We will discuss the latest Houston real estate market trends and find out how they can affect the investors and homebuyers in 2020. Houston is currently a buyer’s real estate market. The Texas real estate market has been pretty quiet for a little under a decade now, but the real estate market in Houston has managed to remain relatively consistent while its surrounding areas have dragged their feet.
Is it a good time to buy a house in Houston? Houston has always a hotbed of buyer activity; just ask the multitude of overseas investors who choose Houston as the city of their choice to invest in real estate. There was a time when Houston seemed immune to the highs and lows of housing cycles, but it now seems to have joined the pace of the national average.
But its rate of appreciation continues to be slightly above the national rate. With an extremely diversified economy and a huge demand for housing, the Houston remains one of the top markets in the nation for real estate investing. Houston is one of the country’s top job creators, the home of America’s booming energy industry, is more diverse than New York City, and lets you stretch a paycheck farther than anywhere else in the country.
With a record no. of sales in 2019, the Houston housing market was off to a big start to 2020. Home sales experienced double-digit gain in February 2020 but with the local economy in bad shape amid plunging oil prices, homes sales are expected to slow down. Keeping aside the oil prices, the Houston Real Estate Market forecast for 2020 is still on a positive side.
According to HAR, Houston has been in seller mode for several years now and there’s no reason to think that will change in 2020. The current home prices in Houston are relatively low, so if you want to invest in Houston real estate, then now would be a great time to do so.
The most recent population figures for the city show a figure of more than 2.3 million people, and the past two decades have seen billions of dollars in both public and private investment to develop areas and make Houston a more attractive place to live and to visit.
Residential units, hotels, office buildings, restaurants; the city goes into 2020 with continuing development projects that promise to keep the real estate market strong. Oil prices have a big impact on the Houston’s housing market. As oil prices plunge, it could mean a potential slowdown for Houston’s economy.
According to Realtor.com, the Houston-The Woodlands-Sugar Land, Texas will see a 0.3% growth in sales and 0.2% in home prices. The home prices are expected to flatten nationwide, increasing by just 0.8%, and buyers will continue to move to affordability, benefiting mid-sized markets.
The real estate appreciation rate in Houston in the latest quarter was around 0.47% which equates to an annual appreciation rate of roughly between 1.5% to 2%. Even small changes in the appreciation rate can change the long-term value of buying considerably
Let’s learn more about the factors that make Houston a good place to invest if you’re considering real estate investment. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control. Please note that there are many variables that can potentially impact the value of a home in Houston in 2020 (or any other market) and some of these variables are impossible to predict in advance.
Top Reasons To Invest In The Houston Real Estate Market |
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Houston Real Estate Market Forecast 2020 – 2021
Houston has been one of the hottest real estate markets in the country for years. It is also one of the hottest real estate markets for investing in rental properties. What are the Houston real estate market predictions for 2020? The Houston metro area offers great opportunities for investors who are looking for a stable market that offers both cash flow and equity growth at a price that is STILL well below their replacement value.
Let us look at the price trends recorded by Zillow over the past few years. Since 2015, the median home prices in Houston have appreciated by roughly 25.8% from $152,000 to $191,161, according to Zillow’s index.
In the last twelve months, the Houston real estate has appreciated by 2.6%. The latest Houston real estate market forecast is that the home prices will continue to increase by 3.6% – in the next twelve months. The latest real estate data from Zillow shows that the current median home value in Houston is $191,161.
Houston is currently a buyer’s real estate market. This means you can probably buy a home for less than list price, and the seller might be willing to pay some or all of your closing costs. Zillow reports that 17.7% of the listings in Houston had a price cut in Jan 2020. When there are more homes available for sale than buyers to purchase them, those buyers are enjoying a cold market.
Here is the Houston real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 3.6% till Feb 2021.
