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Houston Market Shows Strength in 2005, Real Estate Investors Noted
The Houston Real Estate market showed continued strength in 2005 according to a press release from HAR.
In an opinion piece on Thursday, HoustonRealNews highlighted some fundamental market factors driving Houston's real estate market.
Houston real estate investors have been speaking anecdotally about investors from California buying properties sight unseen based on our low prices and cash flow fundamentals. Not yet, experiencing California-like growth, Houston sales and prices are rising in the face or rising interest rates.
The HAR Data speaks for itself in terms of the overall market - price increases, volume increases, and, significantly for real estate investors, inventories down.
According to HAR, Houston experienced an 8.9% increase in number of homes sold in 2005 vs. 2004. The inventory decrease can be seen in the second table below. Inventory in at the end of November was 5.5 months and dropped to 5.1 months at the end of the year.
Note, however, that the total numbers of homes on the market is virtually unchanged from both November and the previous year.
TABLES FROM HAR PRESS RELEASE
HAR 2005 vs. 2004 Table
HAR December 2005 vs. December 2004 Table
(*Months inventory estimates the number of months it will take to deplete current active inventory based on the prior 12 months sales activity. This figure is representative of the single-family homes market.)
RENTAL ACTIVITY JUMPED A WHOPPING 50%
Although the City and the Houston Apartment Association have made great strides to encourage and congratulate each other on the housing of Hurricane evacuees, HAR has given the Houston Real Estate Investor a nod in this press release.
HAR notes that rental activity increased dramatically in the Fourth Quarter of 2005.The number of properties leased through the MLS in the fourth quarter of 2005 increased a surprising 50.0 percent, rising from 2,968 in the last three months of 2004 to 4,451 in Q4 2005. Properties listed through the MLS are more typically single-family homes, high rises, townhouse/condos, rather than apartments. The press release believes that the housing market has been affected by a large influx of Hurricane Katrina evacuees.Luckily, our market had the available supply of homes for sale and lease to absorb the number of people who needed a place to live.
Since an archetypical real estate investor is one who owns a property for investment purposes, and not as a homestead (and therefore CAN rent it out), it is real estate investors leasing out houses. It would appear that HAR has renamed the impact real estate investors bring to the market: "Luckily."
EXISTING HOMES DRIVING GROWTH
HAR now reports on Existing Single Family home sales separately. (See Blog on Nancy Sarnoff's atypical nomenclature.) For the month of December 2005, existing single-family home sales totaled 4,671, which was a 7.8 percent increase from December 2004. The median sales price for existing homes in the Houston area was $139,500, an increase of 7.4 percent compared to the same period last year. The average sales price for the month of $181,391 was an increase of 4.2 percent from last year's level.
A simple analysis of the existing home numbers vs. the overall numbers reveals the existing home sales grew faster than the overall market and new construction.
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