Katy Texas real estate finished out 2016 much like it started, with sales volume stagnating amid diminished affordability and increasing inventory. Home sales within Katy ISD declined seven percent during December while Houston area home sales rose about 3 percent. New home closings within Katy ISD were down 28 percent compared to December of 2015 while new home sales fell about 2 percent in Houston.
Total year figures show that home sales rose 1 percent within Katy ISD during 2016 as existing home sales picked up the slack of a soft new home market. Houston home sales hit a new record in 2016 rising 1.3 percent from the previous record set in 2014. By most measures 2016 was another solid year for home sales in the Houston area. What will likely be buried in the headlines, however, is the inconvenient fact that lower-year-over-year mortgage rates helped to stimulate sales. The coming months should be telling as potential buyers attempt to digest higher rates amid a stagnant local economy.
For now it’s still a tale of two housing markets where homes in the lower price ranges are in relatively short supply. The higher you go up the price bands the more inventory you will find. This means that the top-down price compression in the local housing market is likely to continue. Keep this in mind when you hear the statistical averages quoted in any media press releases. Good homes are still selling well, but more discerning buyers are asking for more value. In this market it’s more important than ever to know what you are selling and be realistic with your expectations.
As I mentioned in my previous housing report, the November bounce in Katy Texas home sales was a one-off event, driven by election year hedging and a favorable comparison provided by 2015 numbers affected by RESPA closing guideline changes. The soft December numbers for Katy Texas real estate sales confirm exactly that. Numbers for January and February could be particularly soft.
Katy area home prices continued to stagnate as we closed out the year. Cinco Ranch posted the 10th month of the year with lower year-over-year prices in terms of price per square foot. Home prices in other Katy area neighborhoods reflected the volatile yet soft market. Cross Creek Ranch also saw lower year-over-year home prices in December as buyers shunned more expensive homes in favorable of more affordable housing options.
The Katy rental market again experienced lower-year-over prices in December on both sides of the freeway. Katy’s relocation market in South Katy saw slightly higher volume with prices that were about 3 percent lower than 2015. North of I-10 volume for closed leases also rose, but prices declined about 2 percent.
The local lease market remains very competitive, with numerous luxury apartment developments continuing to offer discounts and incentives. Single-family landlords are seeing lower prices and longer days on market because the market is much more competitive than a few years ago. Rental prices in Cinco Ranch remained at multi-year lows in December. The softness in the Houston area lease market is going to be a continuing theme in 2017.