Despite falling oil prices, the Houston property market is maintaining a brisk rate of sales and price increases. August was one of the best months on record as Houston continued to see a steady influx of new residents drawn by the opportunities offered in the Texan city.
Property analysts rate 2014 as the best year ever for the Houston property market, but the high level of sales this year has led them to believe that 2015 will at least equal results. The number of single family homes sold in the city last month (7,454 in total) represent the 8th highest monthly figure on record and the highest ever for the month of August.
Resale and rental prices up
Median prices for this type of property in Houston reached US$215,100, a 5 per cent increase on August 2014. The rental market saw similar price rises with monthly rates for single family homes going up by 4 per cent over the year to reach an average of US$2,901.
And while supply levels rose slightly, there's no sign of demand abating as the Houston property market is fuelled by strong driving factors. Low interest rates on mortgages in the US are one of the reasons behind high sales of property in the city as buyers make the most of rates at under 4 per cent on 30-year loans.
Jobs and population increases
Plenty of jobs are another major factor behind demand for homes. Although the rate of job creation is lower this year than last because of the drop in oil prices, Houston has created over 64,000 new jobs over the last 12 months.
People from outside Houston are drawn to these employment opportunities in droves to the extent that the city receives around 1,000 new residents a week. This massive and continued influx has led population analysts to estimate that by 2015 Houston will become the third largest city in the US, overtaking Chicago, currently in third place. They believe the population in Houston will grow from its current 2.54 million to 2.7 million in ten years’ time.
Shortage of new supply
This continued rise in population puts tremendous pressure on the Houston property market where although inventory levels rose slightly in August, the uptick in supply was not enough to make a difference to market conditions. According to the Greater Houston Partnership, there’s little sign of a surge in housing construction to meet demand and they report that new home supply will remain limited because of the general lack of building land.
“The problem with the residential market is that we can’t develop enough lots,” said Patrick Jankowski, regional economist in the Greater Houston Partnership. “If we could create a few more lots, it would lower lot prices, which would lower home prices.”
Sources: Houston Realtors, Greater Houston Partnership, CNBC