High-end homes drive Houston sale prices
The area’s median cost shot up to $290,000 in March
A surge in sales at the high end of the market drove single-family home prices to new highs in March as buyers competed for an extremely limited supply of houses, according to a new report.
The median price for singlefamily homes in the Houston area shot up to $290,000 in March, a 16 percent increase over the median of $249,900 in March 2020, according to the Houston Association of Realtors’ monthly report released Wednesday.
Buyers closed on 9,347 singlefamily houses, a 24.4 percent jump from the year earlier, when COVID-19 started to take hold and agents began shifting to virtual showings. At the time, a double whammy of low oil prices and the pandemic — both of which led to job losses — caused concern about the outlook for the local housing market.
A year later, the picture is clearer. Oil prices have stabilized around $60 per barrel, jobs are coming back and professionals who work from home want more space.
“People are having to pay a higher price because they’re having to compete with more buyers,” said Jim Gaines, research economist with the Real Estate Center at Texas A&M University. “We’re seeing a shortage of inventory just about across the board in all the property. It’s a bit surprising at the upper end.”
Inventory — which represents the time it would take to sell everything on the market based on
the recent sales pace — sunk to an all-time low of 1.4 months, according to HAR. The drop tips the scales further in favor of sellers compared to March 2020, when months inventory stood at an already low 3.4 months. Six months is considered a balanced market.
The dynamic means houses frequently receive multiple offers, often for more than the list price across, all price segments.
Claire Warren, an agent with Better Homes and Gardens Real Estate Gary Greene — Tomball, said 95 percent of the transactions she’s handled this year have gone for more than the asking price.
“I always tell my clients who are buying, there’s no time to sleep on it. You have to be willing to pounce on it and often times to pay a premium,” Warren said.
To win the deal, Warren advises buyers to craft their most competitive offers, which could mean shortening the option period for exiting the contract, waiving a home warranty or paying for the title insurance policy.
A self-fulfilling prophecy may be keeping some properties off the market.
“They want to move and buy, but they can’t find anything because there’s low inventory, so they don’t sell,” said Fiona Gilmour, an agent with Keller Williams Realty Metropolitan.
The shortage of homes on the market priced below $250,000 is the most pronounced, according to HAR. Sales volumes in the lowest price ranges dropped because of the lack of availability.
Sales of homes priced between $500,000 and $750,000 nearly doubled in volume, surging 96.8 percent year over year to 911 home sales. The secondmost active segment was luxury homes selling for $750,000 and above, which soared 89.9 percent year over year to 526 sales.
Sales of homes from $250,000 to $499,999 were up also up, rising 50.7 percent over the year.
The surge in high-end home sales also pushed the average home single-family price to a new record. The average sales price rose nearly 20 percent to $370,847 in March.
“Several overlapping market forces propelled us to a strong finish in March, between a lack of low-tomid-range housing and aggressive high-end buying by consumers taking advantage of historically low interest rates,” HAR Chairman Richard Miranda said in the report. “The inventory shortage is causing stress for many folks. Hopefully we begin to see an uptick in new listings sooner than later.”
Homes spent just 45 days on the market in March on average, down from 65 days in March 2020. Active listings shrank to just under 12,000, less than half the levels of a year ago.
Sales of townhomes and condominiums were also strong, rising 45.2 percent over March 2020. The median price rose to $195,000, up 5.3 percent from the year earlier.