According to National Association of Realtors (NAR) Chief Economist Lawrence Yun, the price appreciation will slow down, but the home prices in Houston will continue to rise. Although the desire to own a home remains strong, the combination of higher home prices and rising mortgage rates will make it increasingly difficult for many first-time buyers to afford one.
| 6.9% | 10.4% | 13.9% | 17.4% |
| Next 24 Months | Next 36 Months | Next 48 Months | Next 60 Months |
Houston Housing Market Forecast 2021
Here is a short and crisp Houston housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for Houston is 76% and it is predicting a positive trend. The LittleBigHomes.com estimates that the probability for rising home prices in Houston is 76% during this period. If this price forecast is correct, the Houston home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
Check this page each quarter for updates to the Houston Housing Market Forecast.
Houston Housing Market Trends
Analyzing real estate data from multiple sources gives us a much broader perspective of the direction in which a market is moving. We shall now discuss some of the most recent housing trends in the Houston area from multiple sources and compare it with past couple of years. We shall mainly discuss about median home prices, inventory, economy, growth and neighborhoods, which will help you understand the way the local real estate market moves in this region.
Houston is a minimally walkable city in Harris County with a population of approximately 2,112,810 people. In the past ten years, the annual real estate appreciation rate has amounted to 4.42% in Houston, according to NeighborhoodScout.com.
Whether you’re looking to buy or sell, timing your local market is an important part of real estate investment. Currently, the inventory remains high in Houston. There are more homes for sale than there are buyers and home owners are becoming more and more eager to sell their property.
While the rapid real estate appreciation Houston witnessed earlier in the decade has slowed, the combination of a strong economy, low unemployment, and a lack of inventory in many market segments continues to push home prices in Houston.
According to the Bloomberg report on Houston Real Estate Market – “Far from declining, the Houston home prices and rents are expected to rise given the sudden housing shortage. Out-of-state investors have even started to swoop in to acquire damaged homes to repair and sell or rent.”
Both the average and the median home prices in Houston for a single family home hit their highest levels ever in October 2018. The average home price in Houston increased 3.5 percent to $294,500, and the median home price was up 3.6 percent to $234,653. Freddie Mac predicts that the home prices in Houston will increase by 4.3 percent in 2019.
On average, homes in Houston, TX sell after 76 days on the market. The trend for median days on market in Houston, TX has gone down since last month, and slightly up since last year. In a healthy, balanced market, it would take about six months for the supply to dwindle to zero. In terms of months of supply, the Houston market can tip to favor sellers if the supply decreases to less than six months of inventory. However, looking at the current trends, we don’t see things stopping moving in that direction. The supply will outpace the demand in Houston to give buyers an upper hand in price negotiations.
Following the housing market decline in 2007, single family rental properties became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate. Single family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units. With 2020 being, theoretically, in the middle of a boom, there’s still 4 years for residential construction to surge. Most likely, a housing shortage will remain in 2020, keeping home prices high.
According to Neighborhoodscout.com, a real estate data provider, one and two bedroom single-family detached homes are the most common housing units in Houston. Other types of housing that are prevalent in Houston include large apartment complexes, duplexes, row houses and homes converted to apartments. The median house price in Houston is $156,205, which indicates that home prices in Houston are well below the national average for all cities and towns in the United States.
2019 was a strong year for Houston’s real estate market. Single-family home sales, total property sales, pricing, total volume, and inventory all increased year-over-year from 2018. The median sale price rose 4.7% from 2018 to $244,000, according to data from the HAR.
Here is a snapshot that shows the median home values in the some of the popular neighborhoods in or around Houston.
Houston Real Estate Inventory And Sales Data
Houston has a mixture of owner-occupied and renter-occupied housing units. According to data from the Houston Association of Realtors, nearly 79,000 single-family detached homes were sold in the first 11 months of 2019, with year-to-date sales running 4.1 percent ahead of last year’s record volume. The total homes sold in the entire twelve months of 2018 were 82,229.
In January 2020, the Houston-area home sales jumped 14 percent from the year earlier, a big start to 2020 that was driven by low mortgage rates and demand for homes priced between $250,000 and $750,000. Home sales experienced another double-digit gain in February 2020 as buyers came out in droves to take advantage of low mortgage rates.
