Nicknamed the “Space City,” Houston is a global city with a broad industrial base in energy, manufacturing, aeronautics, and transportation, as well as home to 49 Fortune 1000 companies—the second largest concentration in the country, after New York. The Houston metro area offers great opportunities for investors looking for a stable market. With an extremely diversified economy and a huge demand for housing, the Houston real estate market remains one of the top markets in the country for real estate investors. The most recent figures show a population of more than 2.3 million people, and the past two decades have seen billions of dollars in both public and private investment to develop areas and make Houston a more attractive place to live. The city enters 2018 with continuing development projects that promise to keep the real estate market strong. So what does the Houston real estate market forecast have in store for 2018?
The Houston real estate market forecast for 2018 shows that many people living in much more expensive cities such as New York, Los Angeles, and San Francisco are now hoping to flock to cheaper living cities like Houston, Texas. Many workers are fed up with the costs in these regions and are having difficulty surviving amid labor shortages, rising mortgage rates, and high lumber costs.
Houston real estate market forecast: post-hurricane appreciation
Hurricane Harvey reportedly flooded about 114,000 homes, totalling $29 billion in real estate. That is 6.7% of the local market, which may have affected as much as 14.2% of Houston’s housing stock, according to Ralph McLaughlin, chief economist at Trulia. Fortunately, the worst is over, and the Greater Houston Area is recovering fast. The Houston real estate market forecast for 2018 estimates 2.8% growth, meaning now would be a good time to invest. Houston is one of the healthiest housing markets in the US now, with damaged homes showing up back on the market. The average price for a detached house rose 2.7 % to $285,858 in October 2017—a new record.
Houston’s December single-family home sales rose 4.1% to 6875 compared to December 2016. The strongest sales performance took place among homes priced between $250,000 and $500,000. Total property sales for the month climbed 3.5% to 8125. The single-family home median price rose 1.7% to $230,000, marking the highest median price ever in December.
Unique resilience: real estate market forecast for Houston
By the end of September, just four weeks after Harvey hit, the Houston real estate market saw home sales rebound and the greatest rental activity of all time. The positive momentum continued through the final months of 2017. By the end of December, a record 79,117 single-family homes had sold, representing an increase of 3.5% from the previous record of 76,450 in 2016. On a year-to-date basis, the average price rose 2.9% to $291,340 while the median price increased 3.8% to $229,900. The year began with a 3.3-months supply of inventory and grew to a 4.3-months supply just before Harvey struck, yet 2017 still ended with a 3.2-months supply.
Unlike with other housing markets, low priced homes have not sold well in the Houston market, yet high priced homes starting at $750,000 are in demand. Hurricane Harvey stimulated the construction and home rehabilitation sectors, generating an increased demand for leased properties and property management companies, and an all-around positive outlook for Houston’s real estate market forecast in 2018.
Rental marketing high
Perhaps the largest increase post-Hurricane has been in rental marketing. The rental market in Houston is approaching an all-time high. The rental statistics for single-family homes and townhomes/condominiums are staggering. Single-family homes saw an increase of 83.6% over a 365-day period while townhomes and condominiums saw an increase of an incredible 92.2%. It is not surprising that investors have flocked to the area.
Close-in neighborhoods with the highest growth: real estate market forecast for Houston
After a strong 2017, broker associate Paige Martin determined the close-in neighborhood with the highest growth in median housing prices in the Houston area was Memorial Park. The area experienced a 34% increase in median home prices from 2016 to 2017. Four other close-in neighborhoods also saw double-digit growth: Braeswood Place at a 32.4% increase, Highland Village/Midlane at 26.7%, Memorial Close In at 18%, and Montrose at 10.5%. Martin said the main reason why home prices grew is jobs. “Houston has a growing economy, is creating jobs and is benefiting from a consistent inflow of relocation.” She added that when both oil prices and the stock market rise, Houston luxury neighborhoods perform very well.