The coronavirus impact on the real estate market in Houston has had an unusual effect. Not many industry experts predicted that home prices would continue to rise in many areas as they have been doing.
The rising prices could be a result of a few factors including pent up demand, low-interest rates, and first-time buyers feeling a sudden rush to buy, fearing that prices are getting higher by the week.
Regardless of what the factors are its a seller’s market and the competition is high and fierce on desirable properties near great schools and amenities.
Although many would-be house buyers are finding it to be a great time to take advantage of low-interest rates. Some buyers will have a tougher time getting qualified for mortgages, as lenders double down to mitigate risk buy increasing credit score requirements and larger down payments.
Another factor not mentioned above that is driving house prices is the lack of inventory. In some cases, homeowners are opting to keep their homes instead of selling, The concern they have is not being able to find another home to purchase.
According to the latest data from the Houston Association of Realtors (HAR), single-family homes sales have set a record in July surpassing 10,000 sales for the first time. This year’s sales total for July was 10,975 surpassing last year’s July numbers of 8,921 by 23 percent.
The sales of high-end and mid-range homes have helped push median home prices up to historic levels. Based on data from HAR single-family homes median prices rose a whopping 8.7 percent to $271,830.
Below is the market data report for the Houston area. The data was derived from the Houston Association of Realtors.
HAR Chairman John Nugent had this to say about the market “We are grateful for two consecutive months of strong activity across greater Houston, however, we do not consider the current pace of home sales sustainable given the shrinking supply of homes and expect business to taper a bit this fall,” said HAR Chairman John Nugent with RE/MAX Space Center. “Historically low interest rates make this an outstanding time to buy a home, but without the inventory, there, unfortunately, isn’t much out there for consumers.”
Related article: 5 Ways the Coronavirus Will Impact Houston Real Estate in 2020
Here is the underlying issue we must be aware of. The real estate market like any other market goes in cycles. When the market is at its peak like it is now, eventually, it will correct itself. Would-be home buyers need to keep this in mind. Interest rates are at record lows, but that doesn’t mean you should overpay just to get a home.
Low-interest rates will save you money over time, but most homeowners only keep their homes for an average of 7 years. When the market corrects itself your home could fall in value. This could lead to owing more than what your house is worth when you get ready to sell.
The real estate market in Houston is booming and on track to break many sales records. Although it might be tempting to take full advantage of low interests and you should if you can responsibly. Don’t make the mistake of over leveraging your finances to do so. Its a sellers market and prices are high, you should try your best not to over pay.