Foreclosures weigh January home prices down; rental demand grows

HOUSTON — (Feb 17, 2009) — Property sales throughout the greater Houston area stayed in negative territory during the first month of 2009, reflecting the lingering effects the nation’s recession is having on consumer confidence. Overall January property sales fell 26.4 percent compared to January 2008, and sales of single-family homes declined by 22.7 percent, according to new monthly data compiled by the Houston Association of REALTORS® (HAR).

The average price of a single-family home in Houston dropped 12.8 percent last month to $164,922 compared to January 2008. At $127,850, the January single-family home median price – the figure at which half of the homes sold for more and half sold for less – fell 8.5 percent year-over-year. January marked the fourth consecutive month of price declines.

Much of the pricing drop can be attributed to an increase in foreclosure sales, which typically sell below market prices. In January 2009, foreclosures made up 34.0 percent of all single-family home sales in the Houston area compared to 25.0 percent one year earlier. The median price for foreclosure sales reported in the MLS tumbled 23.0 percent from $104,000 to $80,500 on a year-over-year basis. The median price of traditional, non-foreclosure single-family homes dropped just 1.0 percent from $157,000 to $155,500.

Sales of all property types in Houston for January totaled 3,240, off 26.4 percent compared to January 2008. Total dollar volume for properties sold during the month was $530 million versus $817 million one year earlier, a 35.1 percent decline.

January brought a continued escalation in demand for rental properties, with leases of single-family homes up 4.8 percent and townhouses/condominiums up 24.6 percent on a year-over-year basis. This suggests that consumers who otherwise might purchase a home are instead opting to lease in order to enjoy the feel of homeownership without the financial obligations associated with a mortgage.

“Passage of the economic stimulus package will by no means trigger a home buying frenzy, but eliminating the repayment provision in the first-time home buyer tax credit will help bring buyers to the market and further reduce housing inventory,” said Vicki Fullerton, HAR chair and broker of record at RE/MAX of The Woodlands & Spring. “Restoring consumer confidence is vital to healing our economy, and Congress and the president have just taken an historic step toward initiating that process.”

January Monthly Market Comparison
The month of January brought Houston’s overall housing market negative results when all listing categories are compared to January of 2008. Total property sales and total dollar volume fell, as did average and median single-family home sales prices.

However, the number of available properties, or active listings, at the end of January fell 12.9 percent from January 2008 to 44,178. That is 430 more active listings than December 2008 and considered an indication that inventory levels remain balanced.

Month-end pending sales – those listings expected to close within the next 30 days – totaled 3,216, which was 24.7 percent lower than last year and suggests another month of declining sales for February. The month’s inventory of single-family homes for January came in at 5.7 months, down 4.1 percent from one year earlier and unchanged from December, which marked the lowest level of 2008. The national month’s inventory of single-family homes is approximately 10 months, according to the National Association of REALTORS® (NAR).

Single-Family Homes Update

At $164,922, the average sales price for single-family homes dropped 12.8 percent from January 2008, when it was $189,143. The median price of single-family homes in January was $127,850, off 8.5 percent from one year earlier. That compares to the national single-family median price of $174,700 reported by NAR. These data continue to demonstrate the higher value and lower cost of living that prevail in the Houston market.

Additionally, January sales of single-family homes in Houston came in at 2,827, down 22.7 percent from January 2008 and accounting for the 17th consecutive monthly drop. Year-over-year sales of single-family homes priced at $80,000 and below rose 11.2 percent in January, fueled largely by foreclosure-related transactions.

HAR also reports existing home statistics for the single-family home segment of the real estate market. In January 2009, existing single-family home sales totaled 2,367, a 19.6 percent decrease from January 2008. At $147,646, the average sales price for existing homes in the Houston area fell 14.5 percent compared to last year. The median sales price of $117,000 for the month was also down 8.6 percent from one year earlier.

Townhouse/Condo Update

The number of townhouses and condominiums sold in January fell compared to one year earlier. In the greater Houston area, 203 units were sold last month versus 348 properties in January 2008, translating to a 41.7 percent decrease in year-over-year sales.

The average price of a townhouse/condominium dipped to $153,773, down 3.2 percent from one year earlier. The median price dropped 2.1 percent to $125,000 from January 2008 to January 2009.

Lease Property Update

Demand for single-family and townhouse/condominium rentals increased again in January. Single-family home rentals rose 4.8 percent in January compared to a year earlier, while year-over-year townhouse/condominium rentals were up 17.0 percent.

Houston Real Estate Milestones in January