Declining Oil prices have Houston homebuyers expecting to see a drop in Housing demand. Don’t get to excited yet as the only thing happening so far is an increase in the Days on the Market
Inner loop Houston Realtor Bill Edge said the long lines of people buyers attending open houses are gone. A Houston Realtor no longer has to get the offer in within minutes of the listing coming on the market. On the other hand finding an inner loop Houston home for sale on the west side is still very hard. He sees home prices holding up very well. The reason may be more related to a labor shortage than anything else. In 2006 home sales in the Greater Houston area were 71,000. The number fell off to 19,000 the next year. Last year was a banner year for homebuilders with home sales approaching 28,000 in Houston.
The home building labor force moved out of Houston after the Housing bust in 2007. They moved to the east coast and Midwest where extreme weather conditions were causing the need for trade’s people to make repairs. They have not returned to Houston. Young Houstonians who traditionally followed their fathers into the trades are saying I don’t want to work in that hot Houston sun.
Houston has not been building the amount of housing that should correspond to the population growth. Young college graduates who would be first time buyers are living with their parents or leasing. The Oil pricing has most affected the new job growth with estimates for 2015 being 45,000 new jobs. Houston had 103,000 new jobs in 2014.
If there is a drop in any area Edge would expect it to be in the $200,000 to $500,000 category. Builders are not building entry level $100,000 homes. So there is an acute shortage of product here. High end housing is being bought by doctors, old money etc. who are not affected by the Oil Industry for the most part. Expect builders to adjust to demand and build homes in the income groups where demand is high.
Just today there was a complaint in the Chronicle Real Estate Section from a buyer of a new home. They were complaining that the builder had stopped construction on their new home. The reason for this is the builder wrote the contract which allows them to stop construction on a home when they see that the contract price is way below the current market price for the home. This is a sign of a rising housing market in Houston.