Although there are still a couple stubborn remnants of the economic downturn, Houston's housing market is doing very well.
Despite a tough mortgage market, Houston’s housing market continues to flourish, thanks to consumer demand and a strong local economy.
For the Houston area, home sales increased 9 percent year-over-year in the first quarter, and the median home price increased 4 percent, according to the most recent data from the Texas Association of Realtors.
A big part of those increases, reported Nancy Sarnoff for the Houston Chronicle, is Houston’s relatively strong economy, which has allowed some self-employed borrowers to re-enter the mortgage market and qualify for home loans.
“I’m more optimistic about what we’re seeing,” said Kevin Keith, a mortgage-banking officer for BBVA Compass, in Sarnoff’s piece.
Houston’s economy has been doing so well, in fact, that the city warranted mention on Forbes’ latest list of America’s 100 fastest growing cities. Houston’s metropolitan area is expected to grow 6.1 percent annually through 2016.
Jim Gaines, an economist with the Real Estate Center at Texas A&M University, said in Sarnoff’s piece that the increased economic activity is also positively impacting both buyers’ and sellers’ expectations of the housing market.
“Buyers and sellers have higher expectations for the market, so they’re beginning to take action and we’re starting to see the impacts,” he said.
One of the more notable impacts has been Houston’s inventory of homes for sale, which has fallen from 7.6 months in 2011’s first quarter to six months now. According to the Real Estate Center, 6.5 months of supply represents a balanced housing inventory, and Sarnoff noted that additional price increases could follow.
Statewide, the trends are similarly positive. Single-family sales in Texas increased 12 percent in the first quarter, and median prices were up 3 percent.
And all of this is occurring amidst a mortgage market that is still difficult for some potential buyers.
Ed Kampf, a branch partner at Hancock Mortgage Partners in Houston, said that underwriting standards for Fannie Mae and Freddie Mac-guaranteed loans have not eased in recent months.
“The lenders are still underwriting defensively,” he said.
David Zugheri, the executive vice president and co-founder Envoy Mortgage, said such lending practices have ushered in a new understanding among consumers on the nature of the mortgage markets.
“The consumer is now adjusting to fact that you have to be very credit-worthy today to get financing,” Zugheri said.
But as Gaines put it, things are still improving from where they were before.
“I don’t want to imply it’s getting easy, but I am being told by Realtors I’m talking to around the state that they are sensing the lenders are easing up just a bit,” he said.