Houston real estate's dream run continues: Home sales break yet another record
Nov 20, 2013
Houston real estate's dream run continues: Home sales break yet another record
By Ralph Bivins
11.19.13 | 12:41 pm
Overall, Houston's single-family homes sales in October were up 13.5 percent over last year. BrooksideHomesRealtor.com
Houston’s existing home sales broke more records in October, as the city’s strong economy and low mortgage rates extended a phenomenal run for real estate.
A total of 6,020 single-family homes were sold in October — the most ever for an October in Houston, according to the Houston Association of Realtors. The previous record was set in October 2006, when 5,612 were sold.
“It’s never been like this before,” says Houston realty veteran Martha Turner of Martha Turner Properties. “There’s not a part of the city that’s not doing well.”
Turner said one of her Memorial-area listings, a townhome priced at $995,000 drew offers from 11 bidders.
The inventory of Houston homes for sale continues to shrink. The inventory dropped to new low of 3.1 months in October, down from 3.2 months in September. A year ago, Houston had a 4.4-month supply of homes for sale.
The inventory is tight in many places across the country, putting a lot of upward pressure on home prices.
Lawrence Yun, chief economist for the National Association of Realtors, says the shortage of available homes will not ease until home builders start constructing more homes at a quicker pace.
“We need a 50 to 60 percent increase in home building to get back to normal,” Yun says.
In recent years, during the recession and recovery home building nearly came to a dead halt. Home building has picked back up somewhat, but many small and medium-sized builders have trouble getting financing to ramp up the pace of construction significantly.
“Builders are struggling to build as fast as they can,” says Cernus Development’s Harry Masterson, president of the Greater Houston Builders Association.
Houston has a shortage of home construction labor and tradesmen, Masterson says. Many carpenters, bricklayers and plumbers found other work when construction dwindled in the economic downturn. The wild boom in the Eagle Ford Shale oilfields around San Antonio has lured away many construction workers with exceptionally high wages.
But the influx of people coming into Houston, with energy firms such as Exxon Mobil relocating employees to the city, has driven the housing market to new highs.
“We’ve had 29 months of improved activity,” says Conroe Realtor Wayne Stroman of Stroman Realty. “It’s solid and it’s been continuing.”
The shortage of listings will not ease up anytime soon, Stroman says. Many sellers don’t want to have their homes up for sale during the year-end holidays. So December’s inventory could be even tighter.
Lower inventory drives up home prices and creates bidding wars between buyers.
Turner said one of her Memorial-area listings, a townhome priced at $995,000 drew offers from 11 bidders.
Buyers must be nimble and be prepared to offer all-cash or be prepared to close quickly. Sellers are dictating the terms in this market. Prices are going up.
Overall, Houston’s single-family home sales in October were up 13.5 percent over last year. At $177,500, the single-family home median price reached the highest level for an October in Houston. The average single-family home price was $239,773, also an October high.
Ralph Bivins, former president of the National Association of Real Estate Editors, is founding editor of RealtyNewsReport.