Low stocks, interest rates catalyze Katy’s ‘unprecedented’ real estate market
Fort Bend County has had less than six months of housing inventory since October 2011, according to data from the Texas A&M University Texas Real Estate Research Center. Likewise, Harris County’s inventory has four months or less of housing inventory since January 2015. (Courtesy of Pexels)
Katy area housing and real estate experts said that in their decades of careers they have never experienced such market conditions.
Described as unprecedented, incredibly competitive and explosive, the real estate market is driven by historically low inventories, record interest rates and soaring lumber and building material costs, real estate agents and home builders have said. .
“In almost 40 years of experience, I have never seen a market like this,” said Bill Lacy, mortgage production manager at the independent Financial institution. “There has just never been a market like this, ever. It’s just exploding.
As this confluence of conditions affects the real estate 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 public schools. of high quality, of its equipment. rich communities and pro-business attitude.
“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 national and regional levels, ”he said.
Low housing inventory
In Wiley’s 17 years with the FBEDC, he said he’s never seen the county’s housing inventory levels so low.
Fort Bend County has had less than six months of housing inventory since October 2011, according to data from the Texas A&M University Texas Real Estate Research Center. Likewise, Harris County’s inventory has had four months or less of housing inventory since January 2015. The center describes six months of inventory as a stable market.
However, in May, the latest month for which data is available, the housing stock reached 1.6 months in Harris County and 0.9 months in Fort Bend County, according to data from the center. Mary Kiesewetter, realtor at Better Homes and Gardens Real Estate, Gary Greene, said low inventory was the main factor behind the state of the market.
“This is the determining factor because I’ve seen some pretty big booms where the market has become a big seller’s market,… but nothing like it,” said Kiesewetter, who sells real estate in the greater Montreal area. Katy for two years. decades.
Low interest rates and 30-year fixed-rate mortgages are boosting demand for housing – rates that have continued to fall since 1980, according to data from the Federal Home Loan Mortgage Corp., or Freddie Mac.
The existing low inventory, combined with rising costs of building materials, has caused home builders in the region to struggle to meet demand for homes, said Rodney Howerton, region president at K. Hovnanian Homes, who is building houses in the master planned community Katy Pointe, which is north of Katy next to Clay Road.
“There is a huge backlog of people waiting for their homes, and with such extreme demand, some builders are even canceling contracts with buyers because they just can’t keep up,” he said.
Rising house prices
As the housing stock began to decline and demand increased over the past year, home prices have risen, said Mike Roller, broker and owner of Roller Realty.
In Katy, the median home selling price has increased by $ 40,000, about 13.6%, from $ 295,000 in 2020 to $ 335,000 in 2021, according to data from houstonproperties.com.
The pandemic and historically low interest rates have clearly played a role in growing demand, pushing home prices even higher, said real estate agent Amy Lookabaugh, co-owner of Cinco Ranch Realty Group.
“For people who were eager to step into a home with more space, something that had that home gym or the pool or home office they were looking for, this became the perfect time,” he said. she declared. “Suddenly, prices started going up and up, and the market still shows no signs of slowing down.”
Local realtors have said that 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 US Census Bureau, marking the seventh consecutive year that it has attracted more than 500,000 new residents.
Kiesewetter said he has seen an influx of buyers wanting to move to Katy from other states, especially California. Likewise, Keller Williams’ real estate agent Pam Shockey cited her experience of seeing four households move to Fort Bend County for each moving away from the area.
Out-of-state buyer Kayla Gregory began looking for a remote Katy home in May from Bellingham, Wash., Where most homes sell for over $ 500,000.
“I looked at 500 homes online and felt like we would never find the right one,” Gregory said.
She cited her husband’s job as the reason for her move, adding that Katy, like other Texas suburbs, offers more space for less money than West Coast markets.
“Our home in Bellingham measures 1,711 square feet and is on hold for $ 606,000,” said Gregory. “Our new home in Katy is 3,600 square feet and $ 573,000. I look forward to more space.
