August Market Update

School is back in session! We are coming up to the last quarter of the year, and 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?

Texas A&M plans on building a cutting-edge research and training facility right next to NASA.

Info and Photo via G reater Houston Partnership

Hispanic Heritage Month is right around the corner. Come out to Avenida Houston on September 17th to celebrate.

I nfo and photo via Downtown Houston

A new expansive NYC-inspired park is coming to East Downton. The plan is to create and active and communal green space in Houston.

Info a nd photo via Secret Houston

Photo: @Goal Park Foundation 501c3 and Bowman

Development Spotlight

Welcome to "W heatley Landing," a beautiful sixteen home community by Zoom Homes. Phase 1 presents eight stunning, standalone 2-story homes with first-floor living. Each residence features an attached double car garage, elegant quartz countertops, and top-of-the-line stainless steel appliances. The primary bath, boasting double sink vanities, an expansive oversized shower, and a remarkably spacious walk-in closet. The open kitchen seamlessly integrates with the inviting living room, creating an enchanting space perfect for hosting and entertaining. Currently under construction, this remarkable community guarantees an elevated living experience.

Learn more

The powerhouse of housing

At the start of 2023, the economic consensus resoundingly predicted an impending recession, which has yet to come, and we’re happy to say that consensus has shifted to moderate economic growth. A “soft landing” — reducing inflation without a recession — seems more likely than ever. The economy is far from perfect, but the effect of largely positive economic news eventually leads to a more positive economic outlook from the average person. Job creation and GDP growth in the first half of 2023 have significantly beat expectations. Inflation is declining rapidly, and consumer confidence is the highest it’s been since February 2022. We can largely attribute the bounce in home prices to consumer perception, but consumer perception isn’t the only factor. Home prices certainly rose as recession worries subsided, even in the face of elevated mortgage rates. Supply, or lack thereof, has been the other major factor in the price rebound. Low, but growing inventory allowed for prices to increase quickly.

Housing doesn’t follow an Economics 101 supply-and-demand problem in part because it isn’t a commodity good. Inventory rising from near historic lows actually helps prices because more buyers can find a desirable home. During times of normal seasonality (at least pre-pandemic), inventory, new listings, sales, and prices all increase from January to July and decline from July to January. Any movement away from the hyper-low post-pandemic inventory levels is good for matching buyers with the right home, because buyers like enough selection to find the home they want in their desired location. Price appreciation this year indicates that even though sales are low, buyers are finding the homes they want.

During the Fed’s July meeting, board members decided unanimously to raise the federal funds rate for the 11th time since March 2022 to its highest level since 2001. Although headline inflation (Consumer Price Index, or CPI) is down by nearly two-thirds since it hit 9% last June, core inflation, which removes volatile food and energy prices from the inflation calculation, has only declined 15%. A large component to core inflation is shelter. The CPI for shelter is only down 5% from the March 2023 peak. This isn’t exactly surprising, considering how close prices are to their peak. The Fed stated they would take future rate hikes on a meeting-by-meeting basis. However, this was before Fitch downgraded U.S. credit on August 1. At best, the downgrade will have little to no impact on interest rates, but if it does have any effect, it will move rates higher. The average 30-year mortgage rate hit 6.81% at the end of July and 6.90 the first week of August. Based on weekly data ending August 3, we expect the average 30-year mortgage rate to hover between 6.25% and 7.25%.

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. In general, higher-priced regions (the West and Northeast) have been hit harder by mortgage rate hikes than less expensive markets (the South and Midwest) because of the absolute dollar cost of the rate hikes and the limited ability to build new homes. As always, we will continue to monitor the housing and economic markets to best guide you in buying or selling your home.

Info via HAR

Sales and new listings declined in July

Single-family home, condo, and high-rise condo sales and new listings rose in the first half of the year before declining in July. Typically, inventory peaks in July or August and declines through December or January. Single-family home and condo inventory continued to rise in July as new listings outpaced sales. However, inventory is so low relative to demand that far more new listings would still be good for the market. The unusually low number of new listings from January through July 2023 has directly impacted sales. The number of home sales is, in part, a function of the number of active listings and new listings coming to market. Since January 2023, sales jumped 61% while new listings rose 32%, whereas last year, for example, sales were only 26% higher in July than in January, compared to new listings, which were 46% higher.

As tight inventory levels continue, sellers are gaining negotiating power. In January 2023, the average seller received 93% of list price compared to 96% of list in July. Inventory will almost certainly remain historically low for the year, and the market will remain competitive in the third quarter.

Info via HAR

Key Takeaways:

-The median home price in the United States landed 1% below the all-time high it reached in June 2022 after appreciating 13.6% in 2023. At the same time, mortgage rates are 1% higher than a year ago, which means the monthly cost of a home is 10% higher than last year.

-The Fed hiked rates by 0.25% in mid-July to the highest level since 2001, which didn’t impact mortgage rates because the rate increase was expected. However, Fitch unexpectedly downgraded U.S. credit from AAA to AA+ on August 1 and, although we’ve maintained that 30-year mortgage rates would likely hover between 6% and 7% during 2023, the surprise downgrade may push mortgage rates slightly above 7% in the third quarter.

-Broadly, the economy is doing well with strong GDP growth, high employment rates and job creation, falling inflation, and growing consumer confidence. Strong economics coupled with a low supply of homes have kept prices climbing, despite sustained elevated mortgage rates.

-Single-family home prices were up 4% in the Greater Houston area, 3% below the record high hit in June 2022. Condo and high-rise condo prices rose 12% and 11%, respectively, in the first half of 2023.

-Sales and new listings fell from June to July, likely indicating the start of the typical seasonal decline across supply and demand metrics. Although demand is still greater than supply, total inventory is near a two-year high, which has helped alleviate some excess demand.

-Months of Supply Inventory has declined significantly in 2023, homes are selling more quickly, and sellers are receiving a greater percentage of asking price, all of which highlight an increasingly competitive environment for buyers.

Info via HAR