The real estate market in the city is much the same as it is everywhere else in the country. Surging demand and tight supply have led to continuous yearly price increases, as a growing pool of buyers compete for a shrinking pool of homes. The result has been a surge in sales and a lack of affordability in the city’s housing market.
For Houston, TX real estate, the luxury end of the city’s housing market has shown increased resilience, even in the face of higher interest rates. The luxury section of the city’s housing market, units prices at $750,000 or over, saw an 18% increase in sales over the past year. This is the hottest part of the city’s housing market. Given the economic conditions prevailing throughout the country, and Texas in particular, this pattern should continue to persist for the foreseeable future. Although Hurricane Harvey was expected to depress the city’s housing market, the only effect it has had has been to decrease supply, which further increases prices. As a result, the storm only had a temporary impact on housing prices.
The yearly price increase for the city’s homes was up 4.3 percent to $316,463. The median price was $245,000, up 2.6 percent from the past June. There is currently a 4.1 month supply of homes in the city.
One lasting impact of Hurricane Harvey has been an increase in rents in the city. Many displaced homeowners were required to rent property while waiting for the damage to their homes to be repaired. This demand for rental properties absorbed much of the excess supply in the city. The demand increase is expected to be temporary, as homeowners are able to move out of rental units and back into their homes as they are repaired. At that point, renters can expect to receive better values of rental properties, as there will be an influx of supply, all hitting the market at close to the same time. Still, the occupancy rate in the city at the current time is close to 94 percent, which is an all-time high. There is some speculation that some homeowners may choose to remain in rental properties permanently, and not want to assume the risk of losing their homes in another storm.
Other factors have impacted the pricing of real estate in the city in the past several years. The recent oil bust and shutdown of some oil production served to keep some purchasers off of the market. However, oil prices have recovered and stabilized, so this factor is no longer affecting the market.
An area of the city that has seen an influx of residents and increased demand is CityCentre. That area largely escaped the damage from Hurricane Harvey. Rental supply in that area remains extremely tight. CityCentre, as part of Midtown, has been named as one of the best places in the city to rent. The neighborhood is filled with bars and restaurants, and is walkable, which is a rarity in a car-dependent city.