Investors are still buying properties in Houston almost as quickly as they are listed, even though home prices in Houston real estate are hitting record highs. Referring to the Houston Association of Realtors or HAR, the sales volume of single-family houses increased more than 4 percent this year, with the shortage of affordable housing making more demands for rental properties.
With home prices reaching historic highs as well as mortgage interest rates are up, the Houston housing market slowed down in May because some buyers delayed purchases or switched to rentals as an alternative. Single-family home sales dropped 0.9 percent, but they are still 4.4 percent ahead of the record pace in last year.
So, the real estate market in Houston can be great for single-family rental property investors, though it can be stressful for homeowners. It is because the strong job market in this city is dragging more people. And when the real estate market is competitive, they choose to rent instead.
Houston at a Glance
Houston is home to around 2.5 million residents, making it the 4th most populous city in North America. This city is named after former General Sam Houston who back in 1836 won the San Jacinto War, helping Texas get its independence from Mexico. Houston is a magnet for tourism. It is strongly linked to Space Centre Houston and NASA’s astronaut training and flight control complex, along with many other interesting, fun tourist attractions.
For example, Houston’s Museum District, The Museum of Fine Arts, Houston Zoo, Houston Children’s Museum, Buffalo Bayou Park, The Health Museum, and many more. For a lot of people, moving to this Bayou City is easy as it offers strong job growth, low living cost, affordability, and amenities. Houston provides nearly everything to call home for the long run.
Houston Real Estate Market Overview
With all the buzz surrounding real estate markets in Texas like San Antonio and Dallas, you probably overlook Houston. If you really do, you need to reconsider it because this city offers incredible accessibility and value to a major housing market in the United States. Home prices in this Bayou City keeps increasing at double-digit rates, as the Greater Houston Partnership reports.
The median sale price of single-family homes recently reached $350,000 as of May 2022, which is rising more than 40 percent compared to 2 years ago. As home prices in the Houston real estate market continue to rise, more people prefer to rent a home instead of owning one. Active listings have gone up by 14.9 percent in May. While the total dollar volume rose by 12.0 percent to 4.9 billion. The inventory is at 1.6 months’ supply, increasing from 1.3 months last year.
- Zillow Home Value Index for Houston is $226,864 through May 2022.
- Home values in Houston grew by 21.7 percent over the past year and by more than 54 percent over the past 5 years.
- The median days on market for Houston Texas homes for sale decreased to 29 days.
- According to the Houston Association of Realtors, the median sales price of a single-family house is $314,000 as of May 2022.
- This year sales of single-family houses in Houston increased 4.4 percent compared to the same period of time last year.
- The inventory of houses for sale is only 1.6 months.
- Of the 89 neighbourhoods in Houston, the most affordable one is Greater Inwood with a median listing price of $195,000. While the most expensive neighbourhood in the city to buy a home is Neartown-Montrose, where the median listing price is $635,000.
Houston Real Estate Market Trends
Let’s take a look at Houston real estate market trends. In May, home sales continued at a solid pace regardless of mortgage interest rates rising and prices reaching new record highs. Investment companies and individual buyers, maintained demands, practically purchasing homes as soon as they are listed. By the end of the month, the volume of single-family home sales had dropped by less than 1 percent compared to a record pace last year.
As part due to a gain in new listings, the housing supply reached its highest level this year, according to the market update from the Houston Association of Realtors as of May 2022. Single-family house sales lowered by 0,9 percent, signalling the 2nd consecutive monthly reduction from year to year, with 9,627 units sold compared to 9,727 in May last year. However, the Houston Texas real estate market is 4.4 percent ahead of last year’s record-setting volume, year-to-date.
The $500,000 to $1 million home market was the month’s hot performer, with an increase of 38.3 percent sales volume from year to year. This was followed by a gain of 30.2 percent in the luxury market that includes residences valued at $1 million or more. The $250,000 to $500,000 home sector was in the 3rd place with a rise of 10.7 percent. The upward trend of home prices in Houston continued in May with buyers pushing prices to new highs.
The average price of a single-family home was up 14.3 percent to $440,670. On the other hand, the median price has gone up 16 percent to $351,000. The average price of a single-family home in Houston exceeded $400,000 for the first time this year in March.
Houston Real Estate Market Forecast
What about Houston real estate market forecast? Houston has a track record of being among the top long-term real estate markets in the country. Since the past 10 years, the home values in Greater Houston have appreciated by almost 109.7 percent, according to the Zillow Home Value Index (ZHVI). ZHVI represents the entire housing stock and not only the houses that sell or list in a certain month.
The current’s typical home value in Greater Houston is $306,192. It shows that 50 percent of all housing stock in the region is worth over $306,192 and 50 percent is worth less. The typical value of houses in Greater Houston was around $248,000 back in May last year. Home values in Houston have increased 23.2 percent over the past 12 months.
