The Houston residential real estate market is experiencing a return to a market we experienced right before it reached its peak in 2007. Our market is emulating 2005, which at the time was the greatest market Houston had ever seen. In fact, most of the current statistics are better than those of 2005.
Despite a robust economy blessed with energy, oil, a world-renown medical center and a nationally strategic port, the nation is experiencing a “psychological recession” — and Houston is not immune. The constant barrage of negative national economic news has affected everyone’s psyche and made people feel insecure about the future. And yet, there is very little basis for it.
Robust Houston market
While job cuts, corporate restructuring, higher gas prices and a bear market are unfortunate and depressing, the American free enterprise system has always experienced periods of eliminating waste and reorganization to move to a higher level of productivity in the future. We rarely hear the good news that our economy is strong and the unemployment rate is low in comparison to other historical periods of adjustment. And that’s most unfortunate, because it affects the economy. There is no basis for Houston to experience the current market, however, we cannot inoculate ourselves from the psychological recession.
We are lucky to live, work and play in Houston, and if you like population growth, think of an overlay the size of the city of Los Angeles coming to Houston in the next decade. There’s a huge real estate opportunity waiting to happen. Houston is the fourth largest city in the United States, located in a culturally diverse metropolitan region, which is home to 5.6 million residents. The city is growing at twice the national pace. It has one of the lowest costs of living, an educated workforce and is home to 88 consulates, which is a testament to its international influence.
For a concise picture of the Houston economy, go to www.houston.org/rankings and you will find 26 national publication rankings of first place in job growth, business climate, health care and lower cost of living. The factors ranked are key drivers of any real estate market, and one of the reasons that despite a temporary slow down, Houston still boasts a positive median and average sales price. It also indicates that today is probably the best time to invest in real estate in Houston.
Houston Real Estate Market Report:
• Sales, year to date (YTD): 37, 038
• Dollar volume sales: $7.855 billion
• Avg. sales price: $212,085
• Median price: $154,000
• Avg. days on market: 84
• Pending contracts: 27,215
• No. of listings: 35,700
This year could close out the same or slightly above the third greatest year in Houston’s residential history, 2005, based on the similar number of sales found July YTD 2008 as those found in July YTD 2005 and a 4.725 percent higher number of units pending this year than those found in 2005. We are currently experiencing a more positive real estate market than 2005 in terms of higher dollar volume sold, higher average sales price, higher median sales price and more pending contracts July YTD in comparison to July YTD 2005.
Jobs, interest rates and favorable home prices drive real estate, so we have an economy poised to not only absorb the additional inventory, but to move beyond previous growth cycles and set new records.
Stay tuned for next month’s Houston real estate report.
Toni Nelson, Director of Strategic Initiatives for Prudential Gary Greene, Realtors