Houston's 2023 Real Estate Market Update and Predictions for 2024
Dive into Houston’s real estate market with our comprehensive series, ‘Navigating the Houston Real Estate Market: Understanding the Past Market Trends to Predict the 2024 Market’! If you’re looking for a hyper-local deep dive into Houston’s 2023 real estate trends and predictions for what’s to come in 2024, arming you with insights to empower you to make informed decisions to achieve your real estate goals, then this is for you!
The sensationalized headlines make it challenging to cut through the muck to gain real insight into what is happening in your local Houston, Katy, and Fulshear real estate markets. It shouldn’t be that way, but here we are! Welcome to the side of the internet where we educate, break down the facts, and don’t pressure or fearmonger our clients!
Read on for a look back at Houston’s 2023 real estate market for an in-depth understanding of:
- The impact of interest rates.
- Leveraging market data to your advantage.
- Houston area home values.
- Recent shifts in the Houston real estate market.
- Tips to help sellers maximize their market moment.
- Guidance for strategic home hunting for buyers.
- Predictions for the 2024 Houston real estate market.
Do you prefer a quick overview of the most important things to know? Click the video below!
Interest Rates & Their Impact
The 2023 real estate market in Houston, Katy, and Fulshear was solely defined by interest rates. The doubling of interest rates, from historic lows during the pandemic to over 7% in 2023, had a monumental impact on the market dynamics from every angle, for both buyers and sellers.
What does a sharp rise in interest rates truly mean for the average Houstonian looking to buy or sell a home?
A key underlying factor in 2023 was that many potential sellers were locked into their current homes with low mortgage rates - since most people who sell a home are also looking to buy a new one for themselves - as rates increased, fewer new listings came on the market. Which in turn, kept inventory levels relatively low, and home prices remained at record highs.
Higher rates compounded the affordability factor for buyers, causing shifts in the Houston real estate market by slowing the pace of sales and reducing the number of homes sold.
Yet, in the face of climbing rates and a hold-your-breath market, the Houston market remained stable, demonstrating its resilience, and offering a glimpse of optimism as the Federal Reserve announced they were pausing interest rate increases and that a series of rate cuts is likely in 2024.
Decoding Market Movements: Predicting Houston’s Real Estate Trajectory
Interest rates had their say; now lets talk about what today’s data tells us about tomorrow’s market.
Looking back at the 2023 Houston real estate market reveals patterns and gives us the foresight to predict and proactively navigate the twists and turns ahead so that you can leverage it to your advantage.
Navigating Houston's real estate market requires insight, experience, and a keen understanding of its nuanced dynamics. As your expert ally, I'm here to help you interpret these patterns so that you understand how to transform these insights into action, whether you're selling, buying, or simply exploring your options.
Today's real estate market holds unique opportunities for everyone. Curious how it translates to your goals? Contact me at 832.594.1265 or at [email protected] to uncover the insights together as they relate to your specific needs.
This market doesn't just demand strategy; it rewards the well-informed. Ready to dive into the data?
Breaking the Numbers Down: Interpreting Houston’s 2023 Real Estate Market
2023's Market in Perspective: Stability Amidst Change
Although 2023 didn’t match the record-breaking streak of the past few years, it still held its ground remarkably well. Despite a drop in the number of homes sold, the sustained high home prices underlined the Houston market's strength and resilience.
According to the Houston Association of Realtors (HAR) 2023 Market Update, here is a look at the year-over-year statistics from 2019 to 2023.
This past year was another big year for home prices. Houston home values kept their post 35% pandemic-infused gain, despite soaring interest rates. Throughout the summer, the average home price marked the third, fourth, and fifth highest in Houston’s history.
The 2023 Houston market also signaled a shift towards a more balanced market. Post the “unicorn pandemic years” homes are sitting on the market longer, there are more homes available, and fewer homes sold at or above list price. These changes point to a market that is moving towards a more balanced pace, but still moving quickly.
Recognizing these shifts is vital for anyone looking to effectively use the real estate market data to their advantage.
Houston Home Values Remained Steady
Despite fluctuations in other areas of the market, home prices in 2023 displayed remarkable stability.
This statistically flat metric contrasts sharply with the pre-pandemic year of 2019 when the average home price was $306,480 — a staggering 35% increase reminding us of the Houston market's explosive growth over the past four years.
Average Sales Price: The Market's Thermometer
The average sales price is a quick measure of market temperature. This metric is crucial for everyone — from homeowners gauging their equity to potential sellers aiming to maximize profits.
In 2023, the average sold price for single-family homes in Houston remained stable at $412,161, a marginal .56% decrease from 2022. The price fluctuated throughout the year, from the low of $381,659 in January, peaking in June to near record highs of $430,475, before stabilizing again towards the year-end.
Median Sales Price: Middle Ground Insights
The median sales price, offering a perspective less skewed by the extremes, dropped modestly to $330,000, a 2.5% decline from the previous year.
This decline from 2022's median price is a slight adjustment compared to the rapid growth since 2019 — which saw a median price of $245,000 — a reminder of the value added during the 'unicorn years'.
Shifts in the Houston Real Estate Market
Number of Homes Sold: Market Activity Indicator
In 2023, there were 83,584 single-family homes sold throughout the greater Houston area, a decrease of 12% from 2022. This reduction, largely influenced by rising interest rates, is a drastic contrast from the record high of 106,229 homes sold in 2021.
Inventory Levels: Understanding Supply and Demand
The inventory levels, or months of inventory gauged by the time it would take to sell all available homes on the market, are a driving factor in whether home prices will fall, increase, or remain the same.
