Is the Houston Luxury Real Estate Market Rebounding?
Based on broad data we have on hand, and with a critical eye towards the future, we will try to answer the question everyone in the Houston luxury home market, real estate agents, builders, homeowners, and prospective home buyers are all asking: is the Houston luxury real estate market rebounding?
A broad picture of local economics
Three primary factors are affecting Houston’s economy, which in turn, have an impact on the market for Houston luxury homes. Of course, in reality, there are many layers of variables, each playing off of the others, that create complexities that can’t be neatly summarized in a single article. Instead, we will look at three overarching trends: the price of oil, the city’s exports, and the US economy at large, to get a handle on Houston’s sputtering luxury home market.
The first and most important factor affecting home prices is the price of oil. Despite the city’s laudable progress in diversifying its economy, oil is still the leading industry in town. Unfortunately for Houston, that industry is still hurting. The Houston metro area alone has shed some 70,000 jobs. As a result, sales of homes listed at $500,000 and higher have declined 8.7 percent year over year, according to the Houston Association of Realtors’ most recent monthly report from June. According to the data, this trend will likely continue for awhile longer.
The second factor underpinning the city’s strength is exports. According to a report by Houston Public Media, while the city’s exports have stayed the same concerning raw tonnage, the dollar values have plummeted. We’re shipping the same amount of stuff, but receiving less money in return.
The third and final factor driving Houston’s economy is the US economy as a whole. The rest of the nation consumes a lot of what the city produces. In this case, consumption is up in line with positive, national economic trends. A recovering overall US economy and a hot overall Texas economy will help mitigate some of the damage done by low oil prices and dipping export revenues, but it won’t be enough for a robust rebound in the Houston luxury housing market.
Will the city’s luxury real estate market heat up again to 2014 levels in coming months? The economics say “no”, but that doesn’t mean a long-term recovery, in both sales and prices, isn’t in sight. In fact, Houston still ranks as one of the best places to invest in real estate long-term and a consistent population magnet. Despite one of the worst collapses in oil prices in recent memory, Houston just keeps growing and going strong. Better yet, both established Baby Boomers, and Millennials are beginning to drive a new wave of demand for Houston luxury homes. Savvy home buyers and investors just have to know where to look.
Are you looking to buy a new luxury home in Houston? Let David Young and Company help you find the perfect home today. We are Houston’s luxury real estate experts.