May Market Update

May Highlight:

HBJ 2023 Real Estate Awards Recipients

#2 New Dev. Transactions | #3 New Dev. Sales | #10 Large Team Transactions | #10 Large Team Sales

Summer is here! As the year continues to go by, it's important to stay up to date with the housing market. Whether you're a realtor, investor, buyer, and more, it's crucial to know all the facts when it comes down to the real estate market.

Not only that, 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.

What's Happening in Houston?

The TMC Helix Park will be opening up this year. The building is part of the first phase of 37-acre project. The park will include 6 million soft of development space.

Info via Greater Houston Partnership

New reports have shown the ION District's investments into Houston's ecosystem. The Ion District recently released its 2023 Community Investment Report, detailing the first year of its Community Benefits Agreement (CBA), which committed $15.3 million in direct investments.

Info via Greater Houston Partnership

Houston is emerging as a leading hub for carbon capture advances. Houston is reaffirming its global leadership in the energy transition as two major carbon capture and storage technology companies expand their presence in the region.

Info via Greater Houston Partnership

Development Spotlight

Welcome to Highland Heights Homes. An elegant blend of Texan and Modern design with twelve (12) two-story homes in a gated community, built by ZENITH Urban Development. These homes are equipped with durable & modern Quartz countertops, Whirlpool Stainless Steel appliances + Vent Hood, and a primary bedroom with dual closets, that features its very own oasis (a sleek primary bathroom with a frameless glass shower & white stand-alone tub).

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Recession isn’t the right word. So what are we in?

While we can say that we aren’t in a recession, it remains difficult to name the exact state of our economy. “Economic limbo” may be the right term, “uncertainty” certainly works, or “whiplash” fits. Three years post-pandemic, we are still trying to figure out the pre-pandemic economy, which grew with such stability from 2012 to 2020 that it was hard to imagine anything different. The pandemic hit and shifted our world from that of boundless, endless choice to a much smaller menu of options. Eat, work, buy, sleep, repeat. Asset prices soared. Consumers had money to spend and were eager to spend it. Easy credit conditions spurred price increases, especially home prices. The change in purchasing power in 2020 is hard to overstate. Due to falling interest rates, prices could rise 10% over the course of the year without changing the monthly cost of the mortgage. Said differently, a $500,000 loan taken in January 2020 cost the same every month as a $550,000 mortgage in December 2020. Interest rates remained consistently low in 2021.

A record number of buyers were priced into the market, and about a million more homes were sold in 2021 than the long-term average. However, skyrocketing inflation in 2021, in hindsight, was an obvious sign that the easy monetary policy was coming to a close, thereby creating the opposite effect of what happened in 2020 and 2021. The key takeaway is consumers felt wealthy and, to a large extent, were wealthier. Fewer options and opportunities to spend money led to more savings and wealth. How we feel means a lot when making big financial decisions. For many, if not most people, those feelings have changed, even if everything is technically fine on an individual level. Not that everyone (or anyone) ties their overall sense of well-being to Gross Domestic Product, an indicator of the economic health of a country or state, but recently released Q1 2023 data indicate that GDP fell from the preceding quarter, which isn’t surprising given the Fed’s effort to slow the economy. However, declining growth isn’t usually associated with rising consumer sentiments.

Info via HAR

Home prices are rising near peak

Inventory is once again driving the rapid price appreciation that Greater Houston is experiencing in 2023. Last year, single-family home prices peaked in June as buyers rushed to lock in a lower mortgage rate. The Fed announced rate hikes at the end of 2021 that would swiftly affect rates in 2022. The average 30-year mortgage rate rose 2% in the first four months of 2022, crossing 5% for the first time since 2011. That 2% jump caused the monthly cost of financing to increase 27%, so buyers rightly rushed to the market. As rates rose higher, the market cooled and home prices fell in large part to accommodate the higher cost of a mortgage. However, in 2023, demand started to rise again despite elevated mortgage rates, but it wasn’t met with the typical number of new listings.

This year, the number of new listings has been significantly lower than usual. Typically, inventory grows in the first half of the year as new listings greatly outpace sales. At this point, inventory growth in the second quarter can’t make up for the lack of growth in the first four months of the year, keeping supply of homes and, in turn, sales low for the rest of the year. As demand increases through the summer months, competition among buyers will climb with it, raising home prices. Single-family home and condo prices are near their record highs, and if active listings drop further in the second quarter, we could easily see home prices reach new record highs over the summer.

Info via HAR

Key Takeaways:

Home sales fell 2.4% month over month after a huge increase the month before. We may see more month-to-month variance than usual in the number of homes sold as buyers try to lock in interest rate dips.
The Fed hinted at pausing rate hikes after the third regional bank failure of this year to assess the vulnerability of the banking sector and the stability of the economy.
Housing inventory hasn’t increased meaningfully in 2023, an early sign that supply will further drive home prices as the summer months near.
Active listings in the Greater Houston area declined marginally in April, continuing a five-month horizontal trend due to fewer new listings coming to market.
The median single-family home price rose nearly $20,000 in the past three months, landing only 5.8% below the record high hit last year and indicating that the lack of new listings coming to market is driving pricing despite higher mortgage rates.
Months of Supply Inventory has declined significantly in 2023, and sellers are receiving a greater percentage of asking price, both of which highlight an increasingly competitive environment for buyers.