Where does the supply vs. demand of homes in Houston currently stand?
After the supply of homes reached its lowest level of 1.1-months in March 2022, there was a year-over-year increase in inventory every month throughout 2023. At its peak, inventory levels reached a 3.6-month supply, the highest levels recorded since November 2019!
Buyers, here is your silver lining! Although this isn’t a drastic change, the slight increase in inventory does give you more options and slightly eases the pandemic-induced surge in the market that began in 2020.
Months of inventory also directly relate to the number of days on the market and the close price-to-list price ratio, which both play a huge part in whether homes have multiple offers.
Days on Market: Market Pace
Days on the market tell us how quickly you need to act when you find “the one”.
The average days on the market in 2023 was 65, which shows homes are taking slightly longer to sell compared to 41 days in 2022 and 44 days in 2021.
What does this tell us? The increase in the time it takes for a home to go under contract shows the market is moving at a more balanced pace, but still much faster than the 82 days we saw back in the pre-pandemic 2019 market.
Closing Price to List Price Ratio: Negotiating Power
The slight decrease in the closing price to list price ratio to 98.80%, down from 100% in 2021 and 2022, shows that buyers hold a few more of the cards than they did in the previous two years. However, this figure is still relatively close to the asking price telling us that we are still in a market that favors sellers.
Total Dollar Volume: Economic Impact of Real Estate Sales
In 2023, there was $39.8 billion of real estate sold in the Greater Houston area, a noticeable decrease compared to $45.6 billion in 2022 and the record high of $46.5B set in 2021.
What Does This Mean for Buyers and Sellers Seizing Their Opportunities in 2024?
Tips for Sellers: Maximizing Your Market Moment
Sellers in 2023 dealt with a market of moderated demand but benefited from stable pricing. Homes that were well-prepared and strategically priced found eager buyers, and yes, multiple offers were still common for standout properties. However, the fierce competition of the pandemic years has eased.
To attract multiple offers, and ultimately an above-average price, here is what sellers need to do:
Home Preparation: Address deferred maintenance and enhance your home’s appeal. Start with decluttering, then focus on creating a welcoming first impression, including curb appeal, refreshing the entryway, and touching up paint, scuffed baseboards, and chipped kitchen cabinets.
Consult with a Realtor: You need insights into the seasonal market trends in your neighborhood. As someone who studies this closely, I can identify the best time to list your home so that you maximize your home’s value and demand. INSIDER TIP: It slightly differs from one Houston area to the next, but it is most likely in MAY!
Choose an Experienced Realtor: Marketing your home effectively across all channels is crucial if you want to sell your home at the highest price in the least amount of time. My approach combines cutting-edge technology, market expertise, and insightful analytics ensuring your home gets in front of a wide audience of potential buyers.
Guidance for Buyers: Strategic Home Hunting
Houston homebuyers in 2023 faced the challenge of higher interest rates. Despite this huge hurdle, the increase in the number of available homes on the market and homes taking longer to sell are signs of a positive road ahead. That said, elevated interest rates make the supposed light at the end of the tunnel feel dim.
Will these numbers continue to trend in the buyers' favor in 2024? If interest rates go down as projected, we expect more properties to hit the market as many potential sellers are also buyers, waiting for a rate drop to list their homes.
Between sellers waiting in the wings and the side-lined pool of buyers continuing to grow, lower interest rates will likely mean a surge in activity, potentially offsetting the increased supply and keeping the market competitive.
Here is what buyers need to do now to position themselves to be ready to capitalize on opportunities as the 2024 market unfolds:
Get Finances in Order: Start working with a lender to understand your financial options and readiness.
Talk to a Realtor: Gain insights into the market and clarity on your must-haves, and flexibility on your nice-to-haves so that you will be ready and in a position to make an offer, and more importantly, know when the right home comes along.
Stay Informed: Keep an eye on interest rates and monthly changes in the hyper-local market where you want to buy. This ensures that you can leverage the market to your advantage.
Key Takeaways from the 2023 Houston Real Estate Market
Resilience in Rising Rates: Despite the increase in mortgage rates, the Houston market showed resilience, balancing a slight decline in home sales with sustained high home values.
Balanced Market Dynamics: A slight shift towards a more balanced pace of the Houston market took place, with increases in inventory and the time it took to sell a home, and a decrease in the number of homes that sold at or above the list price.
Sustained High Home Values: Home prices remained elevated, holding onto the 35% gains from the pandemic period.
Optimistic Outlook for Sellers: Despite market adjustments, sellers experienced positive outcomes in 2023. Homes that were well-prepped and strategically priced saw high demand, with many selling close to their asking prices, as shown by the near-100% close-to-list price ratio.
Opportunities for Buyers: The slight increase in inventory and more balanced market dynamics provided buyers with more options.
Stable Market Outlook: Overall, the market displayed stability and growth potential, even in challenging economic conditions.
Houston Housing Market Predictions for 2024
Curious about what lies ahead for the Houston area real estate market in 2024 and how you can navigate these evolving market conditions? Stay tuned for Part Two of our series, where we'll dive into market predictions and what buyers and sellers need to watch to strategically use the insights to your advantage.
Positioning for Tomorrow: Expertise Meets Opportunity
Uncertain about how the shifting Houston real estate market affects you?
If you're considering making a move or want to understand how these trends affect your real estate goals, don't hesitate to reach out. As your Houston real estate expert, I'm here to help you decode the market and plan your next steps with confidence.
With a deep dive into the specific numbers for your neighborhood and an understanding of your personal goals, I’ll provide the customized advice you need to make informed decisions.
Remember, the market waits for no one, and the best time to act is when you're prepared.