In the past month, 2403 homes have been sold in Houston, TX on Redfin.com, a national real estate brokerage. Additionally, there were also 1359 condos, 1632 townhouses, and 177 multi-family units for sale in Houston last month. The median listing price is around $299,000. The average sale price of a home in Houston was $234,000 last month, up 10.7% since last year. The average sale price per square foot in Houston is $114, up 6.5% since last year.
According their statistics, the Houston housing market is moderately competitive. Homes sell for about 3% below list price and go pending in around 52 days. A hot listing in the market can sell for around list price and go pending in around 15 days.
Trulia has 12,273 resale and new homes for sale in Houston, TX, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.
Currently, there are 8298 homes for sale in Houston on Zillow, an online real estate database company. Additionally, there are 2261 homes for rent. Under potential listings, there are about 32 Foreclosed and 162 Pre-Foreclosure homes. These are the delinquent properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
- The median list price per square foot in Houston is $141, which is higher than the Houston-The Woodlands-Sugar Land Metro average of $124.
- The median price of current listings is $283,000.
- The median rent price in Houston is $1,500, which is lower than the Houston-The Woodlands-Sugar Land Metro median of $1,600.
There are currently 16,320 homes for sale and 8,904 homes for rent in Houston, Texas on Realtor.com, a real estate listings website. According to their statistics, in February 2020, the Houston housing market was a balanced real estate market, which means there was a healthy balance of buyers and sellers in the market.
Ideally a buyer would prefer a sale to asking price ratio that’s closer to 90%. The sellers in Houston have managed to hold good leverage in these negotiations in the past month. On an average, they could sell homes for 97.78% of the asking price. A seller would always prefer scenarios which can yield a ratio of 100% or higher.
- In February 2020, the median list price of homes in Houston was $287,500, trending down -3.8% year-over-year.
- The median listing price per square foot was $140.
- The median rent price was $1,550.
Single-family detached homes are the single most common housing type in Houston. The asking price of single family homes in Houston can start from $29,000 and can go up to $29.5M for a luxury property located in Westside neighborhood. There are currently 3166 new construction houses available for sale in Houston. Neartown – Montrose has a median listing price of $639,000, making it the most expensive neighborhood in Houston. Alief is the most affordable neighborhood, with a median listing price of $155,000.
| Homes For Sale | 16,320 |
| Homes For Rent | 8,904 |
| Median Listing Price | $287,500 |
| Median Sale Price | – |
| Sale to Asking Price Ratio | 97.78% |
| Median Rent | $1,550 |
| New Listings | 1009 |
| New Construction Houses | 3166 |
| Median List Price/Sq Ft | $140 |
| Home Price Range | $1.4K to $29.5M |
| Most Expensive Neighborhood | Neartown – Montrose |
| Most Affordable Neighborhood | Alief |
Houston, TX Foreclosures And Bank Owned Homes Statistics
Looking for foreclosure homes in Houston? As per the Houston foreclosure data by Zillow, the percent of delinquent mortgages in Houston is 1.2%, which is higher than the national value of 1.1%.
There are currently 1,652 properties in Houston, TX that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 1,762. In February 2020, the number of properties that received a foreclosure filing in Houston, TX was 85% higher than the previous month and 10% lower than the same time last year.
| No. of Foreclosures in Houston | 1652 (RealtyTrac) |
| Homes for Sale in Houston | 1762 |
| Recently Sold | 21644 |
| Median List Price | $275,000 (2% rise vs Jan 2019) |
In Houston, the zip code with the highest foreclosure rate is 77044, where 1 in every 757 housing units is foreclosed. 77068 zip code has the lowest foreclosure rate, where 1 in every 861 housing units becomes delinquent.
Houston Real Estate Market After Hurricane Harvey
Hurricane Harvey had some fascinating and somewhat surprising effects on the Houston Real Estate Market. Harvey’s devastating economic impacts have a silver lining for home buyers in the Houston. Houston real estate market forecasts look promising after the hit the city took from Hurricane Harvey in 2017.
