In case you missed it, here’s a quick recap of Boulevard Realty’s “State of the Market” event just two weeks ago. It was standing-room only at our Heights office for the presentation and hundreds watched live on Facebook as Boulevard broker/owner Bill Baldwin gave his take on the sometimes conflicting recent headlines surrounding Houston real estate, along with an outlook for the rest of the year.
Bill’s market analysis is typically a monthly presentation just to his sales force of 60+ agents, but as he anticipates further disconnect between the headlines about oil & home prices and the actual numbers throughout the year, he thought it was good occasion to open it up to the public and publish online.
The full video is above, but here are some highlights:
Overall, Bill’s main point is that the current market shows “resilience, reality, and response.”
In other words, Houston real estate is not in a prolonged downturn. Rather, we’re in a period of normalization following the frenzy of 2013 and 2014, when population growth and the fracking boom ramped up demand just as developers and builders were starting to recover from the Great Recession.
His thoughts are best divided into the following five general ideas. Here’s a breakdown in case you want to skip to parts that may interest you more than others.
A look back at the booming market of 2013-2014 (3:58-10:46): Bill draws our market perspective of today all the way back to the beginning of his real estate career in 1998. “We announced a few stadiums Downtown—Minute Maid Park and Toyota Center—and the inner city certainly evolved since 1998.” Just as Houston started to realize some of this renewal though, we were hit with the tragedy of 9/11 and the subsequent uncertainty. Then right as Houston started to regain its footing, along came Hurricane Ike and the financial crisis. But as things finally began to stabilize, we found ourselves in an unusual boom in the market for 2013-2014.
“A lot of real estate is psychological. It’s about asking, ‘Where are we?'”
The real relationship between oil prices and the real estate market (10:46-19:35): This led him to an interesting study of the relationship between the Houston real estate market and oil prices…and the accompanying headlines. Much has been made of falling oil prices and a weakened housing market with few really understanding the causality. While the dropping oil prices have undoubtedly led to massive layoffs across the industry and many Houstonians work in the oil sector, to Bill, the relationship mostly has to do with uncertainty and perception rather than an actual direct impact. He pointed out that even as oil reached $105/barrel in June of 2014—the city’s best year for real estate—home sales declined by 10%. By comparison, in the second best month of Houston real estate of all time, July 2015, oil was about $46/barrel…lower than it was on the day of his presentation.
Mid-2016 Real Estate Market Statistics (19:35-44:50): Bill then digs into detailed MLS statistics for the predominant inner loop “areas.” Area 9 is the Central North, including Greater Heights, Garden Oaks/Oak Forest. Area 16 is made up of River Oaks, Montrose, Washington Corridor, among other close-in areas. Area 17 includes West University/Museum District/Med Center. Not only in May, but even year-to-date, the number of sales is up inside the loop. However, due to the overall balancing of inventory and demand, it more or less has become a market favoring buyers, who are increasingly discerning and slow to act.
“Buyers have choices. It’s going to naturally take longer to sell a house because the buyer has more to look at, and they’re more cautious than they’ve been in four years. So they’re going to go look at all the houses. Even the bad ones. If you put the greatest house on earth on the market today, the buyer is gonna look at it, but they’re going to go look at 30 other houses.”
Looking at the numbers, Bill projects the housing market headlines in August to be negative. No matter what July 2016 sales are, we’ll be stacking up against the best month ever. Projecting out the numbers for the final quarter though, and comparing them to a slow end of 2015, Bill expects the end of the year headlines to be quite positive.
“I think the headline in October will be that home sales are up 20%.”
“I think we’re going to end the year on a more positive note than we have even now.”
Workforce/Affordable Housing & Best Bets for Investors (44:50-51:48): Home prices are on the rise all across Houston, but there is still a need for affordable housing near the city’s core. Bill re-states the obvious that the Heights, Montrose, and West U are not the places to find deals either for first-time homebuyers or investors. For him, areas that are typically thought of as the “weakest” economically, are actually those that constitute the greatest opportunity.
He points out Sunnyside, Near Northside, Eastwood, and Acres Homes as “great opportunity and affordable neighborhoods for people to go and invest in, and to plant their children in, and to be urban pioneers once again.” He adds, “They’re culturally amazing, historic neighborhoods that have a high sense of pride and just need to feel safe, and they need some people to come over. Not to run everyone out, but to preserve their architectural and cultural history.” But he clarifies, “It’s not successful in my world if you pop over here and put 98 townhouses in a block.”
Trends and Q&A (51:48-End): Bill concludes the presentation by giving his take on trends in the current market. There is demand for increased density and walkability as you are seeing Houstonians fall in love with inner city life again. The city is showing a commitment to improving transportation and making it easier to access Houston’s natural resources and its urban core. He expects location, not just within the city but at the neighborhood level, to largely decide what sits on the market and what sells. He gives the Heights as an example, where just 10 blocks north creates a difference of a $200,000 price tag and a year on the market for the exact same product. In this scenario, he still sees it largely as a numbers game once the demand has fully normalized.
We hope you’ll take the time to watch Bill’s presentation as we think it’s a great resource and simply an interesting and insightful take on the real estate market!
This entry was posted in Rediscover, Replay, Resources
