- Residential home sales spiked in the first quarter of 2016.
- Inventory reached all-time low in Texas at 2.8 months.
The first quarter of 2016 disproved any forecasts of a calm period following a five-year boom in Texas residential real estate. With residential real estate sales increasing 7.8 percent to 65,265, the promise of a growing job market seems to be attracting more buyers.
Housing inventory, on the other hand, dropped to a staggering 2.8 months, which is down 0.6 months from the first quarter of 2015. This is also a historical low for Texas housing inventory. A press release from the Texas Association of Realtors stated that the Real Estate Center at Texas A&M University thinks the monthly inventory for housing is balanced when sitting between 6 and 6.5 months. As such, the decreasing inventory shows that demand is slowly but surely pushing out supply. This, coupled with the growing job market, places a strain on the Texas housing market.
Low inventory could bring trouble
“Housing inventory remains extremely limited in Texas,” Chairman of the Texas Association of Realtors Leslie Rouda Smith said in a prepared statement. “Low housing inventory combined with rising property values is making housing affordability a challenge, not just in Texas’s metro areas, but across the state. This could become a larger problem if there is not greater balance between supply and demand in the future.”
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Active listings also dropped in the first quarter to 74,276, down 11.9 percent year-over-year. Homes spent an average of 64 days on the market, which is three days less than the same time last year.
The median home price, however, increased 5.4 percent year-over-year to $195,000.
If and how the Houston floods affected second quarter numbers will be an interesting situation to monitor going forward. In some states, the post-flood caused a surge in two things: Residents packed up and moved to higher ground, and developers came in to rebuild. However, disasters like floods give states an opportunity to reexamine ways to avoid future problems caused from over development.