From a global perspective, Houston is viewed as a market that lacks diversity when it comes to its employment drivers.
According to Merryn Somerset Webb, editor in chief of U.K. finance magazine MoneyWeek, Houston is still very much an oil town where home prices always fall when the price of oil dips below $55 a barrel. As of November 25, the price of WTI crude oil was $42.87 a barrel, according to oil-price.net.
If Webb’s statement is accurate then home prices should be dropping all over Houston. However, this only appears to be occurring in specific submarkets.
Overall both average and median home prices in Houston climbed to record levels for an October, according to the Houston Association of Realtors. This in spite of a drop in home sales activity.
The average price of a single-family home reached $271,648, a 3.7 percent year-over-year rise, while the median price increased by 6.6 percent to $205,000. The primary reason, the metro’s inventory sits at roughly 3.5 months of supply.
Some Houston submarkets are being impacted more than others by volatility in the oil industry.
Considered Houston’s luxury submarket, The Woodlands experienced a “huge dip” in home values spanning May to mid-August, according to Amy Smythe-Harris of Urban Provision Realtors, who doesn’t foresee first of the year prices getting any better for sellers.
A number of residents in the submarket of Katy work in the oil and energy sectors, which has slowed sales and listing activity. However, the market hasn’t seen backward movement on prices, according to Christi Borden, a realtor with Better Homes & Gardens Real Estate Gary Greene.
Similarly, in Sugar Land slowing sales activity has done little to impact existing home prices. The market’s north region recently saw prices increase 11.3 percent on a year-over-year basis, with the average value of a home in the south region reaching nearly $520,000.
Relatively steady home sales activity, minimal inventory and noticeably rising home prices have made Pearland a seller’s market, according to Danny Frank of Keller Williams. Spanning October 2013 to October 2015, the median home price in the market has rose by $35,000.
“That’s 100 percent to do with inventory levels,” Frank said, noting the market has only 2.2 months of supply.
According to the Federal Reserve Bank of Dallas, during the first half of 2015 Houston suffered the largest decline in manufacturing jobs since the 2007-2009 recession.
Houston is considered by Somerset Webb to be much less diverse then Dallas, a market that has attracted the likes of Toyota and Facebook. The world’s largest automaker is constructing a roughly $350 million facility in West Plano, while Facebook is building a $1 billion data center in Fort Worth.
