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Temperatures dropped in August along with home sales in Houston, and while Houstonians welcomed the break from extreme heat, home sellers became anxious as market times increased.


While the market shift in August may have come as a surprise to some sellers, after 17 years of selling real estate, I want to remind everyone that the housing market typically cools in Houston as parents prepare to send the kids back to school and everyone comes back from vacation.


As families shifted their focus on back-to-school activities, there was little time to focus on buying a home, even if we weren’t also facing rising interest rates. As the housing market normalizes after a post pandemic frenzy, August was back to the status quo in relation to the housing market.


Hang on to your seats though! As we finish the Labor Day weekend, or what some people label as the last weekend of summer, we should see the Fall season pick up. Yes– there is a Fall season for home sales, and it typically starts after Labor Day weekend. According to Homelight, homes listed in September typically sell for more money.


While inventory levels have been creeping up in most markets and we have a 2-3 months’ supply of homes for sale verses a 1 month’s supply that we saw at the beginning of Summer, it is still a Seller’s Market, just a much tamer Seller’s Market.


Although interest rates are higher, home prices are leveling out so buyers do not have to compete against multiple offers and be forced to overpay for homes in most cases. There are still some homes that are exceptional that buyers are willing to pay above the market prices for, but I highly advise buyers to approach overpaying in this market. The last time I saw that happen in 2013-2015, those same buyers were upside down in their homes for at least 4 years.


Overall, this is a much calmer market for buyers to buy a home in, and it is still a reasonable market for sellers to sell.

We are officially in the third quarter of 2022, and while the year started off in a positive direction, there is lots of chatter about a recession and a housing market bust. Whether real or not, the chatter creates a slow down in spending on all sectors, and that includes the housing market.

As predicted, the feds have hiked interest rates 3 times already this year, and they are projecting to increase at least once more by the end of the year.  However, as of today, the average interest rate on a 30 year mortgage is still 5.5% and we are nowhere near the 7% that people were chattering  about in the 2nd quarter.

While I am not an economic expert, my 17 years of experience in Houston real estate has given me some insight on what to expect when the housing market shifts.

The second big word to watch besides Recession is Affordability.  Let’s face it, with an average of 20% appreciation on home prices in Texas over the last 2 years, we were already on track to price the housing market out of range for many buyers. Now with interest rates already 2 points higher than this time last year, home buyers will either have to decide to hold off buying, or they will have to lower their budgets.

In my humble opinion, the cool down of the housing market is a good thing for buyers. Due to abnormal low inventory levels, buyers have been paying above market for the last two years in order to compete with multiple offers. At least now buyers can expect to pay market value for a home, rather than overpaying.

I am fortunate to be a founding member of the Houston Relocation Network as well as a member of the Greater Houston Luxury Group, so I am able to gauge market opinions with some of the top Realtors in Houston on a monthly basis. In our last meeting, top Realtors in Houston all acknowledged that they have seen the showing activity slow down on listings, so Houston is feeling the impact of a market slow down.

I remain firm in my belief that Houston’s housing market will not slow down as quickly as the rest of the United States because our housing market typically follows oil and gas prices by 6-12 months, and with oil prices remaining around $100 a barrel, our housing market should remain strong. A “slow down” is a nice reprieve from the crazy fast pace and high prices that we have seen over the last two years, and buyers will actually stand a chance to buy a home without overpaying for it.

If you want to follow my Real Views on the Houston Housing Market, you can follow my monthly blog at www.energy-realty.com or check out my live version on Energy Realty’s YouTube channel.

The big news in real estate over the last few months is rising interest rates for home loans, but
in the last few weeks, interest rates dropped again by almost 1/2%. If you have been looking to buy a
home for the last year, there is no better time than right now.


Inventory levels have increased by 9% across Houston, so not only do buyers have more homes
to choose from, they need to jump on the lower interest rates while they last.


We are still in a Seller’s Market, and while the market is cooling, prices are stabilizing, not
dropping. What does this mean for a home buyer? Buyers should not have to offer 10% above the list
price to purchase a home today, which is a big relief for the buyers who have lost out on multiple offers
over the last year because they did not want to pay way above the market price. The buyer frenzy that
we have seen over the last 18 months due to low inventory and interest rates is cooling.


