Houston - Is the market going soft?

[Michael Delpier]

Houston, Do we have a problem?

I'm wondering if the market is softening in Houston Texas.

Fair warning: I'm new to analyzing. And my information is from realtors web sites. (not raw data) But the data is reported to come from the Houston Association of Realtors (HAR)

SFH supply is 2.8 months, (2014 = 2.9 months)

DOM increased 7-days YOY

Median listing price is up 7%, but median sales price is not. (med sales - 2014 = $214K, 2015 = $208K)

Typically, Houston listings/sales ramp up in spring for the summer selling season. I don't see this happening yet. (active listings at 28K down almost 2K from 2014) My thought is people wont sell if they can't buy.

This does not seem like much, but given the market was heading up like a NASA rocket, this seems like a stumble. People are still buying, but not at the same enthusiasm as last year.

Another possible cause of the slight difference is the big investment companies have slowed their buying in Houston. This is completely hear say from a mid level employee of one of the investment companies.

Building new is currently cheaper than buying old. This is very significant in Houston as new is seen as very good. There are thousands of homes being built in west Houston.

So what does this all mean? I'm wondering if the Houston market has met it's tolerance, or is this a temporary issue due to the low price of oil.

Comments?

[Michael Delpier]

So.....

I know many will remember the crash and the signs that were obvious after the fact.

One of the telling signs were overpriced real estate with multiple bid offers, and selling in under a week. The underlying money that allowed people to buy dropped out as people were layed off. Then there was a slight hesitation. This appeared as a "slight flattening" of the market. Which ended up in a full blown crash.

We have many of the same signs here in Houston at the moment.

• Homes are overpriced (basically prices rose dramatically faster than incomes)
• Underlying income is hesitating. (oil prices low and layoffs)
• List price vs. sale price is now diverging. People list high but cant sell for that price. (most areas but not all)
• DOM is increasing for the first time in many months.

I am not predicting doom and gloom, and I am not experienced at analyzing the market. But I suffered through the last crash and did a lot of "how did this happen" thinking. I'm just trying to apply past experiences so I don't get caught again.

The difference for me was, that my properties are in the San Francisco area. This allowed me to recover an not lose everything. In Houston this would not be the case. I crash here would be disaster for my personal finances because it typically does not recover quickly enough to hold on.

These are just my thoughts. But remember, I am not an expert. But I do remember that those that relied on "personal feelings" to predict the market were hurt badly in the last crash. I would hope to get some numbers to test my feelings.