House prices for single family homes in Houston recently hit an all-time high as the property market in the city continues to show an imbalance of demand and supply. Real estate experts expect this situation to continue for the immediate future meaning that for many families, the only solution is to rent a property.
According the Houston Association of Realtors, figures for April this year show that the average price for a single family home had reached $270,505 – a 7 per cent increase on April last year and the highest on record. This unprecedented rise in property prices has been prompted by homebuyers entering bidding wars in an attempt to secure a home in a market where demand far outstrips supply.
Year-on-year figures for sales of homes show negligible increases. The 6,438 single family homes sold in April this year represent a mere 0.3 per cent on the previous year’s statistics, a fact attributed to Houston’s acute lack of supply in a market driven hard by demand.
Houston is a fast-growing city where job opportunities are also expanding rapidly. Employment at the end of the first quarter this year had grown by 2.4 per cent and the unemployment rate in March of 5.5 per cent is the lowest for five years. This burgeoning job market combined with low mortgage interest rates is pushing homebuyer interest in Houston property upwards.
But Houston is currently very much a seller’s market and would-be homebuyers find themselves with few properties to choose from. Houses rarely stay on the market for more than 90 days – homes that take longer to sell are generally in very poor condition or priced out of the market – and estate agent listings are limited.
The Houston Association of Realtors puts Houston’s supply at 2.6 months of inventory meaning that if nothing more comes onto the market, property will run out in just over two and half months. This inventory stock (the lowest for 30 years) has remained static since December last year and is far below the national average of nearly 5.2 months.
In this scenario, families are faced with no choice but to rent a home and the rental market for single family homes and condominium properties has seen further increases this year. Rental price rises on the back of high demand in the market mirror those seen in the property market.
This situation is expected to continue for the immediate future since the only solution to lack of supply is to build new homes. New-build construction has increased around 9 per cent so far this year in Houston, but the shortage of labour and land means there’s a long way to go before supply comes near to matching demand. For the time being, the Houston property market belongs to homeowners looking to sell their home or to rent it.
Source: Houston Association of Realtors