HOUSTON

The Facts

• Inventory continues to climb. Currently sitting at 4.3 months (up 1.3 months YOY and up 0.3 months MOM). We would not normally be seeing inventory rise in a summer month like June.
• Total sales and total dollar volume are DOWN 13.6% and 12.2%, respectively.
• Mean and median sales prices are still trending up (0.8% and 0.7% YOY)
• Rental listings are up 8.5% YOY and lease prices are up slightly (1.3%)
• 10 Year Treasury is sitting at 4.242% as of this posting. Mortgage rates for owner occupied 30 year loans are sitting in the high 6 / low 7 percent range.
• See the CME Group FedWatch tool link below. The market continues to bet on lower interest rates going forward. Right now the market is betting on about 150 bps of target rate drops a year from now. But they've been betting basically the same thing for the last two years, so we will see!

https://www.har.com/content/department/newsroom?pid=2096

https://www.har.com/content/department/newsroom?pid=2097

https://www.cnbc.com/quotes/US10Y

https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html

My Take

• I'm continuing to put deals under contract on both sides. The homes that sell the fastest and for the most money are the ones with absolutely nothing for a buyer to do when they close.
• The luxury market (I'm going to call this $1M+) and the first time buyer market (I call this <$400k) have remained strong. It's the middle class type of home ($400k to $1M) that's been a little more difficult to move lately. That's submarket dependent of course, but in general terms, fairly accurate.
• In the last month, Breanne and I closed deals in East Downtown, Spring, Montgomery, New Braunfels, and La Vernia.
• About a year ago, maybe a year and a half ago, I started getting "bail me out" calls from owner occupant folks with real estate in the DFW market. I probably got about 4 or 5 of these from folks looking to offload real estate in the DFW market for below market prices. The DFW market is down overall since then (Jack can speak better to the amount than I can), and I think there is probably a correlation. I just got my first call from someone in Houston like this. So is it possible that the building inventory numbers we see above coupled with my anecdotal story here could mean that we are in for some price declines in Houston in the next year or so?

Bryan / College Station Area Statistics:

• Sales are down across the board by 15% YOY for the Brazos Valley in June and down 0.4% for the 2Q24.
• The only parts of the Brazos Valley seeing an uptick in sales for the 2Q24 are those markets where supply is near or above 6 months (6 months is balanced/equilibrium market). Those markets are Robertson/Leon and Grimes Counties.
• There are currently 1,143 active listings for sale with 404 listings in CS and 325 listings in Bryan.
• Average sales price was $374K compared to May's $401K. Overall May's figure is in-line (albeit slightly below) with the 2024 average at $380K.
• The impact of rates staying higher for longer has really hit the affordability of folks looking to purchase. What this means is - it's not the price of the homes keeping people from buying, it is the monthly payment.
• Looking back at the 2024 performance compared to the last 10-years, we are running almost 45% below the 2020-2023 Markets performance YTD, but still above 2013-2019 - this shows the continued growth of the BCS area and overall economic strength.
• Overall Months of Inventory continues to rise at 4.4 months which is a 69% increase from June of 2023

Bryan:



College Station:



Burleson County:



10YR Monthly Sales Volume:




Let me know if anyone has any requests!

That you again for posting this. I read it every month

Sea Speed said:

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Can you share the reason folks needed to be bailed out? Liquidity crunch I imagine? How much below market are they listing for? Are these below market listings getting any sort of bidding wars?

I would imagine this will accelerate.

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Liquidity crunch. All of these were off market, phone call type of asks for help. I'll give one example. Friend who knows I invest calls me last April and says he has a family friend who is looking to sell a house quickly. The husband and wife are about to get a divorce, haven't made a payment since Covid deferrals kicked in, that has ended, and they want to sell it, but they also want to stay in the house until the kids finish school that year, and maybe even longer. I offered enough that they could avoid foreclosure, stay in the house for a few more months, and even take a small amount of cash after vacating. But there were also strings attached where I tried to protect myself from a situation where I got dragged into the middle of the divorce situation or a bad tenant situation. I thought I was being very fair. Made my offer and heard back a couple of days later that a young buck investor doing his first deal had stepped in and offered them full market value with a quick close. That's how it goes sometimes!

Red Pear Realty said:

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Sea Speed said:

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Can you share the reason folks needed to be bailed out? Liquidity crunch I imagine? How much below market are they listing for? Are these below market listings getting any sort of bidding wars?

I would imagine this will accelerate.

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Liquidity crunch. All of these were off market, phone call type of asks for help. I'll give one example. Friend who knows I invest calls me last April and says he has a family friend who is looking to sell a house quickly. The husband and wife are about to get a divorce, haven't made a payment since Covid deferrals kicked in, that has ended, and they want to sell it, but they also want to stay in the house until the kids finish school that year, and maybe even longer. I offered enough that they could avoid foreclosure, stay in the house for a few more months, and even take a small amount of cash after vacating. But there were also strings attached where I tried to protect myself from a situation where I got dragged into the middle of the divorce situation or a bad tenant situation. I thought I was being very fair. Made my offer and heard back a couple of days later that a young buck investor doing his first deal had stepped in and offered them full market value with a quick close. That's how it goes sometimes!

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Another example - House behind my rent house was bought in August 2023 by an Airbnb guy. I didn't find him having more on the county tax records. He is now selling it as a "cash flowing" investment for $100K above the market and above his purchase price. I'm sure he is sitting with a painful interest rate and high UPB give his purchase date.

I don't think he will get it sold for that price but hey it's called a market for a reason.

This is data looks at months of housing inventory over the last 20 years. I sourced it as of this month. HAR (Houston) data only, but for everything posted to HAR (that spans globally). We are about to cross the historical average for months inventory (4.4 months).

Edit: This is relevant because, as I've continued to say, pricing follows inventory.





Source: HAR.com

So cheap housing is coming back but no one can afford the interest anyways.

NORTH TEXAS

• Price decreases have arrived across the Metroplex and its a response of the dramatic increase in inventory the past couple of months compared to same time last year.
• If you are selling you have to be aggressive and reel it in if you have one on the hook.
• Appraisals are starting to come down as a result of some of the trades that are out there and they are not being as aggressive or leaning into other comps.
• Buyers are still tire kicking and those that decided to make a move have a thin margin when it comes to affordability. Like Jamie said, this is seen more on the middle class portion of the market.
• I have gotten calls from Sellers wanting to down size (maybe overstretched) or needing to move after only one year and expecting to get what they paid originally. When I do the CMAs its tough to get there. Most of them are in areas where new homebuilders are delivering a constant supply of inventory with financing incentives so you have to get creative to compete in addition to the existing inventory.
• Its definitely a different market here for the most part, however, if the rates come down into the 5s I expect things to turn pretty liquid in a short amount of time. I just feel that there's so many people out there that didn't buy in 2020-2022 that are still looking and ready to move if the numbers make sense.

Relevant Twitter thread

Sales down

Prices turning down

Inventory rising FAST

This is how price corrections begin https://t.co/pg08yhiGsY

— Amy Nixon (@texasrunnerDFW) July 20, 2024

This is data for the Highland Lakes area.