Despite being in a relatively quiet Texas housing market for the better part of a decade, Houston has emerged as one of the most active regions in the country. Once a market that was impervious to the ups and downs of housing cycles, Houston is now one of the most overpriced markets in the United States. Perhaps even more importantly, Houston has not shown any signs of slowing down. Houston real estate recently recorded its strongest September on record and simultaneously demonstrated impressive staying power. For all intents and purposes, Houston’s real estate market is a hot bed of activity that investors could easily take advantage of. Foreign investors, in particular, acknowledge Houston as one of the best places to invest for the foreseeable future.
Despite a record setting 2013, those familiar with the Houston housing market forecasted an immediate tapering. The pace of the market appeared to be unsustainable. However, as we near the end of 2014, it appears as if the projections were wrong. Sales in the areas continue to soar and are on track to outpace the previous year. According to the Houston Association of Realtors (HAR), 6,490 homes were sold in September; a 7% increase in sales over the same time last year.
“As long as consumers continue to snap up homes at the current pace, replenishing our housing inventory will be a slow process,” says HAR chair Chaille Ralph of Heritage Texas Properties. “Rental numbers were strong in September, suggesting that many would-be home buyers are continuing to go the lease route until the market bears the homes they’re looking for at the price point that suits them.”
The median home price in Houston is $204,000; just under the national average of $212,267. Despite trailing the rest of the country, Houston home prices are increasing rapidly, as they have appreciated nearly twice as fast as the rest of the country over the previous year. Rapid appreciation rates are due, in large part, to tight inventory levels, and should continue to increase faster than other cities.
The expansion of the local economy has facilitated incredible equity gains in the Houston area. Price appreciation and principle payments in the last three years have boosted total equity growth since the recession. In recent history (homes purchased in the last year), owners generated an average of $18,195 in equity. The national average in the same period was $12,731. However, even more impressively, homes purchased in Houston nine years ago have managed to generate an average of $80,855 in equity – that is more than $75,000 higher than the national average over the same period. Again, prices continue to appreciate without any signs of slowing down.
The local economy has been surging as the energy industry has led Houston to be the national leader in job growth. Over the last year, the job growth rate increase 3.1%. Thousands of people are relocating to the Bayou City every month. As such, Houston’s unemployment rate of 5.4% is better than the national average (6.1%) and continuing to improve. Without a doubt, the promising job market in Houston is the premier driver of supply and demand. Several neighborhoods, in particular, are benefiting from said job growth: Great Uptown and Southbelt/ Ellington are some of the most popular neighborhoods experiencing upward trends.
According to Zillow, the percent of delinquent mortgages in Houston is 5.0%, which is lower than the national value of 6.9%.
Houston Housing Market Summary:
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