners as well as first-time home buyers and expires on April 1.  To see if you qualify, go to

 http://www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit

   2.  Interest rates are at an all-time low and when these two benefits coincide, the result is a flurry of buying activity that will culminate before April.

 This will spark demand through April, but what about the rest of the year?  While Houston lost jobs in 2008-2009, most economic experts anticipate the job growth to return to pre-recession levels beginning this year and extending into the entire 2011.  Jobs, more so than tax credits and low interest rates are the biggest driver of home sales. 

Previously, we mentioned the rise in upscale homes as a rationale for a rise in average and median price in the overall Houston market for January 2010.  These were attributable to only 5% of all sales in Houston.

What home price classes were the hottest selling in Houston in January 2010? 

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

 As you can see from the Top Ten Selling Price Classes in Houston for 2010, hot selling prices ranged from $70,000-$399,000. These price classes and homes priced up to $800,000 are expected to be hot in Houston in 2010.  Why?  The 2010 IRS Home Buyer Tax Credit expanded to include houses priced up to $800,000. 

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®

Houston real estate sales in November 2009 experienced:

1. A 33% increase in single-family homes or a total of 4,519 sales.
2. A 42% increase in dollar volume sales for a total of $899,046,012.
3. A 7% increase in average sales price which is currently $150,000.
4. Days on the Market [DOM] – the time it takes on average to sell a single-family home in Houston declined 15% and is currently 76 DOM.
5. Pending sales dropped 15% for a total of 2,304 contracts written and recorded in November.
6. Current listings are down 10% for a total single-family listing count of 27,220. 

While most of these statistics are very positive, it should be noted that the comparison is with November 2008, which was suffering the aftermath of Hurricane Ike.

Houston real estate sales November YTD 2009:

For the first time this year, single-family home sales have moved from double-digit declines to single-digit declines YTD. Thus, the Houston real estate market is moving in the right direction and experiencing improvement with every month that passes in 2009.

The current market statistics for Houston November YTD overall are as follows:

• Sales YTD are 49,928 single-family homes, an 8% decline since YTD 2008.
• Dollar volume sold is down from November YTD 2008 by 11% with $10,102,602,394
• Average sales price is currently $202,343, down by 3%.
• Median sales price is $153,000, and equal to last year [half of the homes sold above and half below this midpoint range.
• # of contracts written [pending] is 33,405 and that represents 14% fewer than found last year.
• Active listings, a metric that is good if on a decline, are currently 27,709 or 20% less than last year.

 The November 7^th  legistlative extension and expansion of the 2009-2010 Homebuyer IRS Tax Credit should stimulate home sales, more so than the original tax credit.  The expansion is not limited to first-time homebuyers and increased the income limits to $225,000.  For more information on the IRS Tax Credit, click here.    

 The IRS Tax Credit should help bring Houston back to normal sooner than it would have without this program.

What home price classes are the hottest selling in Houston right now?  The following table indicates by price class the hottest selling price ranges in Houston in 2009:

 As you can see, the top 10 selling price classes in Houston range from a low of $90,000 to a high of $399,000, and therein lies the largest demand for single-family homes in the Houston Multiple Listing Service. 

To view homes available in every price range, go to www.GaryGreene.com .

 With every month that passes in 2009, the Houston real estate market has consistently improved.  To move from a sales decline of 24% in February to 8% in November is a remarkable feat, in and of itself. Furthermore, the market improvement comparison table [first table above] indicates that not only are sales improving, all metrics that comprise a good real estate market have consistently improved during the year.  This is a market of opportunity, particularly with the IRS Tax Credit and historically low interest rates.  Houston is expected to return to pre-recession levels in 2011 and home prices will rise. The best time to capitalize on a “bounce-back” is before it bounces back.  That time is now.

Information derived from Houston Association of Realtors® Multiple Listing Service.  Data compiled by Toni Nelson, Director of Strategic Initiatives, Prudential Gary Greene, Realtors®

The 2009-2010 IRS Tax Credit for home buyers was extended and expanded in November.  The new expiration date is April 30, 2010 and the tax credit now includes current homeowners, not just First-Time Homebuyers and income limits were expanded to $225,000.  For detailed information on this home buyer advantage, please click here.

 With new incentives in hand, every month that passes in 2009, shows great improvement in comparison to the previous months’.  The table below shows the difference between the market experienced in February, June and October YTD 2009.   As you can see, as 2009 progresses, the single-family housing market is slowly marching toward a healthier market.

  A summary of October YTD market statistics compared to last year:

• Sales are down from October YTD 2008 by 11% with 45,391 single-family homes.
• Dollar volume sold is down from October YTD 2008 by 14% with $9,202,482,156.
• Average sales price is currently $202,738, down by 4%.
• Median sales price is $153,000, down by 1% [half of the homes sold above and half below this midpoint range.
• # of contracts written [pending] are 31,101 and that represents 14% fewer than found last year.
• Active listings, a metric that is good if on a decline, are currently 27,758 or 21% less than last year.  This is also a metric that in Houston is the exact opposite heard frequently in the national news.

 The newly extended Homebuyer IRS Tax Credit should stimulate sales, particularly in the Spring of 2010 and it will be interesting to see if inventory continues to decline as it has in recent months.  The IRS Tax Credit should boost Houston back to normal market conditions sooner than it would have on its own.  Another added benefit to increasing home sales is that economists believe that for every home that is sold, regardless of the price, a $66,000 economic multiplier effect positively impacts the local market in which the home resides.  The IRS Tax Credit is truly an economic stimulus that sparks the local economy.

 What home price classes are the hottest selling in Houston right now?  The following table indicates by price class the hottest selling price ranges in Houston in 2009:

As you can see, the top 10 selling price classes in Houston range from a low of $90,000 to a high of $399,000, and therein lies the largest demand for single-family homes in the Houston Multiple Listing Service. 

Prudential Gary Greene, Realtors® feels certain that fourth quarter 2009 sales will exceed fourth quarter 2008, which was interrupted by a devastating hurricane, economic uncertainty and a barrage of bad news.  The Houston market has experienced a loss of confidence and uncertainty of the future, especially during the months following Hurricane Ike.  The market improvement comparison table above indicates that our market is on the road to recovery.  This market also spells opportunity, particularly with the IRS Tax Credit, to purchase a home before Houston experiences an upswing in the market, which inevitably will happen.  The best time to capitalize on a “bounce-back” is before it bounces back.

Data derived from the Houston Association of Realtors® Real Estate Information Services and compiled by Toni Nelson, Director of Strategic Initiatives for Prudential Gary Greene, Realtors®.  Market statistics occurring outside the HAR MLS are not reflected in this report.