Texas’ real estate market had a year for the books in 2021. There has been an influx of domestic migration to Texas, as many wealthy residents pack their bags and choose to invest in the state. There are many different things driving people to Texas. No state income tax, low business taxes, warm weather, and great food play major roles. Another significant factor is the lower cost of living compared to states like California, New York, and Massachusetts. However, many Texas markets, like Austin, have seen their affordability take a hit. In Houston, Texas’ most populated city, prices are rising. However, it remains an affordable market compared to some of its competition.
Houston has long been an affordable city to live in, with mostly cheap real estate and a powerful local economy. If you are someone looking to purchase or sell a home in Houston in the near future, being aware of current real estate trends is important. Let’s look at the shape of the market in the city as we move towards spring.
General Houston Real Estate Trends
Houston is a desirable place to live. It has seen its population grow significantly for a while now, which has impacted the real estate market. The heightened demand for homes in Houston impacts the supply, although the situation isn’t quite as dire as it is in many other significant metro areas.
2021 marked a banner year for sales in Houston. 2020 broke the record for single-family home sales volume, and 2021 broke that record handily. According to Norada, there were 106,229 single-family homes sold in Houston in 2021, a 10.3% increase from 2020. The total volume of those sales increased dramatically, rising to a record $47 billion in home sales, a 32% increase from 2020.
As you can likely infer from the massive increase in the total value of sales, the price of a home in Houston went up in 2021, setting new records. The average price of a home in Houston jumped 16% to $376,075, while the median price increased 15.4% to $300,000. Both of these numbers were new records for the city. According to Realtor.com, that growth continued into January 2022, when the median listing home price was 325,000.
Low-interest rates have spurred buyer activity, which is a big reason for the price increase. Another important factor is the lack of supply. The same Norada report showed that the housing inventory supply was 1.4 months at the end of 2021. A healthy market is considered a six months’ supply. This lower rate means fewer homes are available, and competition is high, causing prices to climb steadily.
2021 was the biggest year ever for the Houston real estate market, which has continued into 2022. According to Redfin, the median sales price in January 2022 was a 20.2% increase year-over-year.
The Houston Luxury Market
The luxury market is typically considered homes priced at $1 million or more. In Houston, where the typical home can be purchased for $300,000, this isn’t as significant a portion of the market as cities like New York City or even Austin. However, 2021 was a banner year for luxury home sales in Houston, and if the start of 2022 is believed, this year will be an even better one.
According to data from the Houston Business Journal, Houston’s luxury market had a 77% increase in home sales in 2021. This comes after 2020, a record-breaking, strong year for the Houston luxury market. Buyers are more willing than ever to invest in expensive homes in Houston as prices rise around the city.
Houston carried that momentum into the new year. According to Houston Agent Magazine, the sales volume of luxury homes increased dramatically to start 2022. January had a 52.2% increase year over year of luxury homes sold. If this is any indicator, then the luxury market will have an even bigger year in 2022. However, with inventory down, this pace of sales volume growth may not be sustainable.
The Houston housing market has a lot of momentum to start 2022. The luxury market is surging, prices are rising, and buyer interest remains sky-high. There are some indicators that it could cool off, with low inventory and an eventual climb in interest rates on the horizon. Still, the Houston real estate market is red-hot and not set to cool off for some time.
