Houston's Real Estate Rollercoaster: Navigating the September 2023 Market Trends

Houston, known for its resilient and ever-changing real estate market, has recently faced a daunting challenge. The city's real estate sector experienced its 18th consecutive month of declining home sales in September 2023, prompting concern among prospective homebuyers and real estate enthusiasts alike. But before you throw in the towel, let's dive deeper into the factors at play and discover the hidden opportunities within the current market trends.

September Monthly Market Comparison ? September was the 18th straight month of negative sales activity with year-over-year single-family home sales falling 10.9 percent. When compared to pre-pandemic September 2019, sales were down 2.3 percent, and when stacked against the sales volume in September 2018, five years ago, sales were up 7.1 percent. ? In addition to the decline in single-family sales volume, total property sales and total dollar volume also fell below last year’s levels. Total dollar volume was $3.3 billion, down from $3.7 billion a year earlier. Single-family pending sales rose 1.2 percent. Active listings, or the total number of available properties, were 13.7 percent ahead of the 2022 level. ? Months of inventory expanded in September to a 3.5-month supply. That is the greatest monthly supply since November 2019 when it was at a 3.6-months supply. Housing inventory nationally is at a 3.3-month supply, according to the latest report from the National Association of Realtors (NAR). A 4.0- to 6.0-month supply is generally regarded as representing a “balanced market” in which neither buyer nor seller has an advantage.

The Interest Rate QuandaryAt the heart of Houston's real estate conundrum is the relentless rise in interest rates. As prospective buyers eye the fluctuating rates, some are opting for a "wait and see" approach, while others are favoring the rental market. But, there's a twist – this slowdown in sales activity has created a unique situation that can be advantageous to both buyers and sellers. A Silver Lining: Expanding Inventory and Balanced PricesThe lull in home sales has allowed housing inventory to swell. In September, the monthly supply of homes reached 3.5, a level not seen since November 2019. This metric, often seen as a measure of market health, represents how long it would take to sell the existing inventory at the current sales rate. The upshot of this expansion is the potential for a more balanced and buyer-friendly market. But that's not all. The market slowdown has also brought about a welcome moderation in home prices. In September, the average home price in Houston inched up by a mere 0.8 percent to $416,664, while the median price dropped by 2.2 percent to $333,000. These figures are considerably lower than the record highs seen in 2022, which bodes well for those aspiring to join the ranks of homeowners. Not All Segments Are Created EqualOne interesting aspect of this market scenario is that not all housing segments are experiencing the same challenges. Apart from the sub-$100,000 market, which remains statistically flat, all other segments witnessed declines. On the flip side, rentals of single-family homes and townhomes/condominiums have continued to flourish, showcasing the resilience of the rental market. Looking to the future as we approach the holiday season, it's expected that the real estate market may not witness a dramatic resurgence. Traditionally, this time of year tends to be slower for the industry. Moreover, consumer confidence remains cautious due to the unpredictable nature of mortgage rates. Nevertheless, this situation also presents a unique opportunity for savvy buyers. The expanded inventory and moderated prices can make this holiday season the perfect time to embark on your homeownership journey. For sellers, patience and strategic thinking may be the keys to success in this evolving market.

Townhouse/Condominium Update

Townhouses and condominiums experienced their 16th straight monthly decline in September, dropping 14.4 percent year-over-year with 512 closed sales versus 598 a year earlier. The average price was statistically flat at $257,909 and the median price edged up 2.2 percent to $224,250. Inventory grew from a 2.0-month supply to 3.5 months, the highest level since November 2020.?

Compared to pre-pandemic September 2019, when 540 units sold, townhome and condominium sales were down 5.2 percent. The average price back then, at $200,246, was 22.4 percent lower and the median price, at $170,000 was 24.2 percent lower.

In conclusion, Houston's real estate market may appear turbulent at first glance, but it's important to recognize the potential opportunities hidden within these market dynamics. As the market adapts to the shifting landscape, those who remain informed and patient can make the most of these changing conditions. Whether you're a prospective buyer seeking a great deal or a seller looking to make a successful transaction, the key is to stay attuned to market trends and, if needed, consult with a trusted real estate professional to make informed decisions tailored to your unique circumstances. The Houston real estate rollercoaster may have its ups and downs, but for those who know where to look, there are always opportunities on the horizon.