TOM PLANT'S HOUSTON REAL ESTATE BLOG

Houston’s River Oaks and Avalon single family home sales are showing the same trend as other parts of the city. Homes under $2 million are selling well and homes over $2 million are not. The mix of homes in River Oaks/Avalon are heavily weighted to homes over $2 million causing the number of transactions during the third quarter of 2009 to decline compared to 2008. Sellers in River Oaks/Avalon with a home valued under $2 million should be encouraged. At the third quarter rate of sales, the inventory of homes priced between $1 million and $2 million stands at less than 7 months. Those who own homes valued over $2 million may want to wait until early next year to assess the market. At the third quarter rate, the inventory of homes priced over $2 million in River/Oaks Avalon is more than 3 years.

The detailed statistics are shown below:

Single family homes sales in Houston’s Tanglewood neighborhood surged in the third Quarter. Sales in Tanglewood had lagged behind other areas of the city during the first six months of 2009. In the third quarter, 24 homes were sold, a 33.3% increase over the third quarter 2008. During the first six months of 2009 only 14 homes were sold. In Tanglewood, as in every area of the Houston MLS homes over $2 million are not selling. Homes between $750,000 and $1 million increase 200% and homes between $1 million and $2 million increased 71.4%. Sales of homes over $2 million declined 57.1%.

The detailed statistics are:

Single family homes sales increased slightly more than all of Houston during the third quarter 2009. Houston’s sales increased 1.5% While Bellaire’s increased 4.5%. The increase was led by homes priced under $350,000 (54.5% increase) and homes in the $750,000 to $1 million (50.0 % increase) All other price ranges were down significantly. While homes priced between $1 million and $2 million are selling well in some areas, they are still languishing in Bellaire. No homes over $2 million sold in Bellaire during the third quarter.

The home shown in this post is 4611 Braeburn listed at $1,149,000. You can find photos, floor plans and detailed information at 4611braeburn.com.

What are the signs that mortgage rates, now at historic lows, are about to go up?

One way to catch a clue is to read the minutes of the Federal Reserve. For instance, the Federal Open Market Committee said in its September minutes that when it came to interest rates, there is “no policy change.” And the minutes said that while the Fed believes “an economic recovery is underway,” it regards a weak economy as a greater risk than inflation. Upcoming meeting minutes are likely to be just as forthcoming if an uptick is in the cards.

Other signs include:

• Declining unemployment: The unemployment rate is sitting at 9.7 percent. If lots of Americans go back to work, an increase in interest rates is likely.
• Rising discount rate: The rate the Fed charges banks that borrow from it directly stands at 0.5 percent. If it rises or the spread between it and the Federal Funds rate widens, then mortgage rate increases won’t be far behind.

Source: BusinesWeek.com, Marc Roth (10/28/2009)

Key lawmakers in the Senate have tentatively agreed to extend the existing $8,000 tax credit for first-time home buyers and also offer a new $6,500 credit for existing homeowners who have lived in their current residence for a consecutive five-year period in the past eight years.

Home buyers must be under contract by April 30, 2010, and close before July 1. House Democrats have expressed concern about the cost of the tax credit for the government, and allegations of abuse have resulted in an IRS probe of the program.

Source: Wall Street Journal, Corey Boles and John D. McKinnon (10/29/09)

© Copyright 2009 Information Inc.

Houston’s Southampton neighborhood, a sought after close-in location, performed better than other close-in neighborhoods during the Third Quarter of 2009. While small in number, single family home sales increased 233% in Southampton in the Third Quarter 2009 compared to the same period in 2008. A similar analysis of West University showed an increase of 24.8%, River Oaks a decline of 14.3% and all of Houston an increase of 1.5%.

The Southampton increase was in all price ranges. While considered an affluent neighborhood, during the relevant time period Southampton did not have any homes on the market priced more than $2 million. This is the price range that has not moved anywhere in Houston this year.

With very little inventory on the market, Southampton has one of the few clear Sellers’ markets in Houston. Sellers in Southampton, however, must keep in mind that although their neighborhood is in demand, Buyers are influenced by the dynamics and news of other neighborhoods. Homes priced aggressively in this environment can be expected to sit unsold. Homes priced properly in Southampton are selling well.

