Houston-area homebuyers face a tightening supply of homes just as the busy Spring home-buying season is about to hit.
Chyenne Meyers has been scouring the housing market for eight months, looking at neighbor-hoods in good school districts from Katy to Tomball to Champion Forest to Cypress.
The 23-year-old book keeper struck one deal by bidding more than the asking price, but the home didn't appraise for that amount, the seller wouldn't lower the price, and the deal collapsed.
"I thought the whole process would be fun," she said. "I watch HGTV. I didn't think eight months later I'd still be sitting here trying to find the perfect home."
Houston-area prices and sales were already in record territory for the month of February. The number of single-family home sales rose 5.3% year-over-year to a February record of 5,260, according to a Houston Association of Realtors report released March 14. The median price ticked up 1.4% to $226,200.
Meyer's brokerage, Mark Dimas Properties, which sells homes primarily in suburban neighborhoods in from Spring to Katy, is receiving strong demand for entry level houses as buyers seek to lock in a mortgage before higher interest rates cut into their buying power. For example, if mortgage rates go up 1 percentage point in the next 18 months from the current rate of about 4.5%, a $200,000 house would have the same payment as a $180,000 house in the future, he said.
"Anything under $200,000 is flying off the market," said the brokerage's namesake, Mark Dimas. "Their big fear is interest rates going up to where it prices them out of properties they can afford."
The Dimas team has come up with creative ways to help buyers source properties that aren't yet on the market. That includes sending letter campaigns introducing a prospective buyer in targeted neighborhoods in hope of finding a willing seller. In Dallas, agents have gone so far as knocking on doors.
Homes in the Houston region stayed on the market an average of 62 days in February, two days faster than a year ago, according to HAR, which analyzes sales handled through the Multiple Listing Service primarily in Harris, Fort Bend and Montgomery counties.
Inventory, which represents the time it would take to sell all the listings on the market based on the previous 12 months of activity, slipped to 3.2 month from 3.4 months a year earlier. That compares with a 3.4 month supply nationally, and is well below the six months supply considered to be a balanced market where buyers and sellers have equal footing. The supply has further constricted since Hurricane Harvey hit six months ago when inventory stood at 4.3 months.
"February was a positive month overall for Houston real estate, but we really need growth in inventory to ensure that there is a plentiful supply of homes as we enter the spring buying season," HAR chairwoman Kenya Burrell-VanWormer with JPMorgan Chase said in a news release.
Home sales typically ramp up in March and peak in the summer as families settle into their homes before the school year begins. The most active month for sales ever occurred last June when nearly 8,400 single-family houses changed hands.
As Harvey-damaged houses are restored, more properties will hit the market over the coming year, Dimas said. He's seeing renovated houses in the $300,000 range in suburban areas that flooded only one time sell for pre-Harvey prices. The houses frequently have new flooring, cabinets and appliances, and look like new.
"Even though the prices are the same, you get a better product overall," he said.
Chuck Poteet, broker/owner of HomeSmart Fine Properties, has witness a different dynamic in some pricier neighborhoods hit by Harvey along Buffalo Bayou on Houston's west side. Investors who picked up flooded houses at sometimes 50 cents on the dollar for a $500,000 house, for example, are now selling them for a 20 % discount to the original value after fixing them up. The price to buy investment properties, however, has gone up 10% or more since the flood as neighborhoods recover and homeowners move back in, Poteet said.
"There are plenty of investors out in our marketplace looking for that opportunity to purchase a home that they could renovate and remodel or flip," Poteet said.
Buyers who plan to restore and live in the homes are also driving sales in neighborhoods such as Lakeside Forest and Walnut Bend, Poteet said.
Across the Houston market, homes priced between $500,000 and $750,000 experienced the biggest sales uptick, rising 18.8% over February 2017, HAR said. Homes that in that price range accounted for 5% of February's sales.
Luxury homes, those priced above $750,000, leveled out after three straight months of declines. The category made up 3.2% of the month's sales.
Sales of homes between $150,000 and $500,000 rose by more than 10% , according to HAR. Homes priced below $150,000 showed a decline in activity.
The average price of a single-family home price rose 0.4% year-over-year to $281,945, a record for February. Single-family rents rose 4.1 percent to $1,720 per month. The number of single-family homes leased fell 11.5%.
After a long and exhausting search, Meyers is finally scheduled to close Thursday on a house in Stone Gate that drew seven other offers. She'll pay $180,000, about $5,000 over the list price, and settle on a two-story house with a bit smaller yard than she had wanted. But her 5-year-old son will get to stay in the same school within the Cypress Fairbanks Independent School District.
"I put 10 total offers in," Meyers said. "This was lucky number 10."
