As of now, the Houston housing market leans towards a balanced state, with a 3.3-month supply of homes. This aligns with the national inventory level of 3.2 months, maintaining equilibrium between buyers and sellers. However, the varying performance across price segments suggests opportunities for both buyers and sellers, emphasizing the importance of strategic decision-making in this dynamic real estate environment.
Houston Housing Market Trends: A Positive Start to 2024
As the Houston real estate market embarks on the new year, it does so on a notably positive note, defying concerns about elevated mortgage interest rates. According to the Houston Association of Realtors’ (HAR) January 2024 Market Update, single-family home sales in Greater Houston experienced a remarkable 9.0 percent increase, marking only the second such uptick in two years. This surge, which follows a 5.4 percent increase in November 2023, showcases a promising trajectory for the local real estate landscape.
January Sales Overview
The Houston Multiple Listing Service (MLS) reported a total of 5,009 units sold in January 2024, compared to 4,595 in the same period of the previous year. Notably, the months supply of homes increased from 2.6 to 3.3, indicating a positive shift in market dynamics. Only homes priced below $150,000 saw declines, constituting a mere 1.5 percent of the overall market. In contrast, the best-performing segments were homes priced between $500,000 and $1 million, which saw a remarkable 16.7 percent year-over-year increase, followed by the luxury segment ($1 million +) with a 15.4 percent rise. The $250,000 to $500,000 segment also experienced a substantial gain at 13.0 percent.
Rental properties, specifically single-family homes and townhomes/condominiums, continued to exhibit strength in January, providing an alternative for cautious buyers amid ongoing economic uncertainties.
Price Trends and Market Dynamics
The average price of a single-family home in Greater Houston rose by 2.7 percent to $391,080, while the median price increased by 2.1 percent to $320,500. Notably, this marks the first time since February 2023 that the average price has dipped below $400,000, reflecting a potential shift in affordability in the market.
Market Comparison and Additional Insights
January 2024 stands out as the second time in two years that single-family home sales have entered positive territory, with a notable 9.0 percent year-over-year increase. Total property sales also experienced a 6.9 percent rise, and the total dollar volume surged by an impressive 11.9 percent, reaching $2.3 billion. Single-family pending sales saw a 6.3 percent increase, indicating sustained momentum in the market.
While the months of inventory expanded from 2.6 to 3.3, it remains below the 3.5-month supply observed in October and November 2023. Nationally, housing inventory stands at a 3.2-month supply, as reported by the National Association of Realtors (NAR). A 4.0- to 6.0-month supply is generally considered a “balanced market,” where neither buyer nor seller holds a significant advantage.
Segmented Sales Performance and Existing Homes
Breaking down sales by housing segment, January results varied:
- $1 – $99,999: Decreased by 6.4 percent
- $100,000 – $149,999: Unchanged
- $150,000 – $249,999: Unchanged
- $250,000 – $499,999: Increased by 13.0 percent
- $500,000 – $999,999: Increased by 16.7 percent
- $1M and above: Increased by 15.4 percent
Additionally, HAR reported positive figures for existing single-family homes, with sales totaling 3,488 in January, up 8.2 percent from the same month last year. The average price rose by 3.7 percent to $387,520, and the median sales price increased by 3.3 percent to $310,000.
Townhouse/Condominium Update
January witnessed a continued decline in townhome and condominium sales, falling by 4.0 percent year-over-year. Despite the decrease in sales volume, the average price of these properties rose by 7.0 percent to $247,437, and the median price saw a substantial jump of 14.1 percent to $223,000. Inventory levels grew from a 2.0-month supply to 3.7 months, aligning with levels observed in November 2023.
Current Houston Housing Market Assessment and Future Outlook
With positive indicators across the board, January 2024 brought good news to the Houston housing market. The surge in single-family home sales, coupled with favorable price trends, suggests a market on the upswing. As days on market eased slightly and months of inventory remained stable at 3.3 months, Houston continues to showcase resilience in the face of broader economic uncertainties.
Houston Housing Market Competitiveness and Future Outlook
The competitive landscape of the Houston housing market is evident in the segmented sales performance, with notable increases in higher-priced segments. Despite concerns about interest rates and inflation, the market has proven resilient, catering to a range of buyers, including those opting for rental properties. As Houston enters the year, the outlook appears optimistic, but stakeholders remain cautious, acknowledging the ever-changing economic landscape.
Houston Housing Market Forecast 2024 and 2025
As of January 31, 2024, the average home value in the Houston-The Woodlands-Sugar Land area stands at $300,955, experiencing a modest 0.3% decrease over the past year. Homes, on average, go pending in approximately 36 days.
Market Forecast
According to Zillow's projections, there is a positive outlook for the Houston housing market with a +2.9% one-year forecast as of January 31, 2024.
Housing Metrics Explained
For Sale Inventory (January 31, 2024)
The for sale inventory in Houston is reported at 21,778 units as of January 31, 2024, providing a snapshot of available housing options.
New Listings (January 31, 2024)
New listings during the same period total 4,870, indicating the pace of fresh opportunities entering the market.
Median Sale to List Ratio (December 31, 2023)
The median sale to list ratio as of December 31, 2023, is 0.982, offering insights into the alignment between listed and sold prices.
Median Sale Price (December 31, 2023)
The median sale price for homes in the Houston area, recorded on December 31, 2023, is $313,333.
Median List Price (January 31, 2024)
The median list price as of January 31, 2024, is $349,967, providing an indication of sellers' expectations in the current market.
Percent of Sales Over/Under List Price (December 31, 2023)
As of December 31, 2023, 15.5% of sales in Houston were over list price, while 64.8% were under list price, reflecting the dynamics of negotiations between buyers and sellers.