Here are the third Quarter numbers for Southampton:

In an earlier post, I reported that single family home sales in Houston for September 2009 increased 32% over September 2008. September 2008 was the month in which Hurricane Ike hit and the month in which the recession found Houston. Because of that, it is much more important that single family home sale for the third quarter increased 1.5% over the same period last year.

Many analysts attribute the increased sales activity solely to the new home buyer tax credit. This could hardly be the case, sales improved in all price ranges except for over $2 million. The largest increase in sales was in the $750,000 to $1 million range, which increased 15.7% over the third quarter of 2008. Anyone with income to qualify for a $750,000 home will not qualify for the first time home buyer tax credit.

Even the price range of $1 million to $2 million was level with last year. Homes over $2 million continue to languish with more than a 4 year inventory at current rates of sales. Homes in this category in 2009 were down more than 50% in all geographic areas of the Houston MLS area.

I am about to complete a thorough analysis of all of Houston’s close-in neighborhoods by price range. If you would like a copy, email me at info@tomdplant.com.

Affordable Royden Oaks living. Recently remodeled* kitchen with granite, Sub-Zero refrigerator and Jenn-Air range. This is a wonderful light and bright traditional Royden Oaks home. Large corner lot. *=Per Seller

 List Price: $599,000                                                                                                                                3842 Piping Rock Lane

  Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of REALTORS®.
Here’s the region-by-region picture:

Existing-home sales—including single-family, townhomes, condominiums, and co-ops—jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.10 million in August, and are 9.2 percent higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in more than two years, since it hit 5.73 million in July 2007.

Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”

Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home-owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said.

Conditions for First-Time Buyers
Early information from a large annual consumer study to be released on Nov. 13, the 2009 National Association of REALTORS® Profile of Home Buyers and Sellers, shows that first-time home buyers accounted for more than 45 percent of home sales during the past year. A separate practitioner survey shows that distressed homes accounted for 29 percent of transactions in September.

NAR President Charles McMillan said affordability conditions remain historically high. “Potential first-time buyers can take heart in that affordability conditions this year are the highest on record dating back to 1970, but with the first-time buyer tax credit scheduled to expire at the end of next month, people could hold back from entering the market,” he said. “Our read is that housing overshot on the downside because homes are selling for less than replacement construction costs in much of the country, and the home price-to-income ratio has fallen below the historical average.”national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.06 percent in September from 5.19 percent in August; the rate was 6.04 percent in September 2008.

Inventory Falls
Total housing inventory at the end of September fell 7.5 percent to 3.63 million existing homes available for sale, which represents an 7.8-month supply at the current sales pace, down from an 9.3-month supply in August. Unsold inventory totals are 15.0 percent below a year ago.

“The current housing supply is the lowest we’ve seen in two and a half years,” Yun said. “If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year.”

According to Freddie Mac, the

Home Sales Breakdown
The national median existing-home price for all housing types was $174,900 in September, which is 8.5 percent lower than September 2008. Distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area.

Single-family home sales rose 9.4 percent to a seasonally adjusted annual rate of 4.89 million in September from a pace of 4.47 million in August, and are 7.7 percent above the 4.54 million-unit level in September 2008. The median existing single-family home price was $174,900 in September, which is 8.1 percent below a year ago.

Existing condominium and co-op sales jumped 9.7 percent to a seasonally adjusted annual rate of 680,000 units in September from 620,000 in August, and are 9.7 percent above the 561,000-unit pace a year ago. The median existing condo price was $175,100 in September, down 11.7 percent from September 2008.

Northeast: Existing-home sales increased 4.4 percent to an annual level of 950,000 in September, and are 11.8 percent higher than September 2008. The median price was $234,700, down 7.0 percent from a year ago.

Midwest: Existing-home sales jumped 9.6 percent in September to a pace of 1.25 million and are 7.8 percent above a year ago. The median price was $147,600, which is 1.0 percent below September 2008.

South: Existing-home sales rose 9.0 percent to an annual level of 2.06 million in September and are 10.8 percent higher than September 2008. The median price was $153,500, down 7.6 percent from a year ago.

West: Existing-home sales surged 13.0 percent to an annual rate of 1.30 million in September and are 5.7 percent above a year ago. The median price in the West was $219,000, which is 15.0 percent below September 2008.

Source: NAR

Copyright National Association of REALTORS®. Reprinted with permission