Short of using a crystal ball, the Houston real-estate market can be hard to predict.
The market in 2022 saw record-high average and median prices, but also declining sales—particularly due to a lack of inventory and rising mortgage rates, according to Norada Real Estate Investments. June had the year’s strongest sales volume, with 9,844 single-family units sold. Despite this, new listings boosted inventory levels, which hit a high of 2.8 months’ supply in October
So, what about 2023? The pandemic housing boom has cooled as interest rates go up and inflation eats away savings. Should you buy, should you sell now, or wait? Should you remodel? We asked some industry experts about the effect of higher interest rates, their tips on staging a home for sale, and their overall approach to marketing in a difficult economy. Here’s what they had to say:
Brooks Ballard – Engel & Volkers
One of the opportunities that we are utilizing—that was not available during the 2008 depression—are buy-down points to lower the interest rate. Historically, the current interest rates are not high compared to normal market situations, so it’s still a good time to buy a home. The higher interest rates do give the opportunity to push down the inflationary prices on purchases.
As for marketing, we are excited about our polo events, and we are bringing back our annual golf tournament that raises money for veterans.
My quote is that “Empty houses do not sell,” so staging is very important. However, I do not like virtual staging because I think it gives a false concept and image to the buyers. We don’t really utilize AI, because our relationships require us to have that connection to our clients. Personal interaction is what they demand, and they want that personal attention. AI is not really used except on the back end when processing some repetitive documentation and paperwork.
Our business is not only local, but national and international. Our inventory is everywhere that we have clients who want to purchase homes in the world.
David Batagower – Bayou City Property Group by Compass
We have definitely started seeing more creative solutions come about as interest rates have adjusted over the last year or so. For example, interest rate buy-downs, where the seller or builder credits the buyer a set dollar amount to buy the interest rate down for the initial one to two years of the loan. The thought behind this is that when rates decrease, you can refinance—but have a manageable rate until then. This is just one of the more common options we are seeing. We are huge believers in staging, because we have seen the success. As they say, the proof is in the pudding. One of our recent listings sold in 12 days. Average days on market for the community is 50 days. Because of staging, [combined with] a strategic approach to prepping the property and targeted marketing, we were able to sell 76 percent faster than the average property in that community. Although there is an expense associated with staging, we find our sellers still net more because of increased interest and fewer days on market. In instances where staging isn’t possible, we definitely look to virtual staging as an alternative.
Karen Derr – Karen Derr Realty Group
For sure, sellers are giving more concessions than they had to in early 2022. I’ve seen builders with their lenders offering rates in the fives—and cash toward closing costs—to entice buyers who are on the fence. I have one client offering owner financing with a large down payment. Since COVID, we are back to having client appreciation parties and fun events, which is so nice. I’ve recently treated clients to a yoga class at a new studio. And open houses are going to be back full-force this year because we are going to have a little more time to market properties and plan events. I’ve gotten a lot more casual, but I don’t wear athletic wear for work. I mean, if I’m leaving a workout and get an impromptu request to show from a client, I’ll do it. [But aside from that], I dress for work every day. I think showing a sense of style and good taste is most important. I’ll admit that I text with friends or for business pretty much until I fall asleep at night, but that’s just what I’m comfortable with. I try to be considerate of other agents and clients who get worn down by [all of their daily] screen time. Monday is my favorite day to take off.
Thom Eickleberry – Pride Street Realty
Now, more than ever, builders and sellers are having to offer value. Buyers are aware that the cost of real property is very high. Builders and sellers must put their best on the market if they hope to attract buyers. High-end flooring, high-end fixtures, higher-end appliances. The home or business must wow the buyer. The buyer must feel they are getting something exceptional for their dollar. Just putting a sign in the yard isn’t getting the job done any more.
I do recommend virtual staging. Consumers buy with their eyes. Physical staging is expensive. Virtual is a cost-effective alternative. Even if you just put out some rugs and tchotchkes, it brings warmth and soul to any bare space.
The outside-of-the-loop communities are getting more interest now with high housing prices. Bear Creek Village at Highway 6, and the Colonies off of West Little York, are great options for budget-conscious buyers. Copperfield is a great option, too. LGBTQ+ buyers are calling these communities home, more and more, all the time. My home is there, and my partner and I just love it. Our neighbors love having us there, too. Our home and yard add value to their homes, and they are very appreciative to have us there.
John Gerlach – Mr. Handyman of NW Houston and Jersey Village
Even with the housing market cooling off, the handyman business is holding steady. One week we are really busy; the next week, not so much.
I would tell first-time home buyers to buy enough house, even if it stretches you a bit. Your increasing income may make it easier down the road. Also, consider neighborhoods with potential to be up-and-coming. It can be very rewarding down the road. If you’re looking to sell your home, the first thing you want to do is make the house look clean and well-maintained. It’s not expensive, but it really opens up the market to more buyers. And if you’re looking to stay long-term in your home, I suggest repairing and updating the windows, doors, and insulation.
It will really save you money on the HVAC over time. They can not only improve the appearance, but will pay for themselves in short order.
Cody Grizzoffi – NRL Mortgage
With prices of everything everywhere continually rising, house prices are not expected to be any different this year. The housing demand is still here, and the inventory is still considered low.
Rates will most likely stay where they are or possibly go down, but I do not see them going down to what we were used to over the last few years. Don’t let rates and prices discourage you. This is a cycle, and it is better to get into a house at a set price now and refinance later if rates go down. Rent is continually going up, along with the price of homes. There are still a lot of options for us to get you on track to home-ownership.
I don’t think you can go wrong anywhere in Houston and the surrounding areas, due to the demand for housing we currently have.
