During December of last year, total sales for single family homes in Houston dropped 17.3 percent over the previous 12 months. During the that year, the average sales price for homes increased only one percent, to $208,266, over the previous year according to information found in the Houston area MLS.
Why weren’t more people buying homes in a strong buyer’s market? Even with generally lower housing prices and low interest rates, potential home buyers are becoming more and more anxious. Their fears have been fueled by incessant media coverage of a falling stock market, increasing job losses and rising foreclosure rates. Afraid to commit themselves to a mortgage, many potential home buyers are opting to take the safe road, putting their money aside until better times. Instead of buying homes, many Houston families have chosen to rent.
Figures released in December show that in the Houston metro area, rental leases for town homes and condominiums were up 24.6 percent from the previous year. For single-family homes the percentage for leases was even higher, rising an astounding 26.2 percent. Part of the increase was caused by Hurricane Ike, but most of the growth in the rental market can be attributed to nervousness about the economy.
For investors, this may be the best chance in the foreseeable future to invest in residential rental property, possibly the next big thing in investing. Economists are expecting the economic recovery to be slow, which means that the residential rental market should remain strong. Smart investors who take advantage of the current soft housing market and buy wisely can end up paying a relatively low price for their residential real estate investment as well as profiting from the nearly historic low interest rates currently available. Many investors who buy in the current market will benefit with a solid income stream as well a serious tax benefits.
Seasoned investors will tell you not to go this alone. Whether investing for the first or hundredth time, a real estate agent with experience in investment opportunities should be every investor’s teammate. While there’s money to be made, there are pitfalls as well. Your real estate agent will be able to find properties you can’t find on your own, and can steer you through problems when they arrive.
Further information about the current Houston area real estate market from Vicki Fullerton, chair of the Houston Area Realtor’s™ Association can be found at Houstan Association of Realtors, or contacting Kathy Kipp.
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