Demand for Texas homes is higher than ever before

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The Texas flag waving in the wind.

05/02/2016 | Author: Editorial Staff

A small number is making big news for Texas real estate. In the first quarter of 2016, the inventory of homes statewide hit an all-time low at 2.8 months.

That means if no more houses were listed for sale in Texas, it would take less than three months to deplete the supply of homes on the market now. Why does this matter? Historically low inventory means homes are in demand now more than ever.

For comparison, the Real Estate Center at Texas A&M University estimates that a monthly housing inventory between 6.0 and 6.5 months is balanced between supply and demand … and Texas was at less than half that number in the first quarter of 2016.

For more first-quarter stats, including median home prices and days on market, check out the Texas Quarterly Housing Report, released today by the Texas Association of REALTORS®. The report includes statewide data and data for 25 local markets.

Texas Quarterly Housing Report

Categories: Research, Buyers, Sellers, Homeowners
Tags: research, texas quarterly housing report, buyers, sellers, homebuyers, homesellers


Chris Rosprim on 06/20/2016

Yes that is typical.  Problem is that those who NEED a lower priced home to buy to live in are being pushed out by those investors with ability to pay higher than list, pay cash, close quickly, can accept blemishes and deal with them, etc. so many who want to buy and live in the home are not able to buy and new homes are typically above their threshold.

Nick on 06/14/2016

As real estate investors in Austin, we can attest to this. Whenever we get a property in Travis county we get multiple offers above asking price usually within the same day to 48 hours after it goes up.

Chris Rosprim on 05/10/2016

The why is fairly simple.  In the last real estate crunch a lot of home builders got out of the business as new homes were not selling and they did not have the financial resources staying power required.  Now - many are gearing up and they are building new homes as fast as they can. 

There is a growing demand for rental properties.  Young people are waiting till later to buy a home and thus continue to rent. 

New homes being built are generally out of reach for first time home buyers with many staring in the $200K - $300K price range - far too high for first time buyers who would typically like to be in the $175K or less range. 

In that price range - those that come on the market - attract a lot of attention from investors who have the cash to pay cash for the home and thus can and do pay on top of list regardless of appraisal due to their cash position.  First time buyers can not compete in that arena.  Investors want to buy to rent out.  They are taking a lot of saved funds, stocks and bonds, etc. and buying real estate. 

The inventory is so low due to the fact that if a seller wants to sell - they need some place to move to and their choices on the market are slim and competitive so although they might want to sell - and they could get top $$$ - they don’t cause they can’t go out and find what they want to buy to move into which further adds fuel to the fire of the problem.  When they don’t sell - the inventory is kept low.  Its a vicious cycle all over Texas. 

Home builders could provide some relief but their price point is not helping to provide housing opportunities for many new first time buyers.  Some sellers do not want to take on a new home and the volume is not there for them to choose from yet. 

Will likely take several more months - perhaps into next year - to see some relief. 

Now IS a great time to sell - but - where do the sellers go? 

I have one client that owns 3 nice rental properties (in the $1,600 - $1,800 rent range) and is in process of buying a new home for him to move in and let me lease out his existing home and buying another one to do the same.  And it continues with many investors buying many investment properties to rent out due to the high demand and high rental prices that the market will support.

Linda Stilwell on 05/10/2016

Yes, I agree.  I have been practicing real estate in the Texas Hill Country (Kerrville and surrounding areas) for over eleven years and I have never seen inventory at such low levels.  What I want to know is why?  Surely not all prospective sellers are holding back because they have no place to go???  And why all of a sudden are there so many investors in the market place?  Are other forms of investments so volitile that real estate is the only safe remaining investment?  I find that hard to believe.  There has always been high, medium and low risk investment options for investors with real estate typically being extremely low risk and also long term for return on investment.  So I ask again, why?  It doesn’t seem to make much sense to me.

Chris Rosprim on 05/02/2016

The housing shortage - certainly in DFW / N Texas - likely similar in other parts of the state - is critical.  With only a 2 - 3 months inventory of homes there is a shortage!  For each home that is put on the market - often times there is a buyer already in hand for the available listing and/or the same day / next day there will be 2 - 5 - 10 or more offers.  The problem is exacerbated by the price…. certainly most any home will generate multiple offers.  As the price escalates the pool of buyers diminishes.  In the lower price range - say anything up to $200K - the demand is there for buyers who need to buy in order to have a home to live in and they are competing with those who want to buy in order to have an investment rental property.  Often times those buyers will pay cash and above list and short close - enticing to the seller and freezes the buyer out who needs a home to live in.  Further more the price point for many new homes is near or above $300K which new home / first time home buyers can ill afford and they can’t compete with cash buyers / investors.  New homes are being built but not fast enough to meet demand.  Many existing home owners might like to move up - or move down - but do not put their property on the market and into the inventory cause they can’t find a home to move up / down to so they don’t which further continues the housing dilemma.  We have a way to go before we get out of this cycle.

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