Katy Area Real Estate Update

Recently, many prospective clients, friends, family, and just about anyone on the street, have asked me about the real estate market in Katy, Tx.

Is it still "hot"? Are Interest Rates having an affect on prices? Are there still multiple offers on homes out there? Will prices fall as fast as they have climbed (Which I have just seen a custom homebuilder who I follow on LinkedIn predict)?

Well, I don't have a crystal ball on the future, but, I am a realtor living in Cinco Ranch and I love to look at all of the numbers in order to be best prepared to help my clients, both buyers and sellers. The short answer from the data to date, is, it's still a sellers market, but, there are some signs that we might be at an inflection point.

For this short article, I'm going to concentrate on Zip Code 77494. ZC 77494 is between I-10 and the Westpark Tollway, West of the Grand Parkway, with a small sliver on the East side of 99. (See image below)

Zip Code 77494 for the most part is the "newer" part of the Katy area with the majority of the development taking place in the last 20 years approximately, with the average year built being 2010, for homes sold this year.

In ZC 77494, The development, growth, and price appreciation has been nothing short of incredible. This reflects the desirability of the area, with the Katy Independent School District, the many green spaces, trails and lakes, the commercial developments, with everything one needs. In the last ten years, the area has developed so much and really has everything one needs, from groceries, to restaurants, after school activities, places of worship, and everything else. Years ago, a lot of homes were built, but, the commercial space to support them was a little thin. That has changed now and you can really find almost everything you need in the area.

Below is a long term chart of the the average annual sales price and price per sq ft for the area, going back to 1997. Up until 2006, the Zip never sold over 1,000 homes in a year, and in 2021, 2,737 homes were sold!

As we can see, there has been steady price appreciation in the area for 20 years, then, a sharp uptick in prices since the beginning of the pandemic. The question now is, "Are the prices still going up?" In this chart, it certainly appears so, but, we need to look at the data more recently, and with more resolution.

Below is a chart that takes the averages weekly, as opposed to monthly, and is from only 2021 and to date through 2022. And, we can see here that in the last 17 months, home prices have been on a steady march upward. In January 2021 (week 2), the AVERAGE home sold for approximately $364,000 and $126 per sq ft. This past week, in May 2022, the average price for a home that sold was approximately $596,000 and $184.

These are average prices of homes sold in the given time period (weekly in the above chart), so, remember, the Zip Code is a large area, and there are many different neighborhoods, with many different price points.

When a buyer or seller is ready, consult a qualified realtor to get the appropriate information for your neighborhood in order to start the valuation process on a home that you are interested in buying or selling.

Conclusions that can be arrived at from this information so far, are that, the frenzy continues to date. But, with that being said, are there any signs that the tide might be turning?

There are! First, remember that the information presented here are for homes that have sold. With the average time from getting a home "Under Contract" to closing being approximately 5 weeks, or 35 days, it's possible that the affects of rising interest rates have yet to be fully felt.

Secondly, the inventory of homes on the market, while still low, has actually doubled, compared to earlier this year. Realtors use a statistic to measure this called "Months of Inventory" and it is calculated using the number of homes currently on the market compared to the average number of homes that sold per month during the previous 12 months. Earlier this year, that number was an incredibly low 0.30 in this area of Katy. As of the end of May, it has climbed to 0.80, so, more than doubled. Unfortunately, a "balanced" market is considered around 5 to 6 months of inventory, so, we are heading in the right direction, but, have a long way to go.

CONCLUSION

In the end, homes are still selling very quickly overall, with the recent "Days on Market" averaging around 10 days for all homes, with some homes being put under contract their first day on the market. Move in ready, beautiful homes do not sit on the market and are still going for over asking price.

But, not all homes are selling immediately, and currently 14 percent of the "Active" homes for sale, have dropped their price below what it was originally listed for. We will have to keep watching to see if the rising rates, inflation on non-home purchases, and other factors finally stop the upward march of home prices in the area.