Yesterday's real estate symposium offered a glimpse of the Houston area housing market. While some of the news was sobering, there were also positive signs for Houston real estate.
As Barton Smith noted in his presentation, more than a third of current pending home sales are foreclosures. The weight of this statistic can be attributed to the large number of starter homes. Sales on the lower end are expected to struggle into 2009, as more foreclosures work through the system. Smith noted that a third of area sales during 2007 were made with 100 financing and he expects a lot of those to come back on the market as foreclosures.
While prices have declined on the lower end, the higher end of the market has experienced price gains. Price gains on more expensive homes may slow as the foreclosures on the lower end trickle up. When owners have a difficult time selling smaller existing homes that results in fewer available move-up buyers.
Katy is a prime example of the tale of two markets. North Katy (North of I-10) has seen a large number of foreclosures, with an oversupply of starter homes. Zip code 77449 has been hit particularly hard. By contrast, South Katy has relatively few foreclosures and a much higher average sales price.
One positive sign for the market is that builders have been proactive in tightening their supply of homes. Sales of new homes outpaced starts for the first quarter of 2008. Moderate building activity should keep inventory in check and provide pricing support.
Smith also noted that Houston is likely to remain the fastest growing urban market in the country for the next few years. This can be attributed to the surging energy market and the large number of jobs being added to the economy.
For more information about the Institute for Regional Forecasting and the annual real estate symposium you can visit www.uh.edu/irf.
For more information about real estate and mortgage issues in Katy or West Houston contact Aaron Layman. He is a licensed real estate broker and mortgage broker. You can contact him directly at 281-994-5190. You can also visit him on the web at www.AaronLayman.com.
