How did the Houston area real estate market perform in 2022?
If you are looking for a hyper-local deep dive into how the Katy, Fulshear, and greater Houston area real estate market performed in 2022, this is for you!
In a nutshell…
Once we closed the books on 2022’s transactions, the number of homes that sold across the greater Houston area declined in comparison to the unprecedented surge in 2021. Despite the slowdown, home prices still soared to all-time highs in 2022, setting two new all-time high pricing records. The double-digit price gains kept the total dollar volume within a mere 1.5% of 2021’s record-obliterating year. That is coming off the BEST MARKET THE HOUSTON AREA HAS EVER HAD! Do you where that puts the real estate market in 2022? The second-best year in Houston real estate history.
The Houston real estate market started 2022 charging full steam ahead after the pandemic-induced surge in the real estate market. We ended 2021 with the highest home prices our city had ever seen, and they were continuing to rise in nearly every area of Houston, in all of the suburban markets, and in every price point. Homes were selling in record time, with multiple offers, and for a price that was well above an already inflated list price.
Then the efforts of the Fed to stave off inflation drove mortgage rates from record lows of 3% in April 2022 to more than 7% by November 2022. Between soaring home prices reaching their peak in May and June, a stubborn lack of inventory, and rapidly rising interest rates, monthly sales started to decline in the second quarter of 2022 and continued to taper off every month thereafter.
Many would-be homebuyers were forced out of the market and turned to leasing a home instead, which in turn, boosted the Houston area rental market to record highs.
Perspective and insight into the Houston market stats behind the headlines
If you are thinking about buying or selling a home, you need to know what’s REALLY happening with home prices, the supply of homes, and how many homes have sold (the demand). The sensationalized headlines make it challenging to cut through the muck to gain real insight as to what is happening in your local real estate market. It shouldn’t be that way, but here we are!
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If you want an in-depth look at what the current real estate market means for your potential home buying or selling goals, I’m happy to be your resource! Contact me at 832.594.1265 or at [email protected]
for a detailed look at the market tailored to your specific circumstances.
Read on for an in-depth analysis of the following:
- 2022's numbers for each of the metrics that the Houston Association of Realtors (HAR) used in their ‘Annual 2022 Real Estate Market Recap’.
- How 2022's statistics compared to the pre-pandemic numbers in 2019 vs. the pandemic-induced surge in the market throughout 2020 and 2021.
- A historical look at Houston area home prices over the last decade and throughout each month of 2022.
- Perspective on how far the Houston market would have to decline before we got back to "pre-pandemic levels".
- Market updates and trending listings in each of Houston's most highly sought-after areas; including Katy, Fulshear, The Heights, Garden Oaks/Oak Forest, and Cypress.
- Our thoughts on the current market conditions and what they mean for home buyers and sellers.
An in-depth look at the 2022 Houston real estate market
At the end of every year, HAR’s yearly market update uses five categories, focused on either home prices or the number of homes sold, for its annual comparison. The table below shows each of the categories and how 2022 compared to each of the previous three years; the pre-pandemic version in 2019 and the pandemic-induced surge in 2020 and 2021.
Did you know that starting in 2019, the Houston real estate market began a consecutive three-year streak of setting new records in all of five categories? Then the next year would break all the previous year’s records to cement its place as the new record-setting year. That streak came to an end in 2022.
That said, 2022 still carved out a spot in the record books by setting two new ALL-TIME HIGH pricing records with double-digit increases over the previous pricing records set in 2021.
How did the 2022 Houston real estate market compare to the unprecedented records set in 2021? Let's break down each of the five statistics measured in HAR's annual 2022 market recap.
The number of homes sold continues to decline. Both the number of single-family homes and the number of all property types sold declined on a year-over-year (YOY) basis.
FACT: By the time the books were closed on December’s transactions, the number of single-family homes sold in 2022 fell 10.9% to 95,113, while the number of all-property types sold took a 10.7% hit with 117,572 units sold.
ALSO FACT: The total number of all property types sold in 2022 was the second highest in our city’s history.
The total dollar volume sold in 2022 was the second-highest in our city’s history. The decline in the number of homes sold did little to move the needle in terms of home prices. In 2022 prices rose to new highs keeping 2022’s dollar volume within 1.5% of 2021’s record-setting numbers.
This is on the heels of a 31.8% YOY gain in 2021, an 18.10% gain in 2020, and a 6.7% gain in 2019.
Houston home prices set two new all-time high pricing records in 2022. On a year-to-date basis, the average sales price set a new all-time record high of $413,657, a 10% increase from the previous record set in 2021. The median home price also set a new annual record high at $338,295, a 12.8% increase from the previous record set in 2021.
