Low inventories, interest rates catalyze “unprecedented” real estate market Katy

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Fort Bend County has been taking home inventories in less than six months since October 2011, according to the Texas Center for Real Estate Research at the University of Texas. Likewise, the Harris County inventory has had four months or less of a housing inventory since January 2015 (courtesy of Pexels).

Housing and real estate experts in the Katy area said they have never experienced market conditions like this in their decades-long careers.

The real estate market, described as unprecedented, incredibly competitive and explosive, is driven by historically low inventories, record low interest rates and skyrocketing prices for lumber and building materials, realtors and builders say.

“In nearly 40 years of experience, I’ve never seen such a market,” said Bill Lacey, head of mortgage lending at Independent Financial. “There has never been such a market. It just explodes. “

While this set of conditions is affecting the property market across the country, Jeff Wiley, CEO of the Fort Bend Economic Development Council, said Fort Bend County has always been a desirable place to live because of its high-quality public schools and amenities. rich communities and business drive.

“In good or bad economic conditions, Fort Bend [County] will be a magnet for growth as long as we maintain our competitive and comparative advantage at the national and regional levels, ”he said.

Low housing stock

In Wiley’s 17 years at the FBEDC, he said he had never seen the county’s housing stock so low.

Fort Bend County has been taking home inventories in less than six months since October 2011, according to the Texas Center for Real Estate Research at the University of Texas. Likewise, the Harris County housing inventory has been four months or less since January 2015. The Center describes its six-month inventory as a stable market.

However, in May, the latest month for which data are available, housing inventories reached 1.6 months in Harris County and 0.9 months in Fort Bend County, according to the center. Mary Kiesewetter, realtor with Better Homes and Gardens Real Estate Gary Greene, said low inventory levels are a major determinant of the market.

“It’s a driving factor because I’ve seen a couple of pretty big rallies as the market morphed into a big seller market … but nothing like that,” said Kiesewetter, who was selling property in Katy’s area for two. decades.

Low interest rates and 30-year fixed-rate mortgages are driving demand for housing – rates that have continued to decline since 1980, according to Federal Home Loan Mortgage Corp. or Freddie Mac.

Due to low inventory levels coupled with rising cost of building materials, builders in the area are struggling to meet demand for homes, says Rodney Hauverton, president of K. Hovnanian Homes, which builds homes in the workshop. the planned community of Katie Pointe, which is north of Katie, near Clay Road.

“There is a huge number of people waiting for their home, and with such a huge demand, some builders even terminate contracts with buyers because they simply do not have time,” he said.

Rising house prices

According to Mike Roller, a broker and owner of Roller Realty, as home inventories began to shrink last year and demand rose, home prices have gone up.

According to houstonproperties.com, Katy’s median home sales rose $ 40,000, about 13.6%, from $ 295,000 in 2020 to $ 335,000 in 2021.

“The pandemic and historically low interest rates have played an obvious role in driving demand and further boosting house prices,” said realtor Amy Lucabo, co-owner of Cinco Ranch Realty Group.

“For people looking to get into a home with a lot of space, the home gym, pool or home office they were looking for, this was the perfect time,” she said. “All of a sudden, prices started to rise and rise, but the market still shows no signs of slowing down.”

Local real estate agents said another factor shaping the current market is the growing number of out-of-state transplants moving to Texas. The state welcomed more than 537,000 new residents in 2019, according to the U.S. Census Bureau, attracting more than 500,000 new residents for the seventh consecutive year.

Kiesewetter said she has seen an influx of home buyers wanting to relocate to Katie from other states, especially California. Likewise, Realtor Keller Williams, Pam Shockie, shared her experience with four families moving to Fort Bend County, for every one moving out of the area.

Out-of-state buyer Kyle Gregory began looking for a home in Kathy, a remote location in May from Bellingham, Washington, where most homes are selling for over $ 500,000.

“I looked at 500 houses on the Internet and felt like we would never find a suitable one,” said Gregory.

She cited her husband’s job as the reason for the move, adding that Katie, like other Texas suburbs, offers more space for less money than markets on the West Coast.

