This was an exciting week in real estate as interest jumped to the highest levels we have seen in over a decade! Everyone is on the edge of their seats waiting for the impending “market crash” with predictions that the higher interest rates will stop the onslaught of buyer demand across the United States.
In my opinion, the buyer demand in Houston will continue at a steady pace as oil prices head upwards of over $110 a barrel. Remember that the Houston real estate market typically follows the oil market by 6-12 months, and oil prices started heading upwards at the beginning of 2021, and they are now at the level we saw in 2014 when the buying frenzy in Houston pushed home prices up 20% in one year. In reaction to high oil prices, oil companies are relocating people to Houston in greater numbers than we have seen since 2014 as well, so this is adding to both our buyer and renter pool.
Homes that were priced at $300,000 10 years are now surpassing $500,000 in Katy, which is now affecting the affordability factor for the average Houstonian. Rising home prices coupled with rising interest rates will affect some home buyers so that they can no longer afford the home of their dreams.
The Houston Chronicle just released an article a few days ago that revealed, “Households would need a minimum of $73,600 annually to be able to afford a median-priced home in the Houston area – about $15,600 more than they did a year ago.” According to Patrick Jankowski, Senior Vice President of Research for the Greater Houston Partnership, “The median price of a single-family home in Houston has increased nearly $80,000 in the last two years, and this makes it difficult for families to afford to buy a home.”
In summary, we are in for a crazy ride in real estate this summer in Houston, and tensions are rising as buyers still fight to complete with multiple offers in many of the Houston markets. Some buyers will drop out, but others will follow as more people relocate to Houston in greater numbers than we have seen in a while.
I am committed to keeping our clients and agents informed about my real views on this crazy market in our monthly newsletter and will always include articles from other sources about the market and mortgage rates. I think Houston will see another stellar year in home sales for the remainder of 2022 despite rising interest rates and low inventory, but it could be a bumpy ride.