Houston home prices also set several new monthly pricing records throughout the year. February 2022 started the consecutive streak of breaking and setting new all-time high pricing records. The average sales price continued to increase for four consecutive months before it hit its peak of $438,301 in May of 2022. The median sales price went on a five-month run before it jumped to its own all-time high of $353,995 in June of 2022.
Here is a look at the month-over-month (MOM) average and median sales prices for 2022.
The Houston real estate market stayed relatively steady throughout 2022, unlike several others markets throughout the U.S. that experienced extreme shifts throughout 2022 (I’m looking at you Austin, TX).
Where does the Houston real estate market stand in terms of the number of available homes on the market?
Welcome to the silver lining of the decline in the number of homes selling! The number of available homes on the market continues to increase.
Inventory of homes, measured by how long it would take to sell all of the active homes on the market, increased to a 2.7-months supply. This is up from 1.4-months reported at the end of 2021. The total number of available listings across all property types, surged 55.2% as compared to this time last year.
Does this mean Houston has shifted from a sellers’ market to a buyers’ market?
Not quite. Home prices have a direct correlation to supply vs demand. While the supply of homes is increasing throughout the greater Houston area, there is still a shortage in terms of meeting the current demand.
A 6-months supply is traditionally considered a balanced market, in which neither the buyer nor seller has the upper hand. Anything below 6-moths is considered a sellers’ market and anything more than 6-months is considered a buyers’ market.
Is the Houston real estate market crashing?
If you are into studying historical trends so that you can put what’s currently happing in the local market into perspective, then this is for you!! Below is a closer look at how the current real estate trends compare to the normal ebbs and flows of the Houston real estate market.
Let’s look at the average and median sales prices and appreciation rates for the greater Houston area for the last decade.
The unprecedented rate at which home prices surged in just three years is mind-blowing! In three years the average sales price increased by $107,698, a staggering 35.2% gain. In the seven years prior to the pandemic, home prices only appreciated a total of 31.6%, an increase of $57,476.
What does a “more normalized pre-pandemic pace” look like in Houston?
You’ve heard that the Houston real estate market is easing back to “a more normalized pre-pandemic pace”; so exactly how much does the local market need to decline to be on par with 2019’s numbers? I’m glad you asked!
Here is a look at the numbers just prior to the pandemic vs. the numbers from the annual 2022 Houston market recap.
Here is a breakdown of exactly what would have to happen before the Houston area is back at “pre-pandemic levels.”:
- The total dollar volume sold would need to decline by $9,442,745,130.
- The average sales price would have to fall by $107,698.
- The median sales price would need to decline by $93,295.
- There would need to be 8,117 less single-family homes sold.
- The number of all property types sold would need to drop by 14,059.
Putting the "Market Shift" into perspective: At the time, 2019's "pre-pandemic" Houston real estate market was the best in our city's history, breaking ALL FIVE ANNUAL RECORDS and setting several other records throughout the year. If that is the real estate market that we are easing our way back towards, would you call that a "market crash"?
How is the real estate market around your block?
to view the live REAL-TIME market updates for the most highly sought-after Houston area neighborhoods! The live market updates and trending listings are live for Katy, The Heights, Memorial, Memorial Villages, Garden Oaks/Oak Forest, River Oaks, West University, Cypress, Montrose, Tanglewood, Bellaire, Briargrove, Oak Estates, Southampton, and The Woodlands.
The Takeaway from the Houston Housing Market Recap of 2022
While the 2022 Houston real estate market ultimately ended a long record-setting sweep of all categories, it did set two new all-time high pricing records with double-digit percentage increases over the previous record set in 2021. On a month-over-month basis, home prices have slightly declined from their peak last summer.
Coming off the strongest real estate market that we have ever seen, naturally makes it feel like we are in turmoil and, and prices are plunging. In Houston, Katy, and Fulshear, the sky is not falling, prices aren’t plunging, and we are not in crisis.
Has the Houston real estate market shifted? Very little. Will the greater Houston real estate market continue to shift? Most likely it will. We are already getting close to those levels in terms of the number of homes sold. That said, the recent tap on the breaks for the Houston real estate market still doesn’t put us anywhere close to a normal market in terms of home prices!
The frenzy in the market and historical rise in home values is unsustainable, and frankly, this slight shift is needed for both buyers and sellers that are also hoping to buy in this same real estate market.
Stay tuned for next week's blog where we break down what the current market means for buyers and sellers!
What does today's real estate market mean for you?
Real estate markets are hyper-local and fluctuate from one area, neighborhood, and price point to the next.
Buying or selling a home is a BIG decision. It’s important to understand what is REALLY happening with the real estate market around your block. My job is to ensure that you are armed with the facts needed for you to determine if making a move makes sense for YOUR specific circumstances.
If you are considering making a move, it’s crucial to weigh the pros and cons with an experienced Realtor. Preferably a seasoned one that has experienced the highs and lows in the Houston real estate market.
Reach out to discuss your specific home buying or selling goals!