The inventory of homes in Houston has dropped to levels last seen 12 years ago. The number of homes listed for sale in November 2012 according to the Houston Association of Realtors was 36,539. This is a 34.2% drop in the number of homes (45,113) listed for sale in November 2011. While new home starts are well below the record peak hit in 2006 when over 50,000 new homes were built in Houston.
What this means to you the buyer is that there is a lot of competition for homes listed for sale. Inner Loop Houston Realtor Bill Edge recently saw a home come on the market at 5:30PM. This home looked to be exactly what one of his clients wanted. He picked up the phone and made an appointment to show the home at 9:00am the next morning. To his surprise he received a call around 7:00am the next morning saying the showing was canceled by the seller. He felt there is something not right here and called the seller’s agent for an explanation. The sellers agent said “ I hated to put the home on the market. I knew my phone would ring off the wall. I had agents make appointments to show the home that night. We ended up with a substantial contract and a back-up which were accepted by the seller within hours after the home was listed.”
As 2013 approaches inventory will slide even further. Few homes are listed during the Christmas holiday period. High demand has caused the single family home price to jump 10.5 percent in Houston. The rising cost of homes will keep some first time homebuyers out of the market. However that will hardly matter because of the rapid population growth of Houston due to its robust economy.
The market is actually worse for buyers because of the record number of short sales. By now all of us know that short sales should really be called if and when sales. The time on the market for a short sale can run into years rather than months. Many of these homes will end up being foreclosed on and never sold. But they are listed for sale and counted as active listings.
The line forms at the front door for the foreclosed homes which are listed for sale. It is not uncommon to find 4 different groups of buyers waiting in line to see a foreclosure. They are just like all other listings in that you need to see the home quick and submit your contract offer fast. The sad thing for homebuyers is that many of these homes do not quality for financing and are sold for cash to investors.
Steps homebuyers should take
- Have a pre-approval letter
- Have your Realtor set up a search notifying you when home come on the market
- Drive by the home immediately
- Set up an appointment quickly to see the home with your Realtor
- Submit a contract
While there may be some relief if the shadow inventory of foreclosures owned by the banks and mortgage companies is listed for sale. The bigger problem is that we are simply not building enough homes to satisfy demand in Houston. We need to watch out for the possibility of a housing shortage here.
Source: Houston Association of Realtors, Houston Chronicle
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