With all the chatter about the housing market slowing down across the United States, I want to remind everyone again that Houston’s market will not be impacted immediately like the rest of the United States because as I type this, the price of crude oil is $117 a barrel.
As I have stated before, Houston’s real estate market follows oil prices by 6-12 months, and we just started seeing the housing boom in markets impacted mostly by oil and gas, like the Energy Corridor at the beginning of 2021.
Despite all of our talk about Houston’s economy not relying solely on oil and gas like it did in the 1980’s in 2020, oil & gas accounted for 35% of Houston’s economy, and it is on the rise again.
As you may recall, the suburbs were booming in Houston by the later part of 2020, while markets like the Energy Corridor were stagnant. The suburbs like Katy, Cypress and Sugarland are still super-hot, and we are still seeing multiple offers, above list price contracts, and appraisal waivers at this time, that higher interest rates have not slowed down yet.
Rising interest rates and the costs of inflation could slow down buyer demand, but there is still so much pent-up demand, that I do not see this slowing down much in 2022—let’s face it, we are already half way through the year!
As I predicted 2 months ago, inventory levels have been on the rise since we hit the prime selling season in April, and as school is letting out, inventory levels in Katy are near the high of last year with 277 active listings for sale in Katy today. This is still less than a 2-month supply of inventory, which means that we are still in a seller’s market, and likely to remain there through the end of the year.
Will Houston feel the heat of rising interest rates and inflation? Absolutely, but not at the same level as the rest of the country. As long as oil prices remain high, Houston’s housing market will follow.