Katy Area (77450) Real Estate Update

My previous article about Zip Code 77494 in the Katy, Texas area generated a lot of interest, so, from there, I will present the numbers for the adjacent Zip Code (ZC) 77450, which is to the east of the Grand Parkway (HW 99) and on the west Side of Barker Reservoir. (see image below).

This is generally considered the "older" part of Cinco Ranch and of the Katy suburbs as this was developed first coming out from Houston. Some subdivisions in this area were developed as far back as the 1970's, with the average year built of homes sold last year being 1991. What you do get with this age are mature neighborhoods, with fully developed trees and shade, as well as fully developed commercial infrastructure. Everything from Schools to Grocery Stores, mechanic shops and every other kind of community necessity is well established in Zip Code 77450.

As for the pricing and recent trends, of course ZC 77450 has the same pattern at ZC 77494, with prices having marched steadily higher over the years since 1997 (the HAR database has data back to 1997 only), then, prices climbing quickly in the last two years. Again, these numbers are averages for the entire Zip Code and are to show the overall trends. When a realtor works with a buyer or seller, we then drill down into the specific area, neighborhood, school zone, etc. in order to get more precise comparison with similar homes that have recently sold.

What we see in the below, long term chart for ZC 77450 is at the beginning of the pandemic, in 2020, the average price per sq ft for homes sold, was $113. Then, as with ZC 77494, it climbed, to $134 average in 2021, and up to $155 so far in 2022. That equates to a 16 percent rise from 2020 to 2021, and a whopping 37% rise in the average price per sq ft from 2020 through the present. So, tough for homebuyers and great for those selling!

One thing that I always notice in these charts are the "flat periods". After the financial crisis of 2008, when many markets in the US lost ground, many Houston areas and suburbs did not lose ground, but, rather, "went flat". In 2007, the average price per sq ft in 77450 was $77 and 5 years later, in 2012, it was $80, for virtually no change in 5 full years. Then, after the oil price crash that started in 2014 and continued into 2015, home prices "flattened" again. In 2015, in ZC 77450, the average price per sq ft was $106 and by 2020, had only climbed to $113. So, in the greater Houston area, our market depends a lot on the state of the energy industry, that being the economic engine of Houston.

Below is the recent chart going back 17 months, using weekly averages as opposed to monthly numbers, in order to get a "finer" look at things.

Here again, we see a rather steady climb in prices over the last 17 months, but, not quite to the degree as we did in Zip 77494 on a price per sq ft basis.

CONCLUSIONS

As with the previous Katy Zip Code, 77494, we see that while interest rates have risen, causing monthly payment amounts to increase, so far, there has not been a slowing in the rise in home prices. From our mortgage lending friends, we know that applications for loans are dropping, which equates to less demand for home purchases, so, it is just a matter of time until we start to see some evidence in the slopes of these trendlines.

As opposed to the previous area, ZC 77450 has not had any appreciable rise in Inventory since early in the year. The first thing to look for, before we see prices begin to level off is that homes stay on the market for a longer period of time and inventory increases. This number in the real estate world is called "Days on Market" and is the number of days from when the home is listed until it is put "under contract". Below is a chart showing this number, by month, for the last three years, and, as you can see, we are still at the lowest points (Green line, through May) for the entire time span. So, we'll have to keep looking at the numbers and keep looking for great homes, but, it will take time for this market to cool, even with the actions by the Federal Reserve and mortgage rates climbing.