HOUSTON

Quote:

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As the summer temperatures climbed in August, Houston's housing market experienced a cooldown. The slower sales volume enabled inventory to expand and prices to moderate, creating a positive landscape for home buyers.

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The Facts

• Number of sales and total dollar volume continue to fall year over year and month over month.
• Active listings are up again month over month and year over year.
• Mean / Median prices are basically flat (up 0.9% / down 0.3%), and seem to be starting to stall out.
• Days on Market (DOM) for single family homes are up from 43 to 47 days.
• Y'all know that I'm big on inventory. The last two months that I posted, we were at 4.3 months, but this last month, we've grown to 4.5 months. The historical average for Houston over the last 20 years has been 4.4 months, so I'm officially calling this a "buyer's market".
• The 10 Year US Treasury yield is at 3.629% as of my writing this post. Last month I snapshotted it at 3.93% and the month before I clocked it at 4.242%. We've seen some big movement recently to say the least.
• Mortgage rates are WAY down. Mid 5% range for new owner occupant purchases with good credit, good loan size, and a small buy down is very doable. Get ready to refi this winter/spring.

My Take

• In the last month, I did deals in Pearland, Rice Military, and Jersey Village. The last week or so I've been SLAMMED with activity on the buy and sales side. I think I'll do more deals this month than I did last month and I don't know if this is the end of the summer sales season, or the effect of rates declining, or maybe the hurricane, but I wasn't expecting that at this time.
• According to the CME FedWatch tool, the market is betting with 61% certainty that the Fed will drop their target rate 50 bps (0.50%) in the next two days when they meet. If you are looking to buy soon, it might be a good idea to lock before the meeting, because if the only drop their target by 25 bps, mortgage rates could rise.
• Mortgage rates really started to drop in July. Based on what I've read, prices and the economy really don't start to feel the effects of rate declines for about 14 months. So I'm calling my shot that you have about 12 months or so until prices start to react to the declining mortgage rates (and go back up again). I already have some tuned in clients reaching out to ask if it's time to refi. Once the refi money starts to get back in the hands of the market, hold on.

https://www.har.com/content/department/newsroom?pid=2114

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

Complete Idiot said:

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I've been get more price drop alerts for houses than I can recall in the past (just based on emails from Zillow and Redfin)

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I see this comment a lot on these threads and I would note a couple of things (speaking to Houston only):

1. Overall, the data shows that the mean sales price is still UP 0.9% and the median is down 0.3%. This is also showing that the price declines are mainly happening in cheaper priced homes, while the luxury market is doing fine.

2. The market is not 100% uniform. There are submarkets that are on fire (Memorial, Spring Branch, Oak Forest, Tanglewood, etc., see #1 above) and then there are submarkets that are doing ok (some suburbs), and then there are submarkets that are cratering (like land in tertiary markets).

3. I WANT to see huge price declines because I'd love to go buy a ton of real estate right now. I'm primarily an investor, and while I do brokerage, it's not my main source of wealth, so please don't take any of this as "realtor fluffing".

4. The biggest thing I think of when I see posts like the one above is that there are a lot of sellers who still think it's 2021 and price their homes accordingly. Please check out the very scientific chart that I drew below. The real estate market moves in waves, and we are currently sitting at that blue star on the far right side of the chart. HOWEVER, a lot of sellers are still off in la la land, and instead of following the market, they have priced their homes as if interest rates never began rising and they are at that black circle up top. That pricing is not going to happen any time soon, so they drop their price 1-2%, but are still priced nowhere near market value, so their property will continue to sit unsold. I think we will see degradation of the market for the next 12 months or so until rate declines flush through the markets, but I don't think we will see prices decline any more than 5% or so before they bottom out and start to rebound. I actually think it will be closer to 3%, if not less.

Yup. Was wrong. This is almost concerning…. What did they see in that data that makes them think they needed to take their foot off the brake that much?

San Antonio Market

-Just over 1/3 of the sales this month were new constructions
-Prices are holding steady with only about a 3% decrease since this time last year
-100+ days from list to close



New Braunfels:


Fair Oaks Ranch


Guadalupe County


Gonzales County


DeWitt County


**If you don't see your area, let me know! I'm happy to track down the data and post it for you.**

NORTH TEXAS

• I'm surprised to see prices remaining flat YoY metroplex wide, with some counties seeing significant increases. Are the increases due to an influx of new construction that's priced higher than the older stock? I have to dig in more and find out what's going on there.
• Otherwise its been slow, however, I say that compared to what we saw in the previous 2 years. Houses are sitting for longer on average. Days on Market increased 10 days YoY and Inventory is climbing fast with a 45% increase in active listings and 4 months of inventory. This is a big jump from 2.7 MOI in August 2023.
• You have to stay aggressive on the listing side and stay visible. Buyers still favoring move in ready product in key pockets, otherwise, listings have to grind it out.
• "Applications to refinance or purchase a home in the week that ended Sept. 20 rose 11% week over week, according to the Mortgage Bankers Association (MBA). Refinancing applications jumped 20% during that period as more consumers sought to take advantage of falling mortgage rates. It's the second consecutive week of double-digit application gains. Refinancings made up nearly 56% of applications as the typical summer homebuying season wraps up, according to the MBA."