Big weather events hit many areas of the USA hard last year, and the costs of repairing the damage have been astronomical. But Houston has shown its trademark resilience, and 2018 is predicted to see real estate growth of 2.8% in the city, meaning now would be a good time to invest.
Hurricane Harvey tremendously impacted the real estate market in Houston, Texas. Houston had some of the largest swings in real estate value. So what were the economic ramifications of Hurricane Harvey on this delicate market?
First, people have renewed interest in houses that were located in areas that did not flood. This isn’t a particularly surprising statistic. Buyers now have confirmation that these areas can survive a catastrophic event and that they won’t be in any danger of damage.
A recent trend, though, has been that homes in areas that were damaged by Hurricane Harvey have started to see a pick up in sales. Many houses that were damaged are being quickly sold to real estate investors. They saw an opportunity after Hurricane Harvey to buy damaged homes on the cheap in the Houston Real Estate Market.
This has, in turn, led to Houston becoming a valuable “hot spot” for the real estate market in the US. In October alone, 6,381 homes were sold in the Houston Real Estate Market, an increase of 7.5% over the same period of time last year.
Agents are not only selling houses at a faster rate, but they are also commanding a higher price for their sales. Realtors are selling houses in Houston, Texas for over $7,000 or more than in the previous years. Perhaps the largest increase, though, has been in rental marketing.
People whose houses Hurricane Harvey damaged have been looking to rent since the hurricane struck in late October. In fact, the rental market in Houston is approaching an all-time high. Investors are also intrigued by this statistic as it allows them to make money off of houses they may not be residing in at a given time.
This has further contributed to an increase in the housing market in Houston, Texas. The rental statistics for single-family homes and townhomes/condominiums are staggering. Single-family homes saw an increase of 83.6 percent over a 365 day period while townhomes and condominiums saw an increase of a mind boggling 92.2 percent.
It is not surprising, then, that investors have flocked to the area with the idea of making a quick buck. As many have learned, the profit that could be acquired in this area is immense. The housing market in Houston is in exciting new territory.
Although Harvey’s effects were absolutely devastating, the hurricane also contributed to the Houston housing market’s new rise after Harvey. Houston’s inspiring efforts to come together and recover shows the resilience of the people there and the city’s strength.
The government’s quick response to the tragedy and their overwhelming desire to help the people exhibits the city’s importance on a national, and continental, scale.
Houston housing market remained in the recovery mode in 2018 following devastating floods from Hurricane Harvey. People living in more expensive cities such as New York, Los Angeles, and San Francisco flocked to cheaper living cities such as Houston, Texas.
Many workers were fed up with the costs in these regions and were having difficulty surviving in areas with labor shortages, rising mortgage rates, and higher lumber costs. All these factors contributed to a significant upward trend in the Houston housing market in 2018.
To know more about Houston, read his blog – 17 Facts That Make Houston the Best City in America.
Investing in Houston Real Estate: Advice For New Buyers
Maybe you have done a bit of real estate investing in Houston but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. Houston is a diverse city with lots to offer that will cater to the tastes of a variety of potential buyers and tenants.
Many of Houston’s neighborhoods are some of the most attractive places to live in the whole of Texas, and it’s not hard to see why. With a great balance of urban regions and open spaces in the suburbs, the potential for development is clear to see, and the natural features of the land are some of the most attractive features you could hope for in an investment district.
A good cash flow from Houston rental property means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding a good Houston real estate investment opportunity would be a key to your success. If you invest wisely in Houston real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate. The less expensive the Houston investment property is, the lower your ongoing expenses will be.
When looking for real estate investment opportunities in Houston or anywhere in the country, the generally accepted standard is to purchase a property that will give you a modest but minimum 1% profit on your investment. An example would be: at $120,000 mortgage or investment cost, $1200 per month rental. That would be the ideal equation example. Even with rent increases, buying a $500,000 investment property in Houston is not going to get you $5000 per month on rent.
