A report by the real estate analytics firm CoreLogic showed that Houston is one of four major U.S. metropolitan areas with homes that are highly overvalued. The report defines a housing market as overvalued when housing prices are 10 percent or more above the “long-term, sustainable level” based on residents’ average income.
Frank Martell, president and CEO of CoreLogic, said in a press release on the report that, “(Home) affordability is rapidly deteriorating nationally and especially in some key markets such as Denver, Houston, Miami and Washington.”
Data from the Houston Association of Realtors showed that the median price for a single-family home in June 2017 was $239,000. That price represents a $9,000 increase over June 2016, and an increase of more than $80,000 in June 2010.
The issue of higher home prices is not unique to Houston. According to the CoreLogic report, prices for new homes rose 6.7 percent from June 2016 to June 2017, compared to a 3.8 percent increase in Houston over the same period. The report also predicts that housing prices will continue to rise. The study speculates that housing prices will rise 5.2 percent from June 2017 to June 2018.
A major factor in the price increase, both in Houston and across the country, is the low inventory for new houses. Frank Nothaft, chief economist for CoreLogic, stated in the press release on the report, “As of Q2 2017, the unsold inventory as a share of all households is 1.9 percent, which is the lowest Q2 reading in over 30 years.”
Jim Gaines, chief economist for Texas A&M University’s Real Estate Center, also cited low inventories as part of the reasons for Houston’s skyrocketing housing prices.
“The home construction market has not been able to keep pace,” he said. “We just simply haven’t built enough to keep pace with the level of growth that we’ve had.”