Understanding the Houston MSA and Housing Market Size
The Houston-The Woodlands-Sugar Land metropolitan statistical area (MSA) encompasses various counties, contributing to its robust housing market. The MSA is defined by its economic and social connections, creating a cohesive real estate landscape that spans a diverse range of neighborhoods and communities.
The size of the housing market in Houston is influenced by factors such as population growth, economic development, and housing demand. The substantial for sale inventory and continuous new listings demonstrate the dynamism and vitality of the Houston housing market.
As we navigate through these housing metrics, it becomes evident that the Houston market is characterized by a balance between buyer and seller dynamics, shaping the overall landscape of one of Texas' most prominent metropolitan areas.
Are Home Prices Dropping in Houston?
The 0.3% decrease in the average home value over the past year suggests a slight decline in prices. However, it's important to interpret this in the context of the broader market dynamics. The median sale price of $313,333 as of December 31, 2023, provides additional insight, indicating stability. While there's a modest dip in average value, individual property prices may exhibit variations, making it essential for buyers and sellers to stay informed about specific neighborhoods and property types.
Will the Houston Housing Market Crash?
The data does not currently indicate an impending housing market crash in Houston. The +2.9% one-year market forecast from Zillow suggests a positive trajectory. However, it's crucial to recognize that real estate markets are influenced by various factors, and forecasting comes with inherent uncertainties. Monitoring economic indicators, interest rates, and local market conditions is advisable for a comprehensive understanding of potential risks or shifts in the market.
Is Now a Good Time to Buy a House in Houston?
Considering the current state of the Houston housing market, characterized by a balanced scenario and a positive one-year forecast, it presents a favorable environment for prospective buyers. The median list price of $349,967 as of January 31, 2024, offers a competitive range, and the market dynamics, with a mix of homes going over and under the list price, provide negotiating opportunities. However, individual circumstances and preferences play a significant role, and it's advisable for potential buyers to consult with real estate professionals to make informed decisions based on their specific needs.
Houston Rental Market Trends
The Zumper Houston Metro Area Report analyzed active listings last month across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Texas one bedroom median rent was $1,119 last month. Sugar Land was the most expensive cities with one bedroom priced at $1,450. Texas City was the most affordable city with rent at $780.
The Fastest Growing Cities For Rents in Houston Metro Area (Year-Over-Year)
- League City had the fastest growing rent, up 9.8% since this time last year.
- Galveston saw rent climb 6.9%, making it second.
- Sugar Land was third with rent increasing 4.3%.
The Fastest Growing Cities For Rents in Houston Metro Area (Month-Over-Month)
- Huntsville experienced the largest monthly rent price growth rate, growing 6.5%.
- League City was second with rent climbing 6%.
- Sugar Land ranked as third with rent increasing 5.8%.
Houston Real Estate Investment Outlook
The city of Houston has long been a beacon for real estate investors seeking opportunities for long-term growth. As one of the largest and most dynamic cities in the United States, Houston offers a unique landscape for those looking to make strategic real estate investments. In this essay, we'll explore the factors that make Houston a promising destination for long-term real estate investment and provide insights into its outlook for sustainable growth.
Economic Resilience
One of the fundamental factors that underpin Houston's real estate investment potential is its economic resilience. Houston is home to a diverse range of industries, including energy, healthcare, manufacturing, and aerospace. Its role as the energy capital of the world has historically been a significant driver of economic activity.
While energy markets can be cyclical, Houston's economy has shown remarkable resilience even in the face of energy price fluctuations. This economic diversity serves as a stabilizing force for real estate investors, reducing the risk associated with economic downturns in any single sector.
Population Growth
Houston has consistently experienced population growth over the years. This demographic expansion is driven by several factors, including a robust job market, affordable housing, and a high quality of life. The city's attractiveness to both domestic and international migrants bodes well for long-term real estate investment. As the population continues to grow, the demand for housing and commercial properties is expected to follow suit, creating a reliable source of rental income and property appreciation for investors.
Infrastructure Development
Houston has made significant investments in infrastructure development. The city's commitment to improving transportation, public amenities, and urban planning has enhanced its livability and attractiveness. Infrastructure investments not only make the city a better place to live but also contribute to increasing property values. As Houston continues to expand and modernize its infrastructure, investors can expect to see a positive impact on their real estate holdings in the long term.
Real Estate Diversity
Houston's real estate market offers a diverse range of investment opportunities. Whether you're interested in residential, commercial, industrial, or mixed-use properties, Houston has options to suit various investment strategies. The city's size and varied neighborhoods provide investors with choices to tailor their portfolios to their specific goals. This diversity allows for risk mitigation through portfolio diversification, a key strategy for long-term real estate investors.
Top 10 Highest Appreciating Neighborhoods in Houston
- Gulfgate Riverview Pine Valley East
- Lawndale Wayside South
- Downtown Southeast
- Gulfton South
- Second Ward East
- Close In
- Second Ward
- Greenway Upper Kirby Area West
- Second Ward West
- South Main
(List by Neighborhoodscout.com)
Conclusion: Houston's Promise for Long-Term Real Estate Investment
When considering the outlook for long-term real estate investment, Houston stands out as a city with immense potential. Its economic resilience, population growth, infrastructure development, and real estate diversity create a fertile ground for investors seeking sustainable and reliable returns. The city's track record of weathering economic challenges and its proactive approach to urban development positions it as an attractive destination for those who value long-term real estate investments. As Houston continues to evolve and expand, it will likely remain a shining star in the constellation of real estate investment opportunities.
References:
- https://www.har.com/content/mls
- https://www.zillow.com/houston-tx/home-values
- https://www.neighborhoodscout.com/tx/houston/real-estate
- https://www.realtor.com/realestateandhomes-search/Houston_TX/overview