Houston’s housing market took several turns in 2017 as it saw a surge in demand for homes while also battling the impact of bad weather. New residents moved to Houston as jobs opened up. The city saw significant growth in the region and notable corporate developments, such the expansion of Exxon’s business campus. However, Houston also struggled in the latter half of the year as it dealt with the fallout from Hurricane Harvey. 

Despite the damage, Houston area home sales continued to trend upward, with sales in areas like Brazoria County particularly high. But in spite of an overall positive market, the sale of luxury homes is where the market slipped. As the Houston Chronicle reported, while overall home sales rose by 8.9 percent in January, the price of luxury homes (those priced at $750,000 and above) saw a decline that began in late 2017 and continued into 2018.

According to a report in the Houston Business Journal citing data from the Houston Association of Realtors, high-demand neighborhoods with pricey homes — such as Midtown —  saw their median home prices stagnate or slip in 2017. 

Climbing New Homes Inventory Creates Competition

There are a number of reasons why luxury home sales did not keep pace with more modestly priced homes. While it is true that Hurricane Harvey impacted sales in these traditionally high demand neighborhoods, the Business Journal notes that Houston also experienced a period when there were simply too many new homes on the market. Developers sometimes faced the prospect of selling higher priced homes that were originally built a decade before. With newer homes coming onto the market every day, these developers had to lower prices in order to remain competitive. 

As a result, while the sale of single-family homes rose in January, these homes were typically priced at no higher than $500,000. Sales demand for homes in this price range remained steady from 2017 through 2018. Meanwhile, homes priced above $750,000 saw a decline in prices of 6.3 percent, according to the Chronicle report. Single-family homes actually drove the bulk of demand in Houston, with the sales of townhomes and condominiums falling slightly. Still, pricing declines were at the highest among luxury homes that were competing against newer, lower-priced houses coming onto the market. 

For potential buyers, however, the current housing market may make it the ideal time to become a homeowner. With the sale of luxury homes declining, certain houses may fall within a family’s budget that would not have been available a year before. The number of houses on the market is also indicative of the many communities springing up around the city, many of which carry premium amenities, such as the farming community at Harvest Green or the business campuses at Springwoods Lake.