Houston Real Estate Market Update

Watching the Real Estate Market

With real estate volatility, plenty of people have been sidelined, waiting and watching to see what will happen next.

  • During nearly two years of record-low mortgage interest rates, it spurred a tremendous real estate buying spree. Now the interest rate is at a 10-year high.1
  • In a seller’s market, home prices are high and on the rise; after three years, the increase has begun to slow down.

Perhaps you feel beaten up during past buying attempts. The peak intensity seems to be over at this point. If you are still interested in buying a home, here are a few insights into the Houston Real Estate Market to help you make your decision.

Housing Affordability Index

Buying a home is a decision that will potentially affect your family finances for the next 30 years. Any information that helps make this decision is valuable. The Housing Affordability Index can help you with this decision. While agencies, such as the National Association of Realtors, track this information nationwide,2 you can calculate your own HAI.

When the principal and interest payment of a home is 25% (or lower) of the household income, this is considered affordable housing. This formula can help you make better decisions.

Watch the Interest Rate in the Real Estate Market

For two years, the interest rate hovered around 3% and in June 2021 it was 3.06%. The current mortgage rate exceeds 7%.3, and this large jump happened very quickly. Do not expect the drop in rates to happen as quickly, but watch for it to fluctuate. Perhaps the interest rate puts the purchase of a home out of reach now, but anticipate a drop and be prepared to act.

Look Further into the Houston Real Estate Market

If your Real Estate Market search has been very narrow, an ideal spot for your forever home, you might find the prices to be beyond your budget. If that is the case, consider widening your search perimeter and looking in adjacent neighborhoods. Remember that you may share the idea with a host of other would-be buyers. Homes outside of that prime location might carry a lower, affordable price within your range. Shopping around costs nothing, so it is worth a look. The “outskirts” now may become the hotspot five years from now; being close to your ideal in an affordable home is an excellent option.

Consider Real Estate Market Lending Options

During the peak of the buying real estate market frenzy cash reigned supreme. Homes sold so quickly with cash and guaranteed conventional loans, and no thought was given to other, unconventional types of loans. However, these loans have been used for decades and should not be neglected.

  • Conventional loans are offered by a host of lenders but carry narrow margins. A minimum of 3% down payments are required and the interest rate depends upon a healthy credit score average.
  • Federal Housing Administration loan programs are administered by the Department of Housing and Urban Development. The FHA does not loan money but guarantees the loan for those who qualify to private lenders. Typically, these loans require 3.5% down payments. FHA credit score requirements might be lighter, but the lender may still have higher requirements.
  • Veteran Administration loans are similar but offered to those who currently serve or have served in the Armed Forces. Like FHA loan programs, the VA does not loan money but guarantees the loans for those who qualify. A down payment might not be required and the VA might not have stringent credit score requirements; however, the lending institution might make these requirements.
  • The U.S. Department of Agriculture also guarantees loans similar to FHA and VA loans. However, loan guarantees are set aside for homes in rural locations.

Loans with guarantees or lower down payment amounts might be the advantage that helps tip the finances in your favor.

Explore Assistance

There are more than 2000 resources in the US that assist homebuyers with their purchases; explore your options at https://downpaymentresource.com/. Grants and loans are available to homebuyers; 73% of these programs assist with down payments and closing costs; admittedly most of these programs target first-time homebuyers, but 38% are open to repeat home buyers.

In this troubling real estate market, choosing a quality real estate agent is more important than ever.


1 https://time.com/nextadvisor/mortgages/rates/
2 https://www.nar.realtor/blogs/economists-outlook/housing-affordability-conditions-fade-as-mortgage-rates-push-monthly-payments-higher-in-june-2022
3 https://www.bankrate.com/mortgages/30-year-mortgage-rates/