Houston residential home sales fell 10 percent in October 2015 to mark a significant shift in the real estate market, as per statistics from the Houston Association of Realtors. Townhomes and condominiums, which are usually the laggards in a rising market and the leaders in a falling market, had a drop of 17 percent in sales. For the past four years the Houston market has been on an unsustainable pace of increasing prices, increasing demand, and historically low inventory. This is the first double digit drop in residential home sales since 2011 and the primary reason given by real estate experts is Houston’s slowing economy. In addition, many have stated that the real estate market’s almost meteoric rise over the past four years had to taper off at some point.
The sales trends from the most recent 12 months show a 6.6% increase in the median price from 2014. The median price for a single family home in the Houston area is now $205,000. The number of sales, as mentioned earlier, has dropped by 10% from 2014. The number of sold homes in October 2015 was 5,873 which is down from 6,541 from a year ago.
Raymond Campbell of Houston Home Buyers stated, “A year ago the price of oil was above $80 per barrel and recently it has dipped below $40. And some oil analysts are predicting lower prices into the 30s before any meaningful rebound. In addition, a new round of announced oil industry layoffs, in the 10s of thousands, will put more downward pressure on both home prices and the number of home sales going into 2016.”
“It should be noted that these statistics are for existing home sales. The new home builders are facing a more significant slowing of sales and closings,” explained Mr. Campbell, “A recent Metrostudy pegged the new home slowdown in sales at 27 percent. Some of these builders are sitting on new homes with few interested potential buyers.”
What has been a seller’s market, where the seller has a strong position in asking for better terms and higher prices, is beginning to change to some degree. The sellers still have the upper hand because of the historically low inventory level of homes for sale. However, that position is weakening and now the buyers are in a better strategic position. The “bidding wars” with multiple buyers attempting to buy the same home are far less frequent at this time and buyers can negotiate better concessions and prices today as compared to one year ago.