Fort Bend County has had less than six months of housing stock as of October 2011, according to data from the Texas A&M University Texas Real Estate Research Center. Similarly, Harris County's inventory has had four months or less of housing inventory as of January 2015. (Courtesy Pexels)

Housing and real estate experts in the Katy area said they had never experienced market conditions like this in their decades of careers.

The real estate market, described as unprecedented, incredibly competitive, and explosive, is being driven by historically low inventory levels, record-low interest rates, and skyrocketing wood and building materials costs, brokers and home builders said.

"I've never seen a market like this in nearly 40 years of experience," said Bill Lacy, director of mortgage production at Independent Financial. "There has simply never been a market like this before. It's just exploding. "

Although this confluence of conditions is affecting the real estate market across the country, Jeff Wiley, CEO of Fort Bend Economic Development Council, said Fort Bend County has always been a coveted place to live because of its high quality public schools and amenities. rich communities and a business-friendly attitude.

"In good or bad economic conditions, Fort Bend [County] will be a growth magnet as long as we maintain our competitive and comparative advantage at the national and regional levels, "he said.

Low housing stock

In Wiley's 17 years with the FBEDC, he said he had never seen the county's housing stock so low.

Fort Bend County has had less than six months of housing stock as of October 2011, according to data from the Texas A&M University Texas Real Estate Research Center. Similarly, Harris County's inventory had four months or less of housing inventory as of January 2015. The center describes six months of inventory as a stable market.

However, in May – the last month with data available – the housing stock reached 1.6 months in Harris County and 0.9 months in Fort Bend County, according to the center. Mary Kiesewetter, a broker at Better Homes and Gardens Real Estate Gary Greene, said low inventory levels are the main driver of the market.

"It's the driving factor because I've seen some pretty big booms where the market has turned into a selling market … but nothing like that," says Kiesewetter, who has been selling properties in the greater Katy area for decades.

Low interest rates and 30-year fixed-rate mortgages are driving demand for residential real estate – rates have continued to decline since 1980, according to Federal Home Loan Mortgage Corp. data. or Freddie Mac.

Low inventory combined with the rising cost of building materials has resulted in home builders in the area struggling to keep up with demand for homes, said Rodney Howerton, area president of K. Hovnanian Homes, which builds homes in the master houses. planned community of Katy Pointe, which is north of Katy off Clay Road.

"There is a huge backlog of people waiting for their homes and when demand is so extreme, some builders even cancel contracts with buyers because they just can't keep up," he said.

Rising home prices

As the housing stock began to decline and demand increased last year, house prices escalated, said Mike Roller, agent and owner of Roller Realty.

In Katy, the average home sales price increased by $ 40,000, or about 13.6%, from $ 295,000 in 2020 to $ 335,000 in 2021, according to data from houstonproperties.com.

The pandemic and historically low interest rates played a clear role in soaring demand and raising property prices, said realtor Amy Lookabaugh, co-owner of Cinco Ranch Realty Group.

"For people who were looking to get into a home with more space, something with the home gym or pool or home office they were looking for, this was the perfect time," she said. "Suddenly prices started going up and up and the market is still showing no signs of slowing down."

Local real estate agents said another factor shaping the current market is the increasing number of out-of-state transplants moving to Texas. According to the US Census Bureau, the state welcomed more than 537,000 new residents in 2019, for the seventh consecutive year it has attracted more than 500,000 new residents.

Kiesewetter said she saw an influx of home buyers looking to move to Katy from other states, particularly California. Similarly, Keller Williams quoted real estate agent Pam Shockey as saying that when everyone moves out of the area, four households will move to Fort Bend County.

Foreign buyer Kayla Gregory began looking for a home in Katy, far from Bellingham, Washington, in May, where most homes sell for more than $ 500,000.

"I looked at 500 houses online and I felt like we would never find the right one," said Gregory.

Citing her husband's job as the reason for the move, she added that Katy – much like other suburbs in Texas – offers more space for less money than West Coast markets.

"Our home in Bellingham is 1,711 square feet and is pending for $ 606,000," said Gregory. "Our new home in Katy is 3,600 square feet and costs $ 573,000. I'm looking forward to more space. "

Gregory, who eventually bought a new home on Cane Island, said she moved to the area for the amenities.