“Our home in Bellingham is 1,711 square feet and is awaiting payment for $ 606,000,” Gregory said. “Our new home in Katy is 3,600 square feet and $ 573,000. I’m looking forward to the place. “

Gregory, who eventually bought the new building on Cane Island, said she was attracted to the area because of its amenities.

In addition, Texas, and especially Cathy, is often attracted to out-of-state shoppers, Lucabo said, due to its relative affordability and coveted schools.

“So many people are moving here for personal reasons, political reasons, anything you can imagine, and this is the ideal scenario when you have it all at once,” she said. “All of this is contributing to a sharp rise in the value and demand for homes.”

Construction cost

The value of both newly built and custom-built homes is also on the rise, according to experts, due to skyrocketing prices for building materials caused by labor shortages and as more homeowners decide to improve their existing home or relocate during the pandemic.

For K. Hovnanian Homes, Hovnanian Homes typically saw house prices rise by about 3% per year in the past, Hauerton said. But this year, the company has had to hike home prices more sharply in some areas to keep up with increases in material costs, with some home prices rising 30%.

“The bigger the house, the more timber, so as the value rises, we have areas where homes are selling $ 100,000 more than they did a year ago,” Howerton said. “This is unprecedented.”

The Texas A&M University Lumber and Lumber Price Report released in June showed that the cost of lumber increased 250% year over year from May 2020 to May 2021.

The rise in the cost of building materials is largely due to labor shortages that have arisen as a result of the coronavirus pandemic, as some companies have been forced to lay off or lay off employees, Hauerton said. A shortage of staff leads to construction delays and delays buyers waiting for their homes, he said.

“For example, a flooring company may be short of carpet or tile installers, so builders will have to wait or move elsewhere and possibly increase costs again,” he said.

Bricktown Custom Homes owner and neighborhood resident Kathy Steve Gandy said Houston’s competitive construction industry and undeveloped land made Houston a better home-building destination than other Texas cities. According to him, the Katya region took advantage of these advantages.

“This market is better than others. We found it out in Houston, ”Gandhi said. “We know how to build houses and we have land. In these other areas, such as Dallas and Fort Worth, they are struggling to find land. They are just now starting to blossom and begin to expand, but we are doing it. [The Katy area] almost to Brookshire. “

Gandhi said the Houston area, however, is not immune to labor shortages across the country. Gandhi said he predicts that labor shortages will continue to affect the construction industry as developers continue to work to meet growing consumer demand.

“If they move from house to house, they will need more men,” he said. “Labor prices will start to rise, so this is a way to bounce back. It used to be very cheap to build in Texas, but now it is not. “

Competitive market

Kiesewetter said the recent competition among homebuyers in Katie is unmatched. For example, Kiesewetter said she held two open house days in Autumn Grove on the Cinco Ranch shortly after it was listed, with 32 parties attending an open house on the first day and 27 on the second.

“All these people were looking for homes, and as with any other listing now, a lot of people were making bids well above the asking price,” she said. “Nothing like this has ever happened.”

Impact on the Community Newspaper analyzed real estate data from the Houston Association of Realtors for 10 recently sold homes in each of the six postcodes in the Katy area. Of these 60 houses, 38 are sold at a price higher than the asking price. In addition, eight homes were sold for about $ 10,000 more than the asking price, and nine homes were sold for at least $ 25,000 more.

Local realtors say they often prepare their clients looking to buy a home that they may have to submit multiple bids before being selected. This is more true for lower prices than for higher ones.

“We are still in a situation of multiple supply in almost every home that comes on the market,” Lucabo said. “It was incredibly competitive for buyers.”

As the creator of the mortgage, Lacey said he agrees with most realtors that competitive conditions are likely to lead to buyer fatigue soon.

“The frustration of the customers is understandable,” he said. “The ups and downs they go through are grueling and there is no end in sight.”

Ultimately, this is an incredible market for people looking to sell, ”Lacey said. Residents can exhibit their home, receive dozens of bids within days, and receive tens of thousands of dollars more than they asked for.

“But then you’re in the same position as everyone else, wanting to buy, and probably stuck trying,” he said.

Laura Ebi contributed to this report.

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