According to the data from NeighborhoodScout, the real estate in Houston has appreciated by almost 84.37 percent over the past decade. Its annual appreciation rate has been averagely at 6.31 percent. This number puts it in the top 30 percent nationally for real estate appreciation. The appreciation rate in Houston was almost 13.83 percent over the past 12 months. And it was 5.64 percent in the latest quarter. If it stays stable, it annualizes to a rate of 24.55 percent.
Zillow also forecasts that there will be a gain in home values over the next 12 months. This shows that the home price in Houston will continue to increase in 2022. This might not be good news for buyers. But for investors who want to invest in Houston real estate, now is a good time to purchase a property in this Bayou City. Note that this city is a seller’s market. So, pay attention to upward pricing pressure in the foreseeable future if the trend keeps going.
Population Growth in Houston
Over the last decade, the 3-county region of Houston added a million residents as well as contributed for a quarter of the population growth in the state of Texas. The population of Harris County grew by 15.6 percent between 2010 and 2020. On the other hand, adjoining Fort Bend and Montgomery counties respectively grew by 40.6 percent and 36.1 percent. Below are some stats about the population growth in Houston.
- More than 2.3 million residents in the city as well as more than 7.1 million people in the metropolitan area call Houston home. This makes Houston the 4th most populated city in North America.
- Based on the most recent census, the population in the city of Houston gained more than 205,000 residents over the past 10 years, growing by almost 10 percent.
- Houston is the most populated city in the state of Texas as well as the 4th most populated city in the nation.
- The population growth in Houston is driven by both domestic and international migration.
- Major counties in this city include Montgomery, Ford, and Harris counties that accounted for ¼ of the population growth in Texas between 2010 and 2020.
- The median household income in Houston is $69,328 while the per capita income is $35,125.
- The population of Houston is projected to continue growing this decade. It is expected to add more than 1.2 million new residents through 2029.
Job Market in Houston
Back in May 2022, the Houston metropolitan area created 31,000 jobs, way above the 20 year/pre-pandemic average. In fact, the job growth in this city has been above the average for 9 months of the past 12 months before the pandemic struck the world. Referring to the Greater Houston Partnership, nonfarm payroll employment is more than 3.2 million, which is the highest that it has ever been.
Employment in Houston surpasses pre-pandemic levels in 11 sectors. These sectors include professional services, entertainment, arts, technical services, and scientific services. Here are some stats about the job market in Houston, Texas.
- Based on the report from the Federal Reserve Bank of St. Louis, the GDP of the Houston MSA is more than $455 billion. It has risen by more than 18 percent over the past decade.
- Houston is home to more than 3.2 million employees. The city has added around 400,000 jobs since the outbreak of the global pandemic in 2020.
- The median household income in Houston increased by 5.8 percent from year to year. And the median property value in this city grew by 7.03 percent over the last year.
- The current’s unemployment rate in Houston is 4.1 percent as of April 2022. According to BLS, the industry sectors that show the rapidest signs of growth are hospitality, leisure, business and professional services, transportation, trade, manufacturing, and mining.
- Target industries in the city include logistics, transportation, headquarters, biotechnology, life sciences, energy, advanced manufacturing, aviation, and aerospace.
- Exxon Mobil Corporation, The Methodist Hospital System, United Airlines, University of Texas MD Anderson, and Memorial Hermann Health Systems are some of the largest employers in Houston.
- Dozens of colleges and universities are located in Houston. For example, the Lone Star College System, Sam Houston State University, University of Houston, and Texas A&M University-College Station.
- Houston landed number 4 among the US metropolitan areas in Fortune 500 headquarters with low costs and regulations, and pro-growth government. It also has no personal or corporate income tax at the state level.
Life Quality in Houston
Houston continues to attract more and more people and businesses from all over the world. There are many reasons why people want to visit and stay in this city, such as its low cost of living in Houston TX, vibrant communities, and combination of cultural activities. The population of Houston keeps growing and the city stays vibrant, thanks to the affordable housing prices coupled with no city or state income taxes.
- The living cost in Houston is more affordable compared to other cities in Texas, such as Austin and Dallas.
- Forbes ranks this city as among the best places for careers and businesses in the United States.
- According to the US News & World Report, Houston is one of the best cities in the nation to live and retire.
- Some of the best, popular neighbourhoods in Houston to live include Astrodome Area, Kingwood Area, Clear Lake, and Memorial.
- 19 museums and galleries are located in the Houston Museum District, attracting more than 7 million visitors every year. This makes Houston one of the most-visited cities for those who love arts and sciences.
- The NBA Houston Rockets, MLB Houston Astros, and NFL Houston Texans are the city’s pride.
Houston Real Estate Market FAQs
- Is Houston a Recommended Place to Invest in Real Estate?
The home price in Houston reaches new highs and it is forecasted to continue increasing. This is definitely a good place for real estate investors seeking for flip profits.
- Is It a Good Idea to Live in Houston?
Houston is a good place to live for those who want to live in a big city as Houston is the 4th most populated city in United States.