Housing market, sidelined by Harvey, shows signs of a rebound
Activity pretty much shut down as the storm approached the area, but things are getting going again
Updated 10:16 pm, Wednesday, September 13, 2017
As Hurricane Harvey was making its ominous approach toward southeast Texas late last month, prospective homebuyers put their shopping plans on hold. Sellers canceled open houses, and those with properties under contract extended their option periods, waiting to see how bad the storm would be.
For almost a week, the housing market essentially shut down.
Now, it's beginning to show signs of life.
Real estate agent Sissy Lappin said she gets requests for showings every day on a condo she's listing in a high-rise building near Tanglewood. The unit was recently snapped up by a cash buyer whose home flooded in Bellaire.
Prospective buyers are shopping in areas that didn't flood, said Chaille Ralph, president of Heritage Texas Properties and a former Houston Association of Realtors chairwoman.
One of her agents recently listed a three-story house in Montrose for $775,000.
"Three different families came back twice over the weekend to look at it," Ralph said.
Investors are out, too.
Joshua Berg, part of a group that owns more than 150 investment properties through the Houston area, said he and others are driving flooded neighborhoods looking for potential deals. It's easy to identify a flooded property by the stacks of drywall on the curb.
"The thing about buying properties right now is you'll know if it has flooded or not," he said. "In a couple weeks, you might not know."
While there are still parts of town where the water has just drained from homes, renewed activity elsewhere is a sharp contrast to a few weeks ago when the market ground to a halt as it became clear that Harvey would affect Houston.
When the storm was in the Gulf, insurers stopped writing flood policies. After it hit Houston, title companies and real estate offices were closed.
The lack of activity showed up in new data Wednesday showing a 25 percent drop in single-family home sales in August, breaking a 10-month streak of sales gains in the Houston area.
From starter homes to luxury properties, sales were off across the board, the Houston Association of Realtors said in its first post-Harvey monthly report.
Realtors sold 5,917 homes in August, down from 7,927 a year earlier, according to the association, which tracks property sales through the Multiple Listing Service primarily in Harris, Montgomery and Fort Bend counties. The median price of the homes sold was $231,700, up 3 percent from the previous August.
Townhouse and condominium sales plunged 31 percent, with the median price up 2 percent to $159,000.
"Hurricane Harvey dealt a severe blow to the Houston area and Texas Gulf Coast, and it will probably be several weeks until we can gauge the storm's full impact on our housing market," chairwoman Cindy Hamann said in the report. "Home sales were humming throughout the first three weeks of August, but the moment Harvey struck the region, everything came to a screeching halt."
The association has added a field on the listing forms agents fill out on a property to designate whether it flooded in Harvey.
Before the storm, the market was on track to set new records. Sales are still 1.8 percent ahead of 2016 on a year-to-date basis.
Housing inventory grew slightly in August to a 4.4-month supply, but that's expected to shrink as buyers in need of housing purchase undamaged and repaired homes.
Lappin said demand for high-rise units has gone way up since the storm.
About 20 units in the Houston's vintage high-rise properties have gone under contract since early this month, Lappin said.
The demand is coming mostly from buyers in their 60s and older who have considered moving into condominium buildings in the past but never took the leap.
If they flooded, Lappin said, "this made the decision."
In a white paper released Wednesday, Ted C. Jones, chief economist for Stewart Title Guaranty Co., said home sales will fall within a month or two of the storm, as some homes under contract are damaged by the storm.
Delays will continue, as many of the homes that went under contract before the storm will need to be reinspected for damage, Jones' research showed.
Sales will gradually increase.
After Tropical Storm Allison in 2001 and later hurricanes Charley, Ivan, Rita and Ike, home sales in the affected markets fell in only one of those cases.
After Hurricane Ike, Houston-area home sales fell over the 12 months after the storm, but the country was in a recession and oil prices were declining.
"Some people will list their homes for sale that, without the hurricane, would otherwise not have moved but they have 'had enough.' They will sell and leave town. These sellers will generate transactions that, without the storm, would never have taken place," Jones said in the report.
Others who flooded may buy other properties in their neighborhoods to remain close to their primary homes as they are remodeled.
In those cases, the storm may trigger a second transaction: the sale of either the new or old home.