The Houston housing market exhibited signs of resiliency in April 2023 despite sales volume trailing behind the previous year and prices experiencing a decline. The market remained stable when compared to pre-pandemic levels, offering a range of housing options for buyers as the prime sales season approaches.
With ongoing mortgage rate fluctuations and uncertainties, buyers are still turning to the rental market. While challenges persist, there is optimism that the Houston housing market will strengthen in the coming months. The Multiple Listing Service (MLS) of the Houston Association of REALTORS® plays a crucial role in the real estate market by providing a comprehensive database of residential properties and new homes listed by 50,000 REALTORS®.
In this blog post, we will delve into the recent press release from the Houston Association of Realtors and explore the key insights and trends revealed in their April 2023 Market Update.
Signs of Market Resiliency
Despite the continued volatility in mortgage rates, the Houston housing market showed signs of resiliency in April 2023. However, when compared to April 2022, the market remained down. It marked the 13th consecutive month of sales volume trailing behind the previous year and the third consecutive month of prices failing to surpass the levels of the previous year.
Sales Volume and Pricing Trends
The April 2023 Market Update reported that single-family home sales were down 18.4 percent year-over-year, with 7,310 units sold compared to 8,955 in April 2022. Nevertheless, when compared to April 2019, when sales volume totaled 7,673 units, the decline was just 4.7 percent. This indicates a potential stabilization compared to pre-pandemic levels.
In terms of pricing, the average price of single-family homes dipped 1.3 percent to $419,929, and the median price fell 3.6 percent to $331,000. These figures are in contrast to the record-high prices observed in May and June 2022. Despite the recent declines, the prices still remain significantly higher than they were before the pandemic.
Housing Segments and Rentals
All housing segments experienced declines in April 2023 compared to the same period in 2022. However, the single-family rental market continued to benefit from strong consumer demand. Many potential homebuyers are opting for rentals due to ongoing uncertainty about interest rates and inflation.
Market Outlook and Hope for Strengthening
Cathy Treviño, the HAR Chair with Side, Inc., acknowledged that the housing market turnaround would not occur overnight, given the volatility of interest rates, inflation concerns, and speculation about a possible recession. However, anecdotal reports from Realtors indicate that sub-markets are performing well, emphasizing the localized nature of real estate. There is hope that the Houston housing market as a whole will strengthen later in the year.
Houston Housing Market Forecast 2023
Looking at the current statistics, what are the Houston real estate market predictions? NeighborhoodScout.com's data also shows that Houston real estate appreciated by nearly 98.71% over the last ten years. Its annual appreciation rate has been averaging 7.11%. This figure puts it in the top 30% nationally for real estate appreciation.
Let us examine the price trends recorded by Zillow over the past few years. The Houston housing market has been showing signs of stability and growth, with the average home value in the Houston-The Woodlands-Sugar Land area reaching $302,588. Over the past year, there has been a 2.4% increase in home values, indicating a positive trend for homeowners and potential sellers.
Average Home Values and Value Change
As of April 30, 2023, the average home value in the Houston area stands at $302,588. This figure represents a 2.4% increase in home values over the past year. This upward trajectory suggests a healthy and appreciating real estate market, providing homeowners with potential equity growth.
Based on current trends and market indicators, the Houston housing market is projected to continue its positive momentum in the coming year. The forecast predicts a 3.2% increase in home values over the next 12 months, indicating a favorable environment for both buyers and sellers.
Median Sale to List Ratio
The median sale to list ratio, calculated as of March 31, 2023, stands at 0.982. This ratio indicates that, on average, homes in the Houston area are selling very close to their list price. This suggests that sellers are receiving offers that align closely with their asking prices, indicating a balanced and competitive market.
Percent of Sales over and under List Price
In the Houston housing market, there is a significant percentage of sales that occur both above and below the list price. As of March 31, 2023, approximately 16.6% of sales were made above the list price, highlighting a competitive market where buyers are willing to pay more to secure a property. On the other hand, around 64.0% of sales were made under the list price, providing potential opportunities for buyers to negotiate favorable deals.
Median Days to Pending
The median number of days it takes for a property to go pending, as of April 30, 2023, is 19. This statistic indicates that, on average, homes in the Houston area are going under contract relatively quickly. The shorter the median days to pending, the more active and dynamic the housing market, showing a strong demand for homes in the area.
Clearly, for the long-term investment, you cannot ignore Houston. Investing in a rental property for the long term would build your equity and also generate cash flow through rental income. If you want to increase your cash flow in 2023, you will find great deals in the Houston real estate market.
Houston Real Estate Market Statistics (Previous Year)
The Houston real estate market in 2022 saw record-high average and median prices, but also declining sales, particularly due to a lack of inventory and rising mortgage rates. June had the year’s strongest sales volume with 9,844 single-family units sold. Despite this, new listings gave a boost to inventory levels, which hit a high of 2.8 months in October and November.
In total, 95,113 single-family homes were sold in 2022, representing a 10.9% decrease from the previous year, while the average and median prices increased by 10% and 12.8%, respectively. According to HAR’s December/Full-Year 2022 Housing Market Update, single-family home sales fell 10.9 percent to 95,113.
Sales of all property types totaled 117,572, down 10.7 percent from 2021. Total dollar volume dropped just 2.0 percent to $45.6 billion versus $46.5 billion in 2021. The lease market remained strong as many prospective buyers opted to rent until they were ready to buy.
