I recently read an article written by Paul Silverman in the most recent edition of Houston Realtor Magazine and it gave a wonderful summary overview of the Houston Real Estate Market.  Paul was gracious enough to allow me to share his findings with my readers as well.

While single family home sales were down 2.9% from February, 2010 to February, 2011, this is far better than our industry was expecting.  Last year home sales were greatly inflated over the past several years due to the First Time Home Buyer Tax Credit and Move Up Buyer Tax Credit being offered by the government.  This incentive fuled a sharp rise in sales in 2010 and it took a lot of potential buyers ouf of the market that were planning to purchase later in the year.  Upon the expiration of this tax credit last year, the market instantly experienced a sharp drop in sales respectively - again artificially skewing normal averages over the past several years.

Additionally, over the past few years, lending practices continue to tighten their guidelines making it even harder for prospective home buyers to qualify.  This is continuing, as later this month, PMI rates will increase for home buyers who are not putting down at least 20%/financing FHA which will force home buyers to purchase less expensive homes to compensate for the higher monthly fees.

Another great stabilizing indicator for February, 2011, is that the total number of foreclosure sales has dropped 16%.  As we all know, distressed properties normally sell at a significantly lower than market price which has a negative effect on values and appraisals.

HAR reported that luxury home sales which helped boost the average price of a single family home by 6.6%.

All current indicators show a trend that Houston is returning to stability and our total number of sales is now the result of NORMAL buyer demand, as opposed to being artificially inflated by the tax credit.

Other milestones achieved in February, 2011 include single family rentals rose 20%; townhome/condo rentals increased 15.9% and our local area inventory is 7.3 months compared to the national average of 7.6 months.  If you are an investor - now is a great time to purchase rental properties with all-time low interest rates and such high demand.

Along with these market metrics, there are more reasons to be extremely optomistic for 2011.  Our year-to-date sales have increased 2% and our average price has also risen to $214,039 for single family dwellings.  In addition, Builder Online ranked Houston #7 in Healthiest Housing Markets for 2011 nationally.  They estimate that in Houston building permits will rise 30% this year, along with employment growth of 2.66% - even with all of the school district layoffs.

While it is sometimes hard to interpret statistics, forecasts and reports, it is often a good idea to talk to those on the front line of the real estate market and get their opinion.   Our industry is very positive about the real estate market and I believe so should you!