Rich Bonn's August Houston Market Update: The Numbers and the Opportunity Hidden Inside Them

Rich Bonn at Habayit Home Loans is recording this week's update from his Sukkah during the holiday of Sukkot which means the work continues from a slightly different setting but the data does not care about the calendar. Here is what is actually happening in Houston real estate and why buyers who are fixated on mortgage rates are missing the more important conversation.

What the Houston Housing Market Numbers Are Showing in August

Single family housing sales are down 11.5 percent from last year. The median home sales price is down 1.5 percent but Rich is direct about what that number actually means. It does not mean home values are sliding. It reflects fewer move-up buyers in the market. The average sale price in Houston actually increased 1.2 percent to four hundred and twenty-six thousand seven hundred and sixty dollars which tells a more complete story than the median alone.

Single family inventory sits at approximately 5.3 months which is somewhat higher than the national picture. Days on market are running at 54 days. But Rich immediately contextualizes that number with a specific example. A client just got under contract on a home that had been on the market for two days. It was appropriately staged, appropriately priced, and received multiple competing offers. Part of what is inflating that 54-day average is the inventory of improperly priced homes sitting without activity while well-prepared and correctly priced properties move quickly.

Pending sales are down 3.5 percent year over year. All property sales are down 10.2 percent. Total sales volume is 3.5 billion dollars, also down 10.2 percent. Despite rates being elevated from earlier in the year August still produced meaningful activity.

Looking at the most current numbers new listings are down just under 8 percent year over year. Pending listings are down over 26 percent. Off-market listings are declining. People are being more patient when trying to sell. Closings are down 12 percent. But showings are only down 1.5 percent. Rich identifies that gap as significant. People are still looking. They are not buying anything. They are looking for the right house. When the right house is priced and presented correctly it moves. Listing views are down 12.3 percent which tells you that the buyers who are active are being selective rather than browsing broadly.

Why This Is the Time to Buy in Houston

Rich is unambiguous. If you are on the sidelines this is the time to buy. But he pushes back on the marry the house date the rate framing that has become popular in mortgage marketing. His objection is practical. You do not date when you get married and you should not buy something you cannot actually afford while counting on a refinance to rescue the payment. Buy what makes financial sense at today's rate. Make sure you can afford the payment today.

What buyers should be focused on instead of rate obsession is what they can negotiate. In a market with 5.3 months of inventory, 54 average days on market, and sellers who are growing more patient there are genuine opportunities to structure offers that keep more money in the buyer's pocket through seller concessions, price negotiation, and creative structuring that simply was not available during tighter markets.

The National Economic Picture and What It Means for Rates

Jobless claims fell a thousand to one hundred and ninety-seven thousand. That means fewer people are being laid off and unemployment filings are trending lower. A strong labor market is good for the economy and for housing demand but it also means the Federal Reserve has less incentive to cut rates. Mortgage bonds have been weak and the ten-year Treasury crossed five point two percent at the time of recording. There is a meaningful probability the Fed raises rates again at the next meeting.

The connection between strong employment data and mortgage rate direction runs through the bond market. When the economy is strong and employment is stable bond investors demand higher yields to compensate for inflation risk and mortgage rates follow those yields. Buyers waiting for rates to drop in the near term should understand the economic forces working against that outcome.

The Foreclosure Situation in Houston

Houston is among the top five metros in the country for foreclosure activity right now. Rich is careful to provide the essential context before anyone interprets that as a 2008 comparison. It is not. The volume is nowhere near pre-2008 levels and the reason Houston appears at the top of that list is structural rather than economic. Texas is a non-judicial foreclosure state which means the foreclosure process moves faster here than in judicial states where court involvement extends the timeline significantly.

What Rich is specifically seeing is the end of pandemic-era forbearance games. Some borrowers have been managing to avoid foreclosure for nearly five years through various mechanisms that pandemic protections made possible. Those mechanisms are running out. The foreclosures moving through the Houston system now largely represent that backlog clearing rather than a new wave of distress created by current economic conditions.

The Appraisal Changes Coming November 2nd

Conventional loan appraisal changes become official November 2nd and Rich is clear that there will be no workarounds after that date. For real estate agents who have not yet attended a CE class on the new appraisal requirements Rich and the team at Habayit are running classes across greater Houston. Check the social media on Fridays for the schedule of upcoming CE classes covering the appraisal changes and other topics.

This is Rich Bonn with Habayit Home Loans. Reach out at 281-841-1723. Have a great week Houston.

Sources

HoustonAssociationofRealtors.com
FederalReserve.gov
MortgageNewsDaily.com
TreasuryDirect.gov
ConsumerFinancialProtectionBureau.gov