Gregory, who ended up buying new build on Cane Island, said she was drawn to the area because of its amenities.
Additionally, out-of-state buyers are often drawn to Texas, and Katy in particular, because of its relative affordability and desirable schools, Lookabaugh said.
“So many people are moving here for personal, political, whatever you can imagine, and it’s a perfect scenario where you have all of these things at once,” she said. “All of this is contributing to skyrocketing housing costs and demand. “
The cost of construction
The cost of newly built and custom-built homes is also rising, spurred by soaring prices for building materials, which are driven by labor shortages and the growing number of homeowners who decide to upgrade their homes. existing or relocate during the pandemic, experts said.
For K. Hovnanian Homes, house prices have generally increased by about 3% per year in the past, Howerton said. But this year, the company had to raise house prices in some neighborhoods more dramatically to keep up with rising material costs, which meant some house prices rose 30%.
“A bigger house means more lumber, so with that cost increasing, we have neighborhoods where the houses are selling for $ 100,000 more than a year ago,” Howerton said. “This is unheard of.”
A report from Texas A&M University on lumber and lumber prices released in June showed that the cost of lumber increased 250% year-over-year between May 2020 and May 2021.
The increases in the costs of building materials are largely linked to labor shortages resulting from the coronavirus pandemic, Howerton said, as some companies have been forced to lay off or put workers on leave. This staff shortage is contributing to the construction delay and creating a backlog for buyers waiting for their homes, he said.
“A flooring company may run out of carpet or tile installers, for example, so builders have to wait or go somewhere else and possibly increase costs again,” he said.
Bricktown Custom Homes owner and Katy area resident Steve Gandy said Houston’s competitive construction industry and undeveloped land makes Houston a better place to build a home compared to other cities in the world. Texas. He said the Katy region in particular has benefited from these merits.
“This market is better than the others. In Houston, we got it all, ”Gandy said. “We know how to produce houses and we have land. In these other regions, like Dallas-Fort Worth, they scramble to find land. They’re just starting to blossom and expand, but that’s what we did. [The Katy area] is almost in Brookshire now.
Gandy said the Houston area, however, has not been immune to labor shortages across the country. Gandy said he anticipates labor shortages will continue to plague the construction industry as home builders continue to work to meet growing demand from buyers.
“If they are going from house to house to house, they will need more men,” he said. “Labor prices will start to rise, so this is a way to normalize. Building in Texas used to be very cheap, but nowadays it just isn’t.
The recent competition among home buyers in Katy is unprecedented, Kiesewetter said. For example, Kiesewetter said they held two open houses for a house in Autumn Grove at Cinco Ranch shortly after registering, and 32 parties attended the open house on day one and 27 on day two.
“All of these people were looking for houses, and as with any listing now, so many people were bidding well above the asking price,” she said. “There has never been anything like it.”
Community impact journal analyzed real estate data from the Houston Association of Realtors for 10 recently sold homes in each of the six Katy area zip codes. Of those 60 homes, 38 homes sold for above asking price. In addition, eight homes sold for about $ 10,000 more than asking price and nine homes sold for at least $ 25,000 more.
Local real estate agents have said they often prepare their clients looking to buy a home to submit multiple offers before theirs are selected. This is all the more true at lower prices than at higher prices.
“We’re always in multiple bid situations on almost every home that comes on the market,” Lookabaugh said. “It has been incredibly competitive for buyers. “
As a mortgage originator, Lacy said he agrees with most realtors in the area that competitive conditions are likely to lead to buyer fatigue soon.
“The frustrations that customers are feeling are understandable,” he said. “The ups and downs they go through are exhausting, and there is no end in sight.”
Ultimately, it’s an amazing market for people looking to sell, Lacy said. Residents can list their homes, get dozens of offers in a matter of days, and get tens of thousands of dollars more than they ask for.
“But then you’re in the same position as everyone else, looking to buy and probably stuck trying,” he said.
Laura Aebi contributed to this report.