When looking for the best real estate investments in Houston, you should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable. You must also collaborate and learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Houston, TX.
Let Us Help You In Buying Your First Investment Property in Houston
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market area, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing and interest rates.
NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability. Consult with one of investment counselors who can help build you a custom portfolio of turnkey cash flow rental properties in the various growth markets across the United States.
All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching top real estate growth markets and structuring complete turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
Other Best Places in Texas For Real Estate Investment
Apart from the Houston real estate market, you can also invest in the housing market of Dallas, TX. If you have decided to invest in Dallas, you can either buy a fixer-upper or you may want to buy a Dallas investment property. This market offers a wide range of turnkey investment properties; you just have to find your tenants to rent out the property.
The El Paso real estate market is another hot market to invest in. El Paso real estate market was ranked at 4th in Trulia’s hottest real estate markets to watch in 2018. El Paso’s strong job growth, affordability, low vacancy rates and high population of young household were pivotal in the ranking process. The cost of living in El Paso is lower than the national average, while the cost of housing is well below that of other major metropolitan areas, including Houston and Austin.
The Central, Cielo Vista and Mesa Hills areas offer more affordable rental properties for sale, while neighborhoods in the northwestern and eastern parts of the metro area have some of the more expensive housing inventory. The amount residents spend on everyday expenses, such as food and transportation, is slightly less than what the average American pays. The next one is the San Antonio real estate market. The median home value in San Antonio is $167,600. San Antonio home values have gone up 8.0% over the past year and Zillow predicts they will rise 2.5% within the next year.
For those who want to invest in rental real estate, the San Antonio real estate market is an ideal location because of the outsized military presence. Fort Sam Houston is located inside the city limits. Lackland Air Force Base, Randolph Air Force Base, Camp Bullis and Camp Stanley are located in the immediate vicinity. This means that there is a large population that will almost always rent because they don’t know where they’ll be sent on their next assignment.
San Antonio has a dearth of affordable housing because demand is so much greater than the supply. This has created a large number of renters who need to pay quite a bit to rent apartments or single family homes. We know there is a lack of housing relative to demand when a balanced market has a 6 month home inventory and San Antonio has only a two month inventory.
The Austin housing market is one hot place to invest in Texas. It isn’t the largest in the state of Texas, but there are a number of reasons to consider buying real estate in this city. The Austin real estate market has gained a lot of steam, with home values almost doubling since 2010. The Austin real estate market isn’t as big as Dallas, San Antonio or Houston. One of the long-term strengths of the Austin is its diverse economy. The Austin real estate market dipped after the layoffs of the Dot-Com boom. They decided to solve the problem by encouraging medical and biotech employers to relocate to the area, too. As of this writing, there are 85 biotech and pharmaceutical companies in Austin.
Remember, caveat emptor still applies when buying a property anywhere. The aim of this article was to educate investors who are keen to invest in Houston real estate in 2020. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend to do your own research and take help of a real estate investment counselor. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
References:
- Downtown Houston
https://www.downtownhouston.org/development - Houston After Hurricane Harvey
http://www.chron.com/business/real-estate/article/Houston-real-estate-market-continues-post-Harvey-12341532.php
https://www.houstonproperties.com/hurricane-harvey-impact-houston-realestate
https://www.npr.org/2017/11/08/562903267/some-real-estate-investors-eager-to-buy-houston-homes-damaged-by-flooding
https://www.bizjournals.com/houston/news/2017/10/11/following-harvey-houston-sees-home-sales-rebound.html - Latest Market Data, Trends and Forecast
https://www.zillow.com/houston-tx/home-values
https://www.redfin.com/city/8903/TX/Houston/housing-market
http://gordcollins.com/real-estate/houston-real-estate-forecast
https://www.fortunebuilders.com/houston-real-estate-market-trends
https://www.har.com/blog_66778_what-and-039s-ahead-for-real-estate-in-2019 - Foreclosures
https://www.realtytrac.com/statsandtrends/foreclosuretrends/tx/harris-county/houston
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