Houston Real Estate Market will have more inventory in 2015.

8 Replies

I recently came back from a class provided by HAR.  The instructor of the class said the Houston market will experience an increase of inventory in 2015.  Currently the average inventory stays between 2.5-2.9 months.  In 2015, the inventory will increase to between 5.1-5.9 months. When the months of inventory reach up to 6 month long, the market will change from a seller's market to a buyer's market according to the instructor from HAR.  Any inputs from BPers?

Did he say how he come up with that conclusion?  Could it be from the falling oil prices we are experiencing in Houston?

@Tuan Le  

Hi Tuan. Nice seeing you on here again.  I didn't hear that part when he said why the inventory will increase.  I'll ask him again when i see him again.

That will be interesting. I have been working with a few owner occupant buyers and making offers this last month. In some parts of the city Houses are selling in 1 day at historic highs and other neighborhoods have more inventory of fair market priced similar homes. If you include the unincorporated and surrounding cities the Houston metro is massive. There is just too many diverse areas for me to speculate either way.

Isn't the general guideline that 6 mos of inventory = a balanced market?

You need more than 6 months for it to be a buyers market. If we get closer to 6 months, then we're back to "normal".

Originally posted by @Will Porter :

Isn't the general guideline that 6 mos of inventory = a balanced market?

You need more than 6 months for it to be a buyers market. If we get closer to 6 months, then we're back to "normal".

 I'm not sure.  The information i've got was from HAR.  They could be wrong.  

Hey @Sonny Ngo  ,

The market will have more inventory due to oil prices dropping so much, but it wont be like that for long. Oil prices will go up soon, and the market will become hot again. As for the inventory rule @Will Porter  , yes at 6 months the market is neutral. Again we are at 2.7 of inventory right now and it doesn't just switch from one month to the next. Inventory will start going up but at the same time that it's going up, prices of oil will as well and then inventory will go back down. 

Exxon is still opening more jobs in Spring. Also ConocoPhillips might be opening another office up north which also keep on generating jobs. 

@Andres Jaramillo  

Hey Andres, you are right about Exxon is opening up more opportunities for jobs.  I think the Spring area or 45 North in general is going to create more jobs because of the commercial development that is going on there.   You are also right about the dropping oil prices will create more inventory in 2015.  I think the inventory will start to increase in the beginning of 2015 and slowly increase to 6 month inventory.  However, i think Houston in general will become a buyer's market starting 2015.  Currently the Real Estate market in Houston is at its peak.  And there is no sign of more big companies moving to Houston,Texas besides Exxon that's currently building their headquarter in the north side of town.  There are a lot of new apartment being built right now tailored specifically for their employees.  The new apartment will slow down  a lot of new single family home development in the area where Exxon building is currently being built.  I think the 20-30 year old employees will be living in the apartment.  As far as those who are married, they probably prefer to stay where they are because they have already established their roots in a community such as being part of a church or being accustom to their surroundings.  

Still, Investors should buy investment properties in areas that they know for sure are going to sell once they are rehabbed.  Those areas should  be in the up and coming areas for  young married couples with small children.  But, investors should do a thorough research of the statistics of the amount of people getting married each year, so they don't buy more properties for rehabbed than what the market demands.  One way to determine the right amount of supply and where young marry couples like to buy their homes, investors should consult with a University to conduct a research.  It will cost some money, but if you are  a big time investor, 5k towards a graduate scholarship will get someone in the graduate research department to do the job for you.  They will provide all the stats and information you'd need to make you better equipt than your investing competitors.

Note, if you are going to offer a scholarship, you should offer it to a University in the Houston area, not in Waco or Austin when they don't know jack about the Houston market.  It will be much easier for you to meet your researcher if you are from Houston.

I hear so much about Exxon and jobs but can not find any real data. 

What percentage of the all the new jobs will be filled by the massive pool of engineers and energy industry personnel that are already established and working here? A 30-60 min commute to work is pretty common for the Houston metro.

What is the average employee age, pay scale, education level and retention for the majority of the new jobs? I know of several neighborhoods very near Exxon that have had large numbers of foreclosures and are now predominately rental neighborhoods with sec 8. I don't see the recent college graduate or 6 figure veteran engineer buying or leasing in these neighborhoods.

Its funny how the radius and boundaries of neighborhoods is exponentially growing. Listings and wholesalers claim anything within 10 miles of a hot area. The Heights now extends from Washington Ave to Little York between 59 and 290.  Spring Branch is now anything north of I-10 between 610 and HWY6. Bellaire extends down to 59 south and the beltway. Humble, Jersey Village and anything outside the north beltway are now "Close to Exxon".