Houston Just Hit a Historic Inventory Milestone and Buyers Need to Understand What That Actually Means

Rich Bonn at Habayit Home Loans has the weekly Houston market update and this week there are two major stories worth unpacking. The Houston real estate market just hit a record and the new Fed chair is sending signals that the rate environment may not be moving where everyone hoped.

The Houston Market Numbers This Week

Houston has more active listings in HAR right now than at any point in recorded history. Five and a half months of inventory. That is a significant number and on the surface it sounds like great news for buyers.

It is genuinely good news for buyers. But Rich has a caution worth hearing before anyone gets too excited about having so many options.

Too many choices create paralysis. Rich has said it before and the current market is proving it again. Buyers who are going out and looking at fifteen or seventeen homes in a day are coming home exhausted, eating their pizza, and forgetting most of what they saw. Their brain gets fried somewhere around house number three and everything after that blurs together. Meanwhile the home that was actually the right fit gets snapped up by the buyer who showed up fresh and focused.

The better approach is to short list. Identify the top two or three properties that genuinely meet the criteria and go see those. If none of them work go back to the list and pick three more. Do not mistake activity for progress.

The broader market numbers this week showed closings down approximately 16.5 percent which Rich attributes directly to back-to-school season pulling families away from the homebuying process. Showings were up 2.5 percent which is an encouraging signal of underlying buyer activity. Listing views were down as school-focused families deprioritized browsing. New listings were up 4.9 percent adding to the already record inventory. Pending listings were down and a meaningful number of homes were pulled off the market entirely.

The net picture is mixed for sellers and genuinely favorable for buyers. More selection. More negotiating room. More motivated sellers who have been sitting on the market longer than they expected.

What Is Happening With the New Fed Chair at Jackson Hole

Kevin Warsh is the new Federal Reserve chair and the mortgage market was watching his Jackson Hole appearance closely this week for signals about rate direction. What he delivered was not what rate-watchers were hoping for.

Warsh is a businessman and he is clearly approaching the Fed's mandate with significant caution. While recent inflation data has been showing encouraging signs particularly as Iran tensions have de-escalated and gas prices have fallen Warsh's position is essentially that those improvements are temporary and the underlying picture is not yet settled enough to commit to rate cuts.

He did not commit to a rate hike this year but his tone was markedly hawkish. The market responded immediately. Rich reports a lock alert on Friday as rates jumped higher than anticipated in response to Warsh's Jackson Hole signals.

On unemployment Warsh noted that the rate sits at 4.1 percent which by traditional metrics is consistent with full employment. Rich raises a valid point about how unemployment is measured. The standard figure excludes people who have been out of work for more than six months on the theory that historically finding a job took less than six months. Whether that measurement methodology will be updated to reflect current labor market realities is an open question.

What the Rental Data Is Telling Houston Renters

August rental reports showed rent prices up approximately 0.1 percent. Good news for landlords. For renters it is a reminder that housing costs are not fixed when you rent. They move with the market and they have consistently moved higher over time.

If you are renting right now you are one renewal notice away from a higher payment. If you buy you lock in the principal and interest portion of your housing cost for the life of the loan. The rate environment is what it is and it will change. The price you paid for the home is permanent.

A Note for Self-Employed Houston Buyers and Their Realtors

Rich has a direct message for self-employed buyers and for the realtors working with them. A bank saying no is not the final answer.

If your tax returns show the kind of income that comes from a fully optimized business deduction strategy the numbers can look like you are living on very little even when your actual cash flow is strong. Rich and the team at Habayit Home Loans understand how cash flow works for business owners. Twelve months of bank statements or a CPA-prepared profit and loss statement can tell the real story of how the business is performing and get qualified buyers approved when the traditional route has been closed.

Call Rich Bonn at Habayit Home Loans at 281-841-1723 with any questions about the Houston market or about bank statement loan options for self-employed buyers. Have a great week Houston.

Sources

HoustonAssociationofRealtors.com
FederalReserve.gov
MortgageNewsDaily.com
BureauOfLaborStatistics.gov
Redfin.com