We hope that you’re all doing well and have had a great 2022 so far! Today we’re going to discuss what we saw in the market throughout 2021 and the outlook for the Houston real estate market.
Here are some key statistics from the 2021 market:
- The average home price increased by 17.6% year over year
- Around 26.6% of listed homes sold for over their list prices.
- Rent prices increased by 28.8%
- There is currently 1.6 months of supply of inventory
So what does this all mean for 2022? For one thing, builders are going to be a big factor in the supply-demand equation. Can they build enough houses to get the market closer to equilibrium? In my opinion, probably not. A 1.6 month supply is just too little to start on; plus, there are supply-chain issues that belabor the home-building process, including trades and materials. Pretty much every piece of the construction cycle has been affected by COVID. Because of that, you likely won’t see the cost of new homes coming down any time soon.
There are also interest rates to consider. The Federal Reserve has announced that they’re going to raise interest rates in 2022, perhaps as many as three times. I saw a prediction that the 30-year fixed-rate could go up to around 4%—it’s currently at around 3.5%. Although many people are concerned about it, that rate increase won’t do enough to temper demand, especially in the Houston real estate market where we’re still getting huge influxes of people into the area. Despite the marginal rate increases, they’re still historically low. We believe that with two months of supply, we’re just not going to be able to catch up this year.
Zillow projected a 13.5% increase in Houston home prices this year. I personally believe that figure is a little high, but prices definitely won’t be coming down. We’ll likely continue to see buyers competing for houses. All in all, it’s still a very strong market for sellers and a very tough market for buyers.
If you have any questions about the market or real estate in general, don’t hesitate to give us a call or send an email. Hope you have a great 2022!