TOM PLANT'S HOUSTON REAL ESTATE BLOG

Real Estate agents know you cannot sell a home unless it is on the market. In 2011, West University and Southside Place saw sales decline more than 16% compared to 2010 due in large part to lack of inventory. Currently there is less than 5 months inventory for homes priced between $1 million and $2 million. This signals a clear Sellers’ market. As I have said in earlier posts, how inventory moves over the next three months will have a major impact on how the residential market performs. We did not see much increase in homes for sale during January.

Shown below are the details for 2011 home sales in West University and Southside Place by price range.

Based upon information from the Houston Association of REALTORS® or its MLS for the period January 1, 2010 to December 31, 2011.

Home sales in Houston’s River Oaks and Avalon neighborhoods were strong in 2011 with more than 35% increase. Homes priced under $2 million led the increase. Sales of homes priced over $2 million continued to be slow.

Details of sales by price range are shown below:

Based upon information from the Houston Association of REALTORS® or its MLS for the period January 1, 2010 to December 31, 2011.

While the number of homes sold in Houston during 2011 increased 4.5% over 2010, sales of homes inside Houston’s Loop 610 increased 19.1%. This increase was led by a 35.3% increase in homes priced under $350,000. Home sales inside Loop 610 have consistently outperformed the areas outside the Loop over the past 2 years.

I will be providing information about specific neighborhoods Inside Loop 610 over the next few days. Shown below is information about sales Inside Loop 610 for 2010 and 2011 by price range. Please note the low inventory numbers for all price ranges except over $2 million.

As previously reported, overall single family home sales increased 4.5% in 2011 compared to 2010. To help you understand the dynamics of the market I break the results into sales by neighborhood by price range. Watch this blog in the coming days for reports on these different market areas.

Today I have analyzed the sales for all of Houston by price range. Sales of homes priced $500,000 and lower in 2011 increased 4.2%. Sales of homes priced over $500,000 increased 10.2%.

Here is the breakdown of inventory and sales by price range.

Based upon information from the Houston Association of REALTORS® or its MLS for the period January 1, 2010 to December 31, 2011.

For many reasons, home owners in Houston have been slow to place their homes on the market. As of January 1, 2012 there were 25,699 single family homes actively for sale through Houston Association of REALTORS® MLS. This is the lowest number of homes on the market since December 2003.

The current inventory level represents 5.9 months of inventory. This is the number of months it would take to sell all homes currently on the market at the current rate of sales. Generally 6 to 7 months is considered a stable market, more than 7 months a Buyers market and fewer than 6 months a Sellers market.

What happens to inventory will be critical to how Houston’s residential market performs. Generally, low inventory results in fewer sales due to the lack of choice available to Buyers. Low inventory will also result in increased sales prices.

On the other hand, if owners see positive signs in the market and a glut of homes surges on to the market, this could negatively impact the market. A very large increase in inventory could easily result in reduced sales prices.

The information currently available leads me to believe there will be a measured orderly increase in inventory. This is what we experienced seasonally in years before the bubble. Watch this blog throughout the year for information on the market, as well as inventory levels.

Houston’s single family home sales had a strange ride throughout 2011. The first half experienced large declines compared to the previous year. The declines were the result of comparing months with large tax incentives for buyers (2010) with months with no incentives (2011). The second half of 2011 showed large increases over the previous year. The increases were the result of 2010′s second half decline due to the expiration of tax cuts. After all of this, the year ended with an increase of 4.5% in the number of homes sold.

While growth of 4.5% may seem weak,for many years Houston home sales had a stable, sustainable growth rate of 2.5% to 4.0%. In mid-2003 the hyper growth began and continued until the bubble burst four years later in mid-2007. Perhaps last years growth is a return to the solid growth Houston previously enjoyed.

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Stronger job markets are pushing several cities’ housing markets into recovery-mode. Forbes and the Local Market Monitor, a real estate research firm, recently profiled its top picks for cities that are most poised for a real estate rebound. The list is based on housing and economic data from the 100 largest cities in the country.

“For real estate to do well you want to see two things: that incomes are growing rapidly … and that the growth in jobs attracts other people to that market,” Ingo Winzer, founder and president of Local Market Monitor, told Forbes.

Here are the cities topping the list:

1. San Jose, Calif.
Population growth: 5 percent
Job growth: 3.3 percent
Home prices for the past 12 months: 2 percent decrease
New-home construction: 97 percent increase

2. Houston, Texas
Population growth: 7 percent
Job growth: 3 percent
Home prices for the past 12 months: 2 percent decrease
New-home construction: 38 percent increase

3. Boston, Mass.
Population growth: 3 percent
Job growth: 2.1 percent
Home prices for the past 12 months: 1 percent decrease
New-home construction: 1 percent increase

4. Raleigh, N.C.
Population growth: 12 percent
Job growth: 1.4 percent
Home prices for the past 12 months: 2 percent decrease
New-home construction: 14 percent increase

5. Austin, Texas
Population growth: 11 percent
Job growth: 1.5 percent
Home prices for the past 12 months: 2 percent decrease
New-home construction: 20 percent increase

6. Oklahoma City, Okla.
Population growth: 4 percent
Job growth: 2.6%
Home prices for the past 12 months: 3 percent decrease
New-home construction: 1 percent decrease
Find out more about why these cities are poised for a rebound, and see what other cities made the list.

Source: “Cities Where Real Estate Is Ripe for a Rebound,” Forbes (January 2012)

You read it first here earlier this week, Houston’s single family home sales in December were 4,604 homes, an 18.7% increase over November 2011 and a 7.2% increase over December 2010. This is the seventh straight month of increased sales compared to the same month in 2010.

Houston Association of REALTORS® has released the statistics for December 2011. Significantly the number of single family homes actively on the market dropped to 25,699 a 7.4% decrease from November. This is the lowest level of single family home inventory since December 2003. If this level is sustained Houston will be moving into a Sellers’ market. Pending sales increased 3.5% over the level a year ago.

Shown below is a graph of home sales, pending sales and number of homes on the market from January 2000 to present. This visually shows the reduction in the number of homes on the market. Watch for more on the state of Houston’s market for homes in later posts.