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Jul 03, 2024 PropStream

The 2024 Houston Real Estate Market Is Heating Up

  Key Takeaways:

  • Houston’s real estate market is transitioning from a seller’s market to a more balanced market with increasing inventory and steady home prices.
  • Despite higher mortgage rates, buyer demand remains strong, keeping home values elevated.
  • Houston offers attractive investment and work opportunities due to its growing population, strong economy, landlord-friendly regulations, and high quality of life.

Houston is the fourth most populous city in the U.S. and the largest city without zoning laws, so it has long been an attractive market for real estate professionals.

Catch up on the city’s current housing trends and learn why it can be a great place to invest or work as a real estate agent.

Disclaimer: PropStream does not offer investing advice. Before investing in Houston or any other real estate market, we recommend doing your due diligence and/or contacting legal or financial professionals as needed.

Home Sales Slow But Picking Up

houston tx

Early this year, Houston home sales were off to a strong start, outpacing 2023’s sales.

However, they took a slight dip after a derecho storm hit the city on May 16, causing widespread power outages that delayed closings. Single-family home sales reached 8,538, 1.5% lower than last year.

That said, some property segments fared better. For example, May sales of $500,000 - $999,999 properties increased 6.8%, and sales of $1 million+ properties increased 9.6%! This suggests that luxury property sales are surging, creating potential opportunities for agents and investors in this niche.

Another potential impact on home sales will be the upcoming U.S. presidential election. Historically, home sales tend to soften in the months leading up to a close election as some buyers and sellers wait to see which administration will oversee the economy.

Overall, Houston's home sales have been slow, with signs of picking up.

Seller’s Market is Waning

Houston is in a seller’s market—typically defined as a market with enough inventory to last up to six months at the current sales rate.

In March 2022, inventory was at its lowest with only a 1.1-month supply, but it’s come a long way since then. In May, there were 28,481 single-family homes for sale, up 48.6% since last year and 175% since March 2022. This translates to a four-month inventory, the highest level since August 2019.

In other words, sellers are losing some of their competitive edge to buyers, potentially making now a good time to jump into the market.

Home Prices Stay Elevated

Despite more inventory coming online, home prices remain high. The average single-family home price reached an all-time high of $443,970, up 3.6% year-over-year. The median-priced home still sells for nearly $100,000 more than it did five years ago.

This is primarily due to the continued housing shortage—which is especially severe for affordable housing in Houston. 

Furthermore, since mortgage rates skyrocketed over the last two years, many homeowners refuse to sell and give up their locked-in low rates, constraining supply. According to Freddie Mac, the average 30-year fixed mortgage rate is 6.95% as of June 13. That’s down from a peak of 7.79% last October but still well above the 3-4% rates buyers got used to in 2020 and 2021.

Meanwhile, buyer demand hasn’t let up. Many millennials are entering their prime homebuying years and want to buy despite higher interest rates, putting more upward pressure on home prices.

Reasons to Invest or Work in Houston

houston real estate market

Now that you better understand Houston’s housing market, here are some reasons to invest or work here:

Population Growth

In 2023, Houston welcomed 139,789 new residents, a 1.9% increase from the previous year.

This was the second-highest number of residents added to any U.S. city behind Dallas, with which it tied for the highest population percent growth. Over the last decade alone, 1.1 million new residents have moved into the city.

Strong Economy

Part of Houston’s appeal is its strong economy.

The region generates $490 billion in GDP and has had over 760 expansion and relocation projects in the last two years. With one of the largest ports in the country and two international airports, it makes a great place to do global business. Plus, Texas has no personal or corporate state income tax. It’s also the world's energy capital, with over 4,700 energy-related firms.

Job Growth

Unsurprisingly, employment in Houston has been thriving.

The city created 19,100 jobs in April and 80,700 jobs over the last year. Furthermore, most sectors are growing, and the region hasn’t seen an uptick in unemployment claims. In fact, the unemployment rate fell from 4.6% to 4.3% in March (the most recent data).

Landlord-friendly Regulations

As a part of Texas, Houston is relatively landlord-friendly.

The state has no rent control, deposit limits, landlord license requirements, or notice-of-entry regulations—making it a great place to operate rentals.

Strong Rental Market

Houston’s rental demand is surging.

In March, there was a 4.8% increase in leased listings and an average year-over-year rent price increase of 5.3%. Part of this is due to higher mortgage rates pushing some potential homebuyers toward renting.

Low Cost of Living

For the fourth-biggest U.S. city, Houston is relatively affordable.

Its cost of living is the third lowest among the twenty most populous cities, 29.2% below their average and 5.9% below the national average.

Attractive Climate

Houston’s warm weather and proximity to the Gulf of Mexico make it a popular coastal destination for residents and visitors alike.

Over the year, the temperature typically ranges from 47°F to 95°F and is rarely below 35°F or above 100°F.

Educational Opportunities

Houston has many large and prestigious educational institutions, like Rice University, University of Houston, Texas Southern University, and more.

These attract students worldwide, presenting unique opportunities to invest in student housing.

High Quality of Life Ratings

According to Numbeo, Houston also has a quality of life index of 169.45, which is very high.

It ranks especially high in terms of purchasing power, climate, property price, and income. The city has also been ranked America’s ninth-best city to live in.

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Frequently Asked Questions (FAQs)

What is the current state of the Houston real estate market?

Houston is experiencing a shift from a seller’s market to a more balanced market, with increased inventory and slightly lower home sales in May compared to last year. However, home prices remain high due to high demand and limited inventory. 

Why should I invest in Houston real estate?

Important: PropStream does not offer investing advice.

Houston offers a strong economy, significant job growth, landlord-friendly regulations, a growing population, a strong rental market, a low cost of living, many educational opportunities, and a high quality of life. If these are aspects in a region you value for your rentals, Houston may be a good match.

How will the upcoming presidential election impact the Houston housing market?

It’s impossible to say. However, historically, home sales have softened in the months leading up to the election as buyers and sellers wait to see what type of administration—and, by extension, policies—will impact the economy. 

Is Houston a good place to work as a real estate agent?

It can be. As home sales increase and the city continues to grow, there may be increased opportunities to earn commissions. Plus, Houston’s strong rental market may create opportunities to help investors (who can be excellent agent clients) acquire and sell rental properties. 

What’s the biggest mistake beginner real estate professionals make working in Houston?

One of the biggest mistakes beginner real estate professionals make is underestimating the complexities and implications of the city’s lack of zoning laws. This can include misjudging property values and potential, failing to understand and follow other local property regulations, and overlooking market research. 

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Published by PropStream July 3, 2024