Jason Knebel – Greenwood King Properties
Greenwood King reintroduced our Lobby Speaker Series last December with the amazing architect Tom Kligerman. Our Heights office continues to host our annual pumpkin patch, and our Spring Concert in the Park on April 29. I am also a sponsor for various neighborhood events near The Woodlands.
Physical staging is preferred to help buyers visualize the context of a space. Virtual staging is great to show a room’s potential, backyard pool capabilities, even how a remodeled space could look. I think we are just at the beginning of what AI can do in real estate. I utilize a tool to measure rooms to create detailed floor plans, as well as software that assists in market analysis from multiple data points.
I work a lot with clients relocating here from other parts of the country. Sometimes they know where they’d like to live, and other times we may tour them across the city. My favorite area outside of the city is The Woodlands. The area is consistently voted a top place to live, is overflowing with amenities, has a dynamic and vibrant energy, and you’re surrounded by nature. What’s more to love?
Richard Ray – Douglas Elliman Co.
What we are seeing is that with lower inventory in many areas, homes that are priced right and in good condition are still selling fairly quickly. Buyers seem to be getting more used to the current rates. And if they need to buy now, they are going ahead with their purchase of a new home with the hope that they could refinance at a later date if rates begin to decrease.
Since COVID, I have noticed a much more relaxed dress code for many professionals in all sorts of industries, and in real estate, generally we have seen the same. Now, my personal policy has always been to dress like a million bucks if you want to sell a million-dollar house. However, that can have many variations depending on the client you are working with at the time.
A day off? My day off comes when I physically leave town. But of course, I take my laptop with me, just in case! Yes, being a real-estate agent involves a lot of hours. I always tell new agents, “Remember, we work when others are off, so they can look at houses.” It comes with the profession. But when you love what you do, it’s easy.
Trey Seiter – VCS Construction & Remodeling
With rising interest rates, [which are] attempting to combat inflation, I think the housing market will decline nationally. However, the Texas economy continues to flourish, bringing in people from other states such as California, New York, and Oregon that could result in the Texas housing market staying steady—hence
the rising interest-rate backlash.
I do think there will be a spike in Houston and outlying residents staying in their current homes and choosing to remodel and update rather than move to a new home.
My advice to clients is to consider the market, economy, and their potential profit they stand to make or not make by selling. Also consider the market trends over the previous two years in their neighborhood. If their home has considerably risen in value and they like the part of town they live in, then staying put and remodeling or renovating might be the wise decision. Everybody loves the kitchen area, and that’s where most people congregate during get-togethers, including immediate family. Refacing existing kitchen cabinet doors and drawers, and adding new countertops and plumbing fixtures, is way less expensive than replacing full cabinets—and it will make the kitchen look completely different.
Lyn Sullivan – Alamo Title
I have been in the title industry for over 40 years and could cite countless situations that arise in which a title policy protects the consumer from [property disputes]. In the past few months alone, we have had to litigate boundary-line disputes, prior unpaid taxes due, [or a] change in exemption status—challenges from heirs of the estate and liens that were not paid because a seller did not close at a title company when he [originally] purchased the property. An experienced escrow officer can navigate the parties through the process, regardless of the challenges before, during, and after the closing. It is important to have a solid underwriter for the title-insurance policy. Considering what has recently occurred with banking institutions, you should know the financial stability of your title-insurance company.
I have repeatedly seen new contracts where the sellers are offering contributions to pay down interest rates for the purchasers. There are limits on the amount of the contribution a seller may provide, depending on the type of loan and the loan amount. The contribution credit appears on the settlement statement at closing, which offsets the amount due at closing by the purchaser.
Hudson Holmes – Joe Tramonte Realty, Inc.
When compared to the same time last year, listing inventories are higher as home purchases have declined. For the first time in 131 consecutive months, the median home price in the US decreased. Since we are the oldest family-owned real-estate company on Galveston Island, we love to introduce clients to everything outside of the loop with our motto: Own a Piece of the Island, Own Peace of Mind.
Sellers need to be more realistic on the selling price in this current market. We have a slightly different market composition on Galveston Island, as we have a very strong secondary home and short-term rental market, and that can present unique challenges. Sellers with these types of properties will liquidate these properties from their portfolio first, and right now we are still seeing many overpriced listings which creates longer holding periods.
COVID gave us a false sense of security on market prices that we are still trying to combat.
Colby Wulf – Compass Real Estate
No matter what the market condition is, a well-appointed home will sell fast and at a good price. Renovations and upgrades can always help, such as fresh paint, new flooring, replacing lighting, or a kitchen or bathroom remodel. I have also seen sellers offer incentives such as closing-cost credits or a home warranty to potential buyers.
When working with sellers, I always work to ensure we are reaching our target audience with marketing that is proven to be the most successful. Proper staging can also be very beneficial in making the home as show-worthy as possible.
Finally, the market has not cooled as much for sellers as one might think. Inventory is very low by historical standards. Since both supply and demand for real estate is low, we aren’t seeing the downward shifts in pricing that we would have expected. As a result, it is still a great time to sell.
I host meet-and-greets at my home, and I recently hosted a holiday party in December at Rockefeller’s for my clients and friends.
Compass is very involved with the community, and giving back with community outreach. I endorse political candidates who will be champions for our community, and I host events and fundraisers for them, too. I have already endorsed a great candidate for mayor.
The market is not like it was a year or two ago, but I have a good network that I’m constantly looking to expand on. I am always excited to grow the buyers and sellers that I can work with. For the client wanting to move outside the loop, I like to introduce them to Spring Branch, Garden Oaks/Oak Forest, and Meyerland as great neighborhoods that are close. For the true suburbs, I like The Woodlands, Sugar Land, Katy, and Kingwood!
This article appears in the April 2023 edition of OutSmart magazine.