Additionally, overseas buyers, particularly Katy, are often drawn to Texas for its relative affordability and desirable schools, Lookabaugh said.

"So many people move here for personal or political reasons, all you can think of, and it's a perfect scenario where you have all of these things at the same time," she said. "All of this adds to the skyrocketing cost and demand for home ownership."

The cost of construction

The cost of both newly built and custom homes is also rising, fueled by skyrocketing building materials prices driven by labor shortages and more homeowners choosing to upgrade their existing homes or move during the pandemic, experts said.

For K. Hovnanian Homes, house prices have typically risen about 3% a year in the past, Howerton said. But this year the company had to hike house prices more drastically in some neighborhoods to keep pace with rising material costs – meaning some houses have increased 30% in prices.

"A bigger house means more lumber, so with the cost of it going up, we have some neighborhoods where houses are selling for $ 100,000 more than a year ago," Howerton said. "It's unprecedented."

A Texas A&M University report on lumber and lumber prices published in June showed that lumber costs rose 250% year over year between May 2020 and May 2021.

The increases in building materials costs are largely related to the labor shortage that has emerged as a result of the coronavirus pandemic, Howerton said, as some companies have been forced to lay off employees or take leave of absence. This staff shortage is adding to the delay in construction and creating a backlog of buyers waiting for their homes, he said.

"For example, a flooring company may have too few carpets or tilers, so builders may have to wait or go elsewhere and possibly raise costs again," he said.

Steve Gandy, owner of Bricktown Custom Homes and a resident of the Katy area, said Houston's competitive construction industry and vacant land made Houston a better place to build a home compared to other Texas cities. He said the Katy area in particular had taken advantage of these assets.

"This market is better than others. We've got it under control in Houston, "said Gandy. "We know how to build houses and we have land. In these other areas, like Dallas-Fort Worth, they are trying to find land. They are just beginning to bloom and continue to develop, but we did. [The Katy area] is almost in Brookshire now. "

Gandy said the Houston area, however, is not immune to labor shortages across the country. Gandy said he predicts labor shortages will continue to affect the construction industry as home builders continue to work to meet increasing demand from buyers.

"When they go from house to house, they need more men," he said. "Labor prices will start to escalate so this is one way to get down to the norm. It used to be very cheap to build in Texas, but it's just not the case today. "

Competitive market

The competition among homebuyers in Katy has been unprecedented lately, Kiesewetter said. For example, Kiesewetter said she held two open days for a house in Autumn Grove at the Cinco Ranch shortly after being listed, and attended 32 parties on the first day and 27 open days on the second day.

"All of these people were looking for houses, and as with any listing, so many people were making offers well above the asking price," she said. "There has never been anything like it."

Community Impact Newspaper analyzed real estate data from the Houston Association of Realtors for 10 recently sold homes in each of the six Katy area zip codes. Of these 60 houses, 38 houses were sold above the asking price. In addition, eight homes were sold for about $ 10,000 more than the asking price, and nine homes were sold for at least $ 25,000 more.

Local realtors said they often prepare their home buying clients for the fact that they may have to submit multiple bids before theirs is selected. This applies more to lower price points than to higher ones.

"We are still in a multi-offer situation for almost every home that comes on the market," said Lookabaugh. "It was incredibly competitive for buyers."

As a mortgage lender, Lacy said he agreed with most real estate agents in the area that the playing field is likely to cause buyer fatigue soon.

"The frustration customers feel is understandable," he said. "The ups and downs they go through are exhausting and there is no end in sight."

Ultimately, it's an incredible market for people who want to sell, Lacy said. Residents can advertise their home, get dozens of offers in a matter of days, and get tens of thousands of dollars more than they asked for.

"But then you're in the same position as everyone else, looking to buy and probably sticking to it," he said.

Laura Aebi contributed to this report.

source https://seapointrealtors.com/2021/07/24/low-inventory-interest-rates-catalyze-unprecedented-katy-real-estate-market/

 This free site is ad-supported. Learn more
​