High-end homes take a hit
Demand for luxury houses drops as energy jobs decline
Sales are down at the top of Houston’s housing market. Expansive estates with swimming pools and SubZero refrigerators linger on the market longer than they did a year ago. Sellers are cutting their asking prices.
That contrasts with recent years when the luxury home market was soaring along with Houston’s energy industry.
“The market was just super-heated,” homebuilder Jim Schwabenland said Friday. “Oil prices have slowed things down.”
Sales of the most expensive homes in the Houston region fell 7.9 percent during the first eight months of 2016 compared with the same time last year, a new report shows.
The decline corresponds with a significant loss in high-paying energy jobs, a result of oil prices plummeting from more than $100 per barrel two years ago. In fact, Houston was the only major metro area in the state with a decline in so-called luxury housing — homes that sold for at least $1 million — according to the Texas Association of Realtors’ Texas Luxury Home Sales report.
While there may be fewer wealthy energy workers looking for million-dollar homes, the market is still moving, experts say.
“In a lot of cases, it’s taking longer for the houses to sell and in some cases the prices are being reduced, but for the most part we’re
still seeing houses move,” said Darron Drago, Houston-area regional president for Prosperity Bank, which makes loans to custom builders.
To be sure, this segment of the market is relatively small.
Luxury home sales made up just 1.8 percent of all sales through August of this year across the Houston area, according to the report, which is based on data from the Real Estate Center at Texas A&M University.
Buyers closed on 974 high-end homes during that time at a median price of about $1.4 million. That price was down 2.9 percent from a year earlier.
For all of 2015, upper-crust buyers purchased 1,320 singlefamily homes in the seven-figure range, up 3.5 percent from the previous year. Bill Baldwin of Boulevard Realty in the Heights said the first six months of 2015 were so strong in Houston real estate that “comparing this year is difficult.”
“Overall, I think we’re doing fine,” Baldwin said.
Some high-end buyers are hesitant to purchase because they’re not quite sure how the city’s economy will fare. Some also don’t want to act ahead of next month’s presidential election.
“Those people are more jittery about the election than most,” Baldwin said.
Despite the energy-related job losses, other employment sectors have picked up, he said.
“We have more buyers than we’ve had in the last year, and I have no houses for them,” Baldwin said.
Still, the number of luxury homes on the market as of August was 1,449, a 29 percent spike from a year earlier. Those homes are now taking an average of 85 days to sell, an increase of 11.8 percent.
Ever-increasing land costs, which led to the recent increases in home prices, have started correcting.
“It appears as though land prices have stabilized and in some instances perhaps come down a little bit,” Drago said.
Housing inventory is up in many of Houston’s most exclusive neighborhoods, including the Memorial Villages, Tanglewood and River Oaks.
Schwabenland is trying to sell a home he recently completed in Spring Valley Village, in Memorial Village just north of Interstate 10.
The 4,786-square-foot house with four bedrooms and four full baths has been on the market about six months.
It originally was listed at $1.63 million, but Schwabenland recently cut the price by $33,000.
“It’s definitely softened,” he said about the market, but he doesn’t expect to see a crash.
He’s gotten some offers on the house — one from someone in the energy business and another in medical software — but turned them down.
“Everything sells in time,” he said.