CQ Brief: August Edition

Welcome to the August Market Update

Back to school season is here!

Let's all go back to school by educating ourselves with what is happening in the real estate market. Whether you're an agent, investor, buyer, and more, it's crucial to know all the facts when it comes down to the real estate market.

Not only that, but we also have all the information you need to keep up to date with what's going on in Houston! From activities, to news, business, and more! We find it a key factor to know what's going on around us when selling houses in the Houston area. Remember we are selling a lifestyle, not just a house.

What's happening in Houston!

White Linen Nights on 19th street in the Heights will be happening this Saturday! But, there has been a change to this event, now requiring you to have a ticket to attend. Make sure to grab your tickets before it sells out.

Info & photo W hite Linen

August 1, 2024 officially kicks off Houston Restaurant Weeks! Dine at some of your favorite or try out a few new restaurants for an unforgettable experience.

I nfo & photo via H ouston Restaurant Weeks

Quick Market Take:

Since January 2024, prices have climbed 13.6%, reaching an all-time high in May and another in June 2024. Similarly, the monthly cost of financing has hit a record high, meaning that home affordability is at a record low.
In June, the average 30-year mortgage rate declined to 6.86%, dropping 0.17% from the 2024 high reached in April. The Fed may cut rates as early as September, but the magnitude of the cut will be small, likely 0.25% this year. Currently, we expect rates to remain between 6% and 8% for the rest of 2024.
Sales fell 0.7% month over month, while inventory rose 6.7%. The combination of rising prices and high interest rates has kept sales historically low. Since January 2023, sales have trended more horizontally, although we expect sales to decline until spring 2025.

Values Keep Rising as More Homes Come onto the Market

American homeowners continue to see the value of their homes rise as buyers remain poised for the beginning of interest rate reductions by the Federal Reserve.

Anticipated falls in mortgage costs have yet to materialize as the Fed remains concerned about the risk of inflation due to the nation's strong economic performance and buoyant employment growth.

Houston Area Market Data

Surprisingly Unsurprising: High Rates, High Prices, High Inventory

In June, prices rose for the fifth month in a row, peaking at an all-time high in June 2024. This also marks the 12th consecutive month of year-over-year price growth. According to typical seasonality, the median price peaks in June, so we expect prices to decline starting in July. Over time, prices generally move much higher in the first half of the year than they decline in the second half; you can think of it as two steps forward and one step back, year after year. Last year, for example, prices rose 13.7% from January 2023 to June 2023, then fell 7.7% from June 2024 to January 2024, which was still a year-over-year gain of 4.9%. This year will likely look similar, although we don’t think that prices will decline as much in the second half of 2024 as they did in 2023, especially if the Fed cuts rates in the fall. Even a minor rate cut, like the expected 0.25%, could significantly affect mortgage rates, as it would signal the beginning of more and more cuts.

For the moment though, we are starting summer with a combination of elevated mortgage rates and record high prices, which have brought affordability to an all-time low. Low affordability has resulted in fewer sales and growing inventory. Demand is still high relative to supply, even though inventory is building. We know that demand is still high because buyers are still buying at peak prices. From a historical context, we should’ve expected this to happen. We took a look at data from the 1980s to see how much home prices appreciated during a decade-long period of the highest mortgage rates in history. From January 1, 1980, to January 1, 1990, the 30-year mortgage rate ranged from 9.03% to 18.63%, with an average rate of 12.71%. Although home prices didn’t increase dramatically like they have in the recent past, inflation-adjusted home prices still increased about 8% during that decade. Today, with the strong U.S. economy, it was never very likely for home prices to stagnate or decline due to higher mortgage rates. However, high rates have slowed sales volume considerably, which has caused inventory to grow.

Overall, inventory growth is great news for the undersupplied U.S. housing market. According to data from the National Association of REALTORS® (NAR), inventory reached its highest level since August 2022. The market is still broadly undersupplied, but the increasing inventory level should cause rising home prices to slow. In the pre-pandemic seasonal trends, sales, new listings, inventory, and price would roughly all rise in the first half of the year and decline in the second half of the year. Sales and new listings have been far lower than usual since mortgage rates started climbing, which is to be expected. Because we don’t anticipate sales to pick up until the spring of 2025, inventory could continue to grow in the second half of the year.

Different regions and individual houses vary from the broad national trends, so we’ve included a Local Lowdown below to provide you with in-depth coverage for your area. As always, we will continue to monitor the housing and economic markets to best guide you in buying or selling your home.

Featured Development

Final residence available. In a testament to craftsmanship and elegance, NJA Homes blends contemporary and traditional elements in these enchanting farmhouses. Greeting visitors through a solid wood, divided glass door, the home boasts a spacious foyer lined with stained oak engineered flooring that extends throughout the entire house, forgoing any carpet. Two sizable bedrooms round out the first floor, sharing a spacious "jack & jill"-style bathroom. Atop the stair landing, guests are welcomed to an open-concept dining and living space with a tall, vaulted ceiling. The chef's kitchen offers abundant storage with sleek dual-toned shaker cabinetry and brass and gold hardware, complementing the streaked white quartz countertops. A sizeable primary bedroom provides an ensuite bathroom with double sinks, oversized countertops, a soaking tub, and a large glass-enclosed shower. The Terry Farmhouses are just minutes from Houston's major highways and the city's main attractions.

That's it for this month! Make sure to check back every end of the month for a new CQ Brief update!