In the past couple of years, Houston has grown and developed to become one of the most desirable places to live throughout the United States. In doing so, however, it has also triggered a real estate boom that has led to house prices skyrocketing in the city as demand for affordable housing outweighs the availability of homes. It comes as a number of decade-end reports have been released in recent months that have pointed to a city-wide trend where almost every neighborhood reported its house prices soar. If you are interested in uncovering why Houston was one a place of affordability but is now experiencing escalating house prices, continue reading to find out everything you need to know.
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A response to the pandemic
In 2020, the global pandemic forced a growing number of consumers to spend more time living and working from the comfort of their own homes. In the years since, homeowners have scrambled to sell their homes and relocate elsewhere in an attempt to welcome a change of scenery as we enter yet another year of restrictions and flexible working practices. It has led to the global real estate market booming and house prices reaching record-breaking highs as cities around the world struggle to keep up with the sheer volume of homeowners seeking to sell their home and cater to growing demand. It also comes as buyer preferences have changed dramatically since 2020 with the type and location of homes that are considered desirable today starkly different to what it was just a few years ago and fiscal policies cushioning the blow of fewer or lower household incomes.
It is not over yet
It may feel as if the world is returning to some sense of normalcy as we edge closer towards the end of 2021 and get ready to enter 2022, but Houston’s real estate market is showing no signs of slowing just yet. In the next year, for example, it is predicted to jump another 14% on top of the previous year’s increase of 10%. It is likely to be due to a number of reasons but is largely due to a dwindling supply of available homes as the city struggles to keep up with the swathe of visitors relocating from elsewhere as it adapts to its new-found position as one of the fastest-growing metro real estate markets in the country. It does, however, appear to be a state-wide problem with Austin recently predicting a staggering 37% rise in house prices over the coming year.
Additional Home Costs are Due to Rise
What it takes to maintain a home, personalize it, and keep it secure from accidents will cost more money too.
While many homeowners are turning to the DIY tips and tricks publicized by influencers on TikTok, raw materials costs continue to be on the up. The COVID-19 pandemic has limited the manufacturing, resourcing, and distribution of all sorts of building materials, from timber to concrete. The world will see the effects of this for a while in terms of cost and delivery times.
Labor is also undergoing constraints, with staff shortages impacting a contractor’s ability to fulfil jobs with the right amount of trained personnel. In turn, prices have also gone up, but, also, it’s difficult to organize a time for them to come as they’re busy.
Homeowners routinely look for cheaper insurance options or ways of lowering the cost. It’s a fact of life that homeowners insurance is fundamental. Premiums, however, will likely increase. Inflation is the general cause of this, but so is repair costs, as detailed above. There still exist ways of finding cheaper options, comparatively, and homeowners will no doubt exhaust them, but, on the whole, they can expect the increase to maintain itself for a couple of years.
The end is in sight
It may sound as if the future is bleak for future homeowners in Houston but as shocking as recent predictions have been, the end is in sight as house prices are expected to eventually slow as changes to supply, demand, and mortgage rates come into effect. It has been predicted, for example, that by the time July rolls around, house price gains will slow to a 2.7% annual increase, down from a staggering 18% as was reported in July 2021 which was the largest year-over-year growth since records began in the 1970s. It will please homeowners that have been waiting for the real estate market in the city to slow since early 2020 and provide them with the first opportunity they have had in a number of years to become a first-time buyer or sell their current home.
In the past couple of years, the real estate market in Houston has reached new heights and, in doing so, has become largely unaffordable for a growing number of homeowners in the city. It has mainly been due to the ongoing pandemic as consumers strive to pack up and move in an attempt to welcome a change of scenery. It may not be over yet as it will continue to surge into the new year but with house prices predicted to slow into the summer of 2022, the end is in sight.