Houston Rental Market Trends
The Zumper Houston Metro Area Report analyzed active listings last month across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Texas one bedroom median rent was $1,141 last month. Sugar Land was the most expensive cities with one bedroom priced at $1,390. Pasadena was the most affordable city with rent at $850.
The Fastest Growing Cities For Rents in Houston Metro Area (Year-Over-Year)
- Sugar Land had the fastest growing rent, up 8.6% since this time last year.
- Pearland saw rent climb 8.3%, making it second.
- Galveston was third with rent increasing 5%.
The Fastest Growing Cities For Rents in Houston Metro Area (Month-Over-Month)
- Sugar Land experienced the largest monthly rent price growth rate, growing 2.2%.
- Texas City was second with rent climbing 1.1%.
As of May 2023, the average rent for a 1-bedroom apartment in Houston is currently $1,300. This is a 2% decrease compared to the previous year. Over the past month, the average rent for a studio apartment in Houston increased by 8% to $1,280. The average rent for a 1-bedroom apartment increased by 4% to $1,300, and the average rent for a 2-bedroom apartment increased by 9% to $1,586.
- Two-bedroom apartment rents average $1,586 (an 8% decrease from last year).
- Three-bedroom apartment rents average $1,850 (a 3% increase from last year).
- Four-bedroom apartment rents average $2,000 (a 4% increase from last year).
Some of the most affordable neighborhoods where the asking prices are below the average Houston rent:
- East Little York, where the average rent goes for $870/month.
- Greater Eastwood, where renters pay $850/mo on average.
- Gulfton, where the average rent goes for $1160/mo.
Houston Real Estate Investment Outlook
Investing in Houston real estate can be a worthy investment due to a steady rate of appreciation. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. Should you consider Houston real estate investment? Houston is a minimally walkable city in Harris County with a population of approximately 2,112,810 people. It is a diverse city with lots to offer that will cater to the tastes of a variety of potential buyers and tenants.
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, rowhouses, and homes converted to apartments. Single-family homes account for about 45% of Houston's housing units.
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 number of homes sold in the entire twelve months of 2018 was 82,229. Residential units, hotels, office buildings, and restaurants; the city is seeing continuous development projects that promise to keep the real estate market strong. 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. 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.
Houston has always been 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, 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. Houston is also one of the hottest real estate markets in the nation.
Top Reasons To Invest In The Houston Real Estate Market
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 homebuyers in Houston. Houston's 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 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 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. 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 365 days 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 an exciting new territory.
Although Harvey’s effects were devastating, the hurricane also contributed to the Houston housing market’s new rise after Harvey. Houston's inspiring efforts to come together and recover show 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 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.
Good cash flow from Houston investment properties 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 key to your success.
If you invest wisely in Houston real estate, you could secure your future. The best investment is now looking for a rental property that will generate good cash flow. Your best tenants would be the retirees who intend to relocate to Houston and want to purchase property to rent out.
The running costs for owning and managing a Houston rental property should not be high. While hiring a property management company you should expect to give up roughly ten percent of the rent for each property they manage. Remember to factor this loss into your calculations when budgeting for a new rental property.
The three most important factors when buying real estate anywhere are location, location, and location. The location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Houston investment property and you should be able to get a good return on your investment over the long term.
The neighborhoods in Houston must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. A cheaper neighborhood in Houston might not be the best place to live in.
A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. Houston's real estate prices are well above average cost compared to national prices.
It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals such as duplex and triplex in Class A neighborhoods. The inventory is low, but opportunities are there.
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 of 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 for example. Even with rent increases, buying a $500,000 investment property in Houston is not going to get you $5000 per month on rent.
The asking price of single-family homes in Houston (on Realtor.com) can start from $29,000 and can go up to $29.5M for a luxury property located in the Westside neighborhood. You can find many 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 around $155,000.
Even as Houston's home prices have reached new heights, the market remains attractive to residential real estate investors. As they continue to compete for potential investment properties at the lower end of the market, the challenges for first-time homebuyers will remain.
The homebuyers won’t be able to outbid real estate investors and would end up renting. As with any real estate purchase, act wisely. Evaluate the specifics of the Houston housing market at the time you intend to purchase.
Here are the top 10 Highest Appreciating Houston Neighborhoods Since 2000 (List by Neighborhoodscout.com)
- Lawndale Wayside South
- Brittmoore Rd / Shadow Wood Dr
- Gulfton South
- Woodland Heights
- Greater Heights Southeast
- Greater Heights East
- Downtown Southeast
- Near Northside
- Second Ward East
- Greenway Upper Kirby Area West
Other Texas Real Estate Investment Markets
Apart from Houston, 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 next one is the San Antonio real estate market. For those who want to invest in rental real estate, the San Antonio real estate market is an ideal location because of its 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 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 several 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 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. There are around biotech and pharmaceutical companies in Austin. 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 areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Houston.
Consult with one of the investment counselors who can help build you a custom portfolio of Houston turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Houston.
Not just limited to Houston or Texas but you can also invest in some of the best real estate markets in 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 and structuring complete Houston turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
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This article shouldn't be used to make real estate or financial decisions. Some of this article's information came from referenced websites. Norada Real Estate Investments provides no express or implied claims, warranties, or guarantees that the material is accurate, reliable, or current. All information should be validated using the below references. Norada Real Estate Investments does not predict the future US housing market. This article educated investors on Houston real estate. Buying a rental property needs research, planning, and budgeting. Not all investments are good. Always do research and consult a real estate investment counselor.
Market Data, Trends, and Forecasts
Houston After Hurricane Harvey