Housing market is tough sell for buyers

Sellers get upper hand as demand spikes, but slowdown predicted

Stephanie Willis’ listing in Montrose, a 1930s bungalow with a garage apartment, hit the market Jan. 30 and had four offers within a few days. The seller settled on one that was above the $795,000 asking price.

“The market is thriving again,” she said.

Willis is among the slew of buyers, builders and real estate agents reporting a stronger-thannormal start to the year, driven by mortgage rates a full point lower than they were a year ago and ongoing job growth, despite headwinds in the energy industry. In some cases, home shoppers are engaging in bidding wars or offering more than a property’s asking price.

A new report from the Houston Association of Realtors confirms the uptick. Houston-area home sales jumped 14 percent in January from the year earlier. Buyers closed on 4,699 single

family homes at a median price of $234,000, which was up 4.5 percent from last January. The sales increase was the seventh straight month of yearover-year gains. It followed a strong December as well.

The big start to the year is being driven by low mortgage rates and an increase in demand for homes priced between $250,000 and $750,000, agents said.

“Buyers are coming out of hibernation. Rates are low and they’re taking advantage of it,” Rich Anhorn, an agent with Greenwood King, said.

Mortgage rates last week fell to a three-year low, averaging 3.45 percent for a 30-year fixed-rate home loan, down from 4.41 percent a year earlier and the lowest level since October 2016.

The low rates are also making it attractive to refinance.

Elizabeth Rankin Rice, a mortgage loan consultant with First United Bank, said about a quarter of her current business is refinancing higher-rate mortgages.

“I quoted somebody this weekend and the rate was 3

3⁄8 on a 30-year fixed. That’s low,” she said.

Headwinds

Still, the fast-moving market is not the case across the board.

Some listings near pockets of new construction are taking longer to find buyers. Properties in the seven-figure range are sitting longer, too, as the luxury market continues to be affected by the 2018 change in tax policy that put a $10,000 cap on property tax deductions.

Moreover, the year ahead could bring headwinds amid the struggling energy sector, troubles in China and a presidential election.

“There are plenty of things that can upset the market, but now it feels good,” Lawrence Dean, regional director for Metrostudy, said during a recent presentation to home builders.

Inventory marketwide has been below four months since September, according to HAR, which tracks sales handled by Realtors primarily throughout Harris, Fort Bend and Montgomery counties. Anything less than six months is considered a seller’s market.

That’s likely to change in a few months, John Nugent, the association’s chairman, said in Wednesday’s report.

“All the January home buying activity lowered our housing inventory a little, but we expect to see that grow again as we approach the spring months when more homes typically hit the market,” he said.

Until the market loosens up, shoppers may have to be more strategic.

Anhorn said buyers who have experienced bidding wars and lost out, are getting more aggressive. With the amount of property information available to consumers these days, he said, buyers are smart. They know a good price when they see one.

“If they lose a house, the next time around from the get-go they’ll bid higher just to secure the house,” Anhorn said.

Bidding wars can also be the result of more reasonable asking prices.

Willis, an agent with Douglas Elliman, said sellers often want to price their homes above market value, figuring buyers will negotiate the price down. But pricing a home reasonably out of the gates, she said, can mean a faster sale at a better price.

Willis is experiencing the frenzied market from her sellers and buyers.

She’s representing a couple who has been outbid twice on two properties in the Heights. They want a house that is move-in ready, but so does everyone else, she said, so they’re going to start to look at more fixer-uppers.