The results are in! Despite the second year of the pandemic, low inventory levels, and soaring housing costs, Houston’s housing market achieved another record year of sales. Let’s review how Houston’s real estate performed and what to expect in 2022.
Single-Family Homes
Although the year’s overall numbers are fantastic, December represented the third month of a decline in single-family home sales in 2021. In total, 9,272 properties were sold. Compared to the previous year, sales fell 4.5 percent. The strongest sales volume recorded in December was for homes priced between $500,000 and $999,999, and year-over-year, sales of properties in this category soared 41.4 percent. Not bad at all!
Pending sales for the month totaled 7,527, an increase of nearly 11.0 percent compared to December 2020. However, total active listings dipped 14.1 percent when compared to the same year.
Despite declining sales volume, the prices just keep on rising. In December, the median price of a single-family home reached a new historic high of $319,000. The average price jumped to the second-highest level all time, $392,449.
Condos & Townhomes
Condos and townhomes had quite the year in 2021! There was not a single month of declining sales. In fact, December’s sales volume actually jumped a staggering 21.5 percent compared to the year before. The average price to end the year was $258,139, a 13.8 percent jump. The median price also skyrocketed 20.9 percent to $220,000. The year-over-year inventory decline in condos and townhomes was also quite dramatic. Supply dwindled from a 3.3-months supply to just 1.7 months.
Leases & Rentals
Increased interest in renting a home led to a 5.9 percent growth in standalone single-family home leases in December. Compared to last year, rents were up 7.5 percent to $2,042.
Townhomes and condos did not fare as well with leases tumbling 23.0 percent. However, prices continue to climb. To end the year, the average rent for townhomes and condos ticked up 5.5 percent to $1,731.
Overall
Broken out by pricing, here’s how December 2021’s real estate sales performed:
- $1 – $99,999: decreased 45.3 percent
- $100,000 – $149,999: decreased 41.5 percent
- $150,000 – $249,999: decreased 39.2 percent
- $250,000 – $499,999: increased 17.0 percent
- $500,000 – $999,999: increased 41.4 percent
- $1M and above: increased 8.8 percent
The Days on Market (DOM) value dropped from 47 to just 37, further evidence of a lively and persistent seller’s market.
Inventory levels continued to tumble in December, with the month registering just a 1.4-months supply. The national housing inventory level also dropped to a 2.1-months supply as recently reported by NAR®. One thing is for sure: It is becoming increasingly challenging for buyers to purchase homes in popular cities like Houston.
“As we enter 2022, inventory and affordability are definite concerns,” said HAR Chair Jennifer Wauhob in HAR’s recent report.
A Brief Review of 2021’s Obstacles & Triumphs
The effects of the pandemic rattled industries across all sectors in 2021, and real estate was no exception. On top of historically low inventory levels and supply shortages, the city saw a startling lack of labor able to perform on construction projects, further reducing the availability of new homes.
Real estate also looks a lot different than it did at the beginning of 2021.Thanks to efforts made by the Houston Association of Realtors® and other industry professionals, new options for viewing and purchasing a home during the pandemic were established. This included virtual technology that made it possible for consumers to tour properties from the safety of their own homes. In some cases, buyers never even set foot in the home before making an offer!
In June of 2021, an incredible 10,642 single-family homes sold – the second highest volume of all time. The same month, prices reached a record average price of $393,263. By August, inventory peaked for the year at a paltry 1.8-months supply. Bidding wars became commonplace – a real challenge for buyers who set out on their home search with high hopes and a budget in mind.
By the end of 2021, inventory dipped to a 1.4-months supply, and total dollar volume of sales skyrocketed more than 28.0 percent year-over-year. In December, the average price jumped to the second-highest level all time, $392,449. Despite rising prices and stiff competition between buyers, a record 106,229 single-family properties sold across Houston in 2021! That’s a 10.3 percent increase from 2020’s record of 96,271 homes.
Once you factor in all property types, sales volume actually reached 131,041 properties, representing only the third time in Houston’s history that total property sales broke the 100,000 marker.
2022 Real Estate Predictions
According to a recent report by Redfin, inventory levels should soon begin to pick up – at least slightly. This is happy news for homebuyers who have been eagerly waiting for months. The bad news: Mortgage rates inched up to 3.11% in December. Mortgage applications dropped 4.0 percent week-over-week during the week ending on December 31st, but the Redfin Homebuyer Demand Index still rose 7.0 percent. The coming months will be the true indicators of whether or not rising mortgage rates will make a tangible difference in buyer interest. It also remains to be seen if prices will continue to soar, but with new residents flocking to Houston every day, it’s definitely a possibility.
Sellers, you may have some early competition within the market. Realtors® all across Texas have been reporting an increased interest in homeowners selling a property and doing it early in the year. Keep in mind that supply chain and labor shortages haven’t yet eased up, meaning that new construction properties will continue to be hard to come by. If you have a newer home and are thinking of selling, now may be the time.
Have questions about renting, buying, or selling in the Houston and near-town areas in 2022? Get in touch with Circa Real Estate. They’d love to chat with you about how to make your real estate dreams happen.