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5 min read

6 Smart Real Estate Investing Facts About Houston Real Estate 2016

Tue, Jul 19, 2016

 real estate investing

houstonrealestate-2016-realestatemarket.jpgIt’s been a crazy few years for Houston. They’ve seen one the biggest energy crashes in recent memory, but also one of the most vibrant and downright frenzied real estate markets ever witnessed.

Even in the middle of an unprecedented economic slump in the energy sector, the real estate market seemed to go largely unscathed, with prices surging and demand at an all-time high.

Competition remained steep into 2016, inventory was well below normal levels, and construction could barely keep up. But well into the summer, where are we? Where does Houston stand? Has the energy market finally dragged real estate down with it?

And if it has, is it necessarily a bad thing?

We’re here to catch you up on what’s been going on with all things Houston real estate.

6 Things You Need to Know About Houston Real Estate So Far in 2016

1) Construction Growth in Northwest Houston

Despite projections for job losses in the construction sector over the next few years, construction is going strong in northwest Houston, where a real estate boom is brewing. CityPlace, a 60-acre mixed-use development is planned to host luxury apartments, office buildings, a full-service hotel, retail space, and restaurants. It’s the hub for Springwoods Village, a community near the nearly-opened Exxon Mobil campus relocation.

The relocation of other companies to the area has created the real estate boom, which has been expedited by the opening of the Grand Parkway.

It’s a particularly attractive area for young families and, with high demand, builders are working hard to keep up with the demand.

2) Home Prices Put on the Brakes

Surprisingly, or perhaps not-so-surprisingly, depending on how optimistic you are, Houston has finally seen a slowdown in what seemed to be a never-ending acceleration of its home prices. In fact, home price growth rates in Houston are far behind that of overall Texas and national rates as a whole, something that hasn’t happened in some time.

A June 7th report showed Houston metro-area prices at a 3.9% increase, compared to overall Texas increases of 6.9% and national increases of 6.3%.

The jump down is significant, given where Houston as been, but it’s not necessarily a bad thing (we’ll get to that).

3) Commercial Real Estate Feeling Energy Pains

Some areas of real estate are feeling the energy slump more profoundly than others. In Houston’s case, it’s in the commercial sector. No surprise, considering. Some say that people are being too optimistic about the market, and that there’s simply been a lag in the the impact of the energy sector’s slump on Houston. While this may be the case, other areas of Houston’s economy are still growing and even thriving thanks to a diversity in the economy.

The commercial real estate most affected are spots in the Energy Corridor, and where there are direct ties to the energy industry.

4) Late Spring Sees Home Sale Bounce

On a positive note, the slowdown of home sales and home prices has had a positive impact: the buyers waiting on the sidelines have finally had a chance to jump into the market. In May in Houston, home sales jumped a surprising 10%, the biggest jump since winter 2014.

Why? Competition finally leveled off enough to allow for enough supply for more buys to be able to get in on the market without being pushed out. Mario Arriaga, chairman of the Houston Association of Realtors, said, "Now that the inventory has increased and we're getting back to more of a normalized market, we're seeing a lot of those people come forward."

Right now, sellers still have the upper hand, but inventory is finally increasing and more people have more of a chance in Houston’s frenzied market.

5) Normalizing Market

That, of course, brings us to this point: there are doomsayers that would catastrophize any impact of the energy crash on the real estate market, but we would argue that this slowdown is actually bringing things back into balance.

The market, where it was going, wasn’t going to be able to sustain itself forever: impossibly tight inventory, out-of-control price spikes, builders who couldn’t keep up, and wages that couldn’t begin to keep up with rental costs. A normalizing, more stable market is a good thing. We can’t say that the energy crisis in Houston is good, but there may be some hidden benefits and blessings in disguise for the real estate market in the end.

6) Surprisingly Resilient Despite Oil Slump

And, at the end of the day, Houston real estate has been remarkably tenacious in face of the city’s economic trials over the past few years. No one could have anticipated this outcome. The fact that Houston’s real estate market has fared as well as it has and defied expectations in face of these impossible challenges is a testament to the city’s economic backbone. Houston is unique and incredible, and we know we’re thrilled to be here. 

There are plenty of quality opportunities for real estate investors in Houston—
and you can get started today!

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Chris Clothier
Written by Chris Clothier

Entrepreneur, writer, speaker, ultra-endurance athlete, husband & father of five beautiful children. Chris puts these natural talents on display every day. As a partner at Memphis Invest, Chris addresses small and large audiences of real estate investors and business professionals nationwide several times each year. Chris is also an active writer, weekly publishing real estate, leadership, and endurance training articles.