Houston home sales hit records in 2020

Real estate industry avoided hitting ‘brick wall’ despite crash, pandemic

December single-family home sales helped 2020 finish on a strong note, contributing to a record year in Houston for both sales and prices in a year marked by a global pandemic, an oil price crash, record low interest rates and homes for sale.

Sales of single-family homes rose to 96,151 in 2020, eclipsing the 2019 record by 10.5 percent, according to the Houston Association of Realtors, which tracks transactions sold through the Multiple Listing Service primarily in Harris, Montgomery and Fort Bend counties.

“When the coronavirus pandemic struck, we expected the real estate business to hit a brick wall and never fathomed the possibility of 2020 becoming a record year for the Houston market,” HAR Chairman Richard Miranda said in a monthly report released Wednesday.

The inventory of homes dwindled to 1.9 months in December, down from 2.2 months in November and the lowest on record, according to HAR. Inventory represents how long it would take to sell all the houses on the market based on the previous 12 months of activity. A 6month supply is considered a balanced market.

“As we enter 2021, we find ourselves in critical need of inventory if we are

to sustain a healthy pace of home sales,” Miranda said.

The pandemic prompted buyers, many of whom were spending more time at home and often working there, too, to upgrade their living spaces, according to real estate agents.

Sales were unseasonably strong in the last few months of the year, a time when activity typically slows as families focus on the holidays. December single-family homes sales rose by 25.5 percent compared to December 2019, according to HAR, and totaled 9,652, the second highest month on record behind July’s 10,815 sales.

Single-family homes sold for a median price of $273,443 in December, up 8.7 percent from a year earlier and an all-time high, according to HAR.

For the year, the median home price rose 5.9 percent to $260,000.

It’s a competitive market for prospective homebuyers. “If it’s a good listing, it’s absorbed immediately,” said Yvonne Bonner-Holley, a real estate agent with Keller Williams Preferred.

“More people are requesting swimming pools or outdoor areas if they’re quarantining at home with kids. More people want double offices. Our buyer needs are evolving. And it’s based on, really, how their situation at home has changed this year.”

External, internal factors

The gains came in a year when interest rates fell and oil prices recovered to near $50 per barrel after falling below zero in April on storage concerns as demand tanked and the economy faltered in the coronavirus pandemic.

Last week, the average rate for a 30-year mortgage fell to a record low of 2.65 percent, according to Freddie Mac.

“The low interest rates are stimulating a lot of people to get out and buy,” Jim Gaines, chief economist of the Texas A&M Texas Real Estate Research Center, said. “The demand has been so strong that the supply has not be able to keep pace.”

People are also staying in their houses longer, contributing to the supply problem. Owners used to stay in their homes five to seven years before selling, but that’s turned into nine to 12 years, Gaines said.

Sales of homes priced from $500,000 to $749,999 jumped 80.8 percent in 2020. The $750,000 and up segment was the second most active, rising 54 percent over the year.

Only homes priced below $149,999, which made up 5.8 percent of the December sales, experienced declines.

“It’s not that people don’t want to buy, we just don’t have any houses,” Shad Bogany, a broker associate with Better Homes and Gardens Real Estate Gary Greene, said of the entry-level houses.

Homes priced from $250,000 to $499,000 made up 46.4 percent of the sales, while homes from $150,00 to $249,000 made up 35 percent of the sales.

The homes spent an an average of 46 days on the market, 18 fewer days than in December 2019, according to HAR.

Chuck Poteet of HomeSmart Fine Properties in Houston said the torrid pace is continuing in 2021. His office recently had 21 people show up for open houses at two new listings in the mid-$300,000 range.

“We’re kind of surprised and delighted that many buyers, despite everything going on in the world around us, they were still looking and confident enough to get into the buying market,” he said.

The market is especially competitive for those shopping in the $250,000 to $350,000 price range targeted by many firsttime homebuyers, said Nimesh Patel, brokerage partner at RE/MAX Fine Properties. He said bidding wars are the norm for such homes, and recommended buyers make sure they’re qualified for a loan before looking for homes.