What do higher interest rates and inventory mean to sellers? First of all, with a 9% increase in
inventory, we still have low inventory levels with only a 2 month’s supply. Keep in mind that a healthy
inventory level in Houston is 3-4 months and 5-6 months in the rest of the United States. When
inventory levels in Houston exceed 4 months, we will be in a buyer’s market, but for now, we are still in
a seller’s market.


However, sellers should be cautious when pricing their homes today. Overpriced homes are not
selling like they were 6 months ago, and we are seeing those home prices dropping. Work closely with a
real estate professional to determine a realistic sales price before listing your home to avoid long market
times. Buyers are being more cautious as the news is heeding that real estate prices will drop soon.


Remember, the buyer’s affordability factor has dropped so the luxury market could be impacted
as interest rates rise. A $700,000 house purchase today with 20% down payment will result in the same
monthly payment as an $800,000 house purchase with 20% down payment did last year.


Whether you are a buyer or a seller, there is no need to panic, but you will need the guidance of
a real estate professional to help navigate through a changing market.

Assisted a Seller living abroad with $25k in renovations to flip their existing home and make another $40k on the sale!

If Your Home Is Not Selling, Schedule your FREE 30-minute Consultation to Evaluate Your Home’s Presentation and Price.

After:

The Transformation:

Advised my client abroad to spend $25k in updates on a rental property in order to sell their property for $60k higher and faster. While a concierge remodeling company quoted $60k to update, I prioritized painting walls, changing counters, updating the master bath, and refinishing wood floors instead of installing new ones for $25k. My special touch is the selection of modern lighting to completely transform the space, and in this case, I kept the existing kitchen cabinet color based on new trends.

What was our Key to Success?

First, We Addressed The Challenges:

  1. Most contractors advised painting kitchen cabinets for $5k which was more than my client wanted to spend. 
  2. Wood floors were dated and damaged, but the replacement cost was $20k
  3. Due to the seller’s budget, we had a decision to make – the choice of replacing the carpet or painting the walls

Next, We Tackled The Solutions:

  1. I recommended keeping existing and just updating the counters and backsplash. Saved $5k!
  2. I found someone to refinish for $8k and saved $12k!
  3. I chose to paint all the walls the same light neutral color.

Before:

The Results

I sold the house in 20 days at top dollar for the Seller.

I managed the remodel and selected all the finishes saving the client $45k on the remodel. The house would have taken 3-4 times longer to sell without the remodel and the seller netted $40k more with my remodeling advice and contractor connections.

Client Testimonial

I give Sherry and her Energy Realty team a 5-star rating. The house was so nice that I considered not selling it. This was my sixth time working with Sherry and her agents make the buying and selling process seamless!

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.

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.

Spring is in the air and as the flowers start to bloom, the Houston real estate market is still booming.

According to an article in Next Advisor Mortgage News, “77% of homebuyers believe there’s a bubble where they live, according to a recent Redfin survey,” but with inventory levels remaining at an all-time low and the pent up demand to purchase homes not going away, there is no indication that this booming market will slow down soon.

Houston is sitting in a great position with oil prices higher than they have been in over 5 years, and the relocation market in Houston is also busier than we have seen it in over 5 years.

As a prominent player in the relocation market, Energy Realty agents are busy, busy, busy!

As predicted since January, inventory levels are picking up in April, as this is historically the best month to sell a home. As of today, there are 138 homes on the market in Katy, compared to less than 100 in March—that is almost a 40% increase. Although buyers may continue to compete against multiple offers for the remainder of the year, the supply should continue to increase into the summer, causing a cool down in above-market offers.

The buzzword out there today when competing with multiple offers is Appraisal Waiver. Watch my video on our YouTube channel next week on the Addendum Concerning the Right To Terminate due to An Appraisal. Click here to subscribe to our Youtube channel:  https://www.youtube.com/user/EnergyRealtyTexas.

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