Real estate experts have described the 2021 real estate market in Sugar Land and Missouri City as a frenetic, dynamic and unprecedented seller’s market.
In 2022, those conditions have slowed, but not yet eased, experts said.
The market has become more expensive in Sugar Land and Missouri City with a 19.54% year-over-year increase in the price of single-family homes in Fort Bend County in April, according to data from Texas Real Estate. Texas A&M University Research Center.
“The Sugar Land market is still booming,” Keller Williams Realtor Sapana Patel said. “Some of the things that used to happen last year – people lining up outside an open day waiting for it to start – that’s not really happening anymore. But there’s still little inventory. So it’s still a very strong sellers’ market.
Another demand indicator — average days on market — also saw significant declines in five ZIP codes in the Sugar Land and Missouri City area, according to data from Sparrow Realty Alina Rogers. In the postcode 77498, which runs along the highway. 6, north of the freeway. 90 – homes were on the market for an average of 23 days between June 2021 and May 2022, down 61% from the previous year.
Data from the Texas Real Estate Research Center shows Fort Bend County housing inventory remains at an all-time low with a 0.9 month supply. Kunal Seth, a local realtor with The Seth Brothers Team Realty, said the less than three-month-old inventory in the Sugar Land and Missouri area is a seller’s market.
Weak inventories are also hitting homebuyers as mortgage rates rise, hitting 5.81% on June 23, before dropping to 5.3% on July 7. Currently, on July 14, that rate was 5.51%, according to the Federal Home Loan Mortgage Corp., commonly known as Freddie Mac. That’s the highest level since 2008 amid the Great Recession.
Adam Perdue, a research economist with the Texas Real Estate Research Center, said the county’s low inventory goes hand-in-hand with rising house prices. In Fort Bend County, the average price of single-family homes fell from $401,070 in May 2021 to $476,226 in May, according to center data.
“There just aren’t many homes available anymore,” Perdue said. “Price increases are still accelerating. What this shows is that demand is still strong, while recent closings are easing because there aren’t as many homes left.
Still, experts said demand from homebuyers remains strong, especially in some neighborhoods in Fort Bend County, such as the planned community of Sienna as well as Glendale Lakes and Parks Edge, which are expected to add more than 7,000 new homes by 2031 to meet demand.
Low inventory and high demand mean that not all potential buyers are able to buy the first home they bid on, and some have been unable or unwilling to win a bidding war , said experts. Others have simply been overpriced.
“Buyer fatigue and the interest rate are not helping home buyers because the interest rate change will change their monthly payment,” said Serena Chu, a Keller Williams real estate agent who focuses on properties. rental. “Buyers started to doubt and worry and worry, so some said, ‘You know what, I’ll just rent and wait for the end of the market. “”
The sentiment comes as the national 30-year fixed-rate mortgage hit 5.51% on July 14, according to Freddie Mac. While low compared to historic rates like the 18% mortgage rate the country faced during the 1981 recession, mortgage rates have risen nearly three percentage points since January 2021, when the rate fell to 2.65%.
This means that at a 30-year fixed mortgage rate of 5.51% and a house price of $476,226, a homeowner with a 20% down payment would be paying $2,189 per month on their mortgage, according to the mortgage calculator from financial technology company Smartasset.com. In January 2021, this same owner would have had to pay $1,552 per month on his mortgage.
Meanwhile, demand for single-family rentals in the Greater Houston Area reflects this growing hesitancy to purchase a home. A June 15 report from the Houston Association of Realtors showed that 3,406 renters rented single-family homes in May, an increase of nearly 25% from a year earlier.
A 2022 HAR Consumer Sentiment and Housing Affordability Survey, released in May, found that of 600 survey respondents in the Greater Houston Area, the 79% who stopped looking for a home said they did so because they were out of the market, 62% because there was not enough inventory, and 29% because of an increase in the mortgage rate.
This comes as HAR reported that the median monthly price for single-family rentals in the Houston area rose 8.1% year-over-year to $2,000 per month.
The average rent for one-bedroom apartments in Sugar Land hit $1,250 a month as of June 15, according to data from Zumper.com, a platform that tracks apartments available for rent. That’s the highest rent rate in eight Houston-area cities, above cities like Houston and Pearland, which charged renters an average of $1,200 a month.
Higher rents explain why 70% of renters who responded to the HAR survey said they were likely to buy a home in the next two years.
“If people think it makes more sense to buy, those tenants will become owners, and then the rental market will slow down a bit,” Chu said.
To take advantage of lower mortgage rates, buyers had pushed home purchases years ahead of their original buying schedule, but rising rates are giving homebuyers more time, Seth said.
Along with buyer hesitation, low inventory and rising home prices, the number of homes available at lower prices has dropped significantly, Patel said.
According to price distribution data for Fort Bend County from the Texas Real Estate Research Center, 21.1% of homes sold in Fort Bend County in 2020 were priced between $200,000 and $249,999. In 2021, this figure fell to 10.8%.
Yet demand for housing remains very strong across the board, and in communities such as Siena the demand for house construction has posed a challenge for builders, who are struggling to meet this need given the continued disruptions to supply chain,” said Alvin San Miguel, vice president and general. director of Siena.
The national figures paint a broader picture of the challenges facing the homebuilding industry. According to Freddie Mac, there were 1.64 million new homes under construction nationwide in April, the highest on record. Locally, in eight metro Houston counties, including Fort Bend County, that figure was about 21,000 as of June 15, said Lawrence Dean, senior vice president of consulting at Zonda, a real estate search firm.
“This is the highest number of new homes being built that we’ve ever seen,” Dean said. “Over the past year and a half, it has taken homebuilders longer to build due to labor constraints, but even longer due to constraints on building materials.”
Siena, which had more than 10,200 occupied homes as of June 15, plans to build an additional 5,290 single-family units by 2031, according to February projections by demographics firm Population and Survey Analysts.
New home construction is designed to meet population demand in Fort Bend County as the county projects its population to reach 1 million by 2027.
Amenities, more space and a better community vibe are some of the reasons people move to Fort Bend County, San Miguel said.
“Over the years, I think residents and potential buyers appreciate the suburban setting,” San Miguel said. “They’re close to many employment centers in Houston, and the Fort Bend toll road that connects to the northern part of the community is only a 20-minute drive from Houston with no lights.”
Fort Bend ISD, which oversees seven schools in the Siena community, including one high school, two middle schools and four elementary schools, monitors housing and population growth in communities such as Siena and implements strategies such as rezoning to ensure that its schools do not become overcrowded, said FBISD Deputy Superintendent Steve Bassett.
To accommodate future growth needs in the district, FBISD will seek to add additional schools in the Siena Corridor and FM 521, Bassett said.
“We’re looking at having two elementals in our bond set that we’re preparing for 2022,” Bassett said. “We’re trying to stay ahead of the game and get those things in place before kids really need them.”