Houston Housing Market 2022: Prices, Trends & Forecast

The Houston housing market became one of the hottest markets nationwide as the pandemic ripped through the country. The booming economy and jobs being willing to adapt led to a mass migration to the Lonestar state. Politics played a role in how states handled the pandemic, and their response, which led to a further increase in population as families moved to states that supported their opinions. The sudden population growth ate up the current supply of houses, leading to a market that was a seller’s market.

The price of houses soared as new residents snatched up single family homes days after they were put on the market. The supply of houses reached an astounding low of fewer than two months.

However, the market is slowly starting to balance out. This article will tell you everything you need to know about the Houston Housing Market. 

Houston Housing Market Prices

Housing prices in the Houston housing market reached record highs during the two years of the pandemic. This trend continued during the first part of 2022, with single-family homes in the Houston area costing more than $400,000. Pre-pandemic prices were approximately $300,000. Now, however, prices are slowly starting to cool off. They are still rising but at a much slower rate.  Homeowners, that need to sell their house quickly, don’t usually consider the current state of the real estate market in Houston — they simply look for their own cash home buyers in Houston that will make them an offer quickly.

The combination of high prices, alarmingly high-interest rates, and the low supply of houses led to an astronomical increase in prices and many buyers not participating in the market.

When buyers stop participating in the market, it helps adjust the market because the housing supply has time to increase, which is necessary to create a healthy market.

Even though homeowners were not purchasing as many homes, housing prices continued to rise slowly. They rose an average of 9.9% for single family houses. Year over year, the market has seen an average of a 19.1% increase in price.

This is due to a low housing supply. The current housing supply in the Houston real estate market is 2.5 months. This is the highest the housing supply has been in two years, but it’s still too low to be a healthy market. In August 2020, the housing supply was only 1.7 months.

A housing supply of six months is considered a healthy market. If the housing supply exceeds six months, it will become a buyer’s market, and prices will decrease. Prices tend to increase when the housing supply is lower than six months.

Houston Housing Market Trends

Rapid population growth in Texas over the past two years has also contributed to the low housing supply. More than 170,000 new residents moved to the Lonestar state during the pandemic.

Texas CEO Magazine stated that this was due to a booming economy with plenty of job opportunities and a low cost of living. Most transplants that migrated to Texas came from coastal areas that experienced a loss in economic growth during the pandemic. That population growth has now slowed.

The Houston housing market saw another drop in sales in July, making it the fourth month in a row for fewer sales. Total property sales decreased by 17.4%. The hot housing market throughout the pandemic was impossible for the supply to keep up with, so it’s normal to see a market adjustment at this point.

Increased inflation, rising loan rates, and more have also contributed to people buying fewer houses. The market saw a decrease in sales of single-family homes, which was approximately 17.1% in July, 1.3% fewer sales than the previous year. Pending sales and property sales declined as well. At the same time, active listings in the Houston housing market increased by 30%.

On average, according to a report released by HAR, homes spent approximately 26 days on the market.

For the first time since April, on average, homeowners did not pay above the list price.

The purchase of townhouses and condominiums fell for the second month in a row. However, even though the number of units sold fell 21.5%, the price rose 5%.

Houses in the Houston housing market have appreciated almost 90% in the past ten years. However, the appreciation rate was only 3.1% this last quarter. If the appreciation rate remains consistent,

Houston Housing Market Forecast

The housing market in the Houston area is slowly returning to the state that it was before the pandemic hit. As more people consider other options, such as renting instead of buying, the supply is slowly increasing due to alarmingly high housing prices.

It’s predicted that the market is adjusting and cooling off quite a bit. This is slowly happening right now and will continue to be slow. However, it will balance out within the next few years.

As the supply increases, more people will find that they can afford to purchase houses. This will result in more home purchases in Houston, keeping the supply balanced.

If this trend continues, it will become a seller’s market within 2-3 years. Houston real estate agents will start seeing more buyers returning to the market thanks to the low prices.  This includes real estate investing companies that buy homes in Houston.

Over the next twelve months, that will not happen. Prices will continue to increase as will the supply. For now, it will remain a seller’s market. Buyers who want the upper hand in negotiations must wait a few more years.

In Conclusion

The housing market is starting to cool off, but it is still hot. Buyers that are waiting for prices to fall will see a slow increase over the next few years, but they should be able to have more power at the negotiating table within the next five years. Sellers can continue to raise the list price, but that power is slowly dying down as the supply increases. If you’re interested in buying, it’s time to consider how much house you can afford.