Humble Housng Inventory Report

TOTAL BREAKDOWN OF HOUSING INVENTORY FOR THE HUMBLE HOMES MARKET

Every price category we have been following saw inventory increases over the last month, except for the $80,000 and below price point. On March 4th, 2009, the total Humble housing inventory statistic came in at 6.3 months of inventory. This jump pushed the overall market out of true neutral market territory and into what many would call a buyer’s market. Seeing only slight increases in the total number of active listings, the substantial change in the inventory statistic must be due to a continued drop in the number of sales in the market place.

The $80,000 and below Humble housing market saw a big drop in months of inventory posting just 3.1 months compared to 4.1 months at the end of January. The continued absorption of inventory in this price point is largely due to investors gobbling up properties that make for excellent monthly cash flow when rented. I expect this trend to continue because of the very strong rental market that we are seeing all across the Houston metro area. In case this is the first one of my reports that you have read, inventory levels below the 5 month mark are considered to be a seller’s market in the eyes of economists.

Inventory for the $80,000 to $150,000 price point did not fair nearly as well as that for the $80,000 and below price range. This market posted 6 months of inventory, as of March 4th, 2009, which is up substantially from the 5.2 months noted in our last Humble housing market report. Even though 6 months of inventory misses being considered a buyer’s market, the sharp turn up in inventory does not sit well for sellers, however, it is a move in the right direction for buyers actively looking for a home. If this upward movement in inventory continues, buyers will soon see the upper hand in negotiations when entering into contract with sellers.

The $150,000 to $300,000 price range witnessed a move into what would be classified as a buyer’s market over the period. As of March 4th, 2009, housing inventory posted at 6.9 months compared to the more modest level of 6.2 months of inventory as seen at the end of January. So, if you are a buyer, you will likely see more strength at the negotiation table making it much more likely that you can get the seller to make repairs or pay a portion of your closing costs.

The $300,000 and above market saw a continued strong movement up in inventory moving to 9.9 months of inventory up from 9.2 months noted in the last Humble housing inventory report. This pushes this price point further into a deep buyer’s market, where it is very likely to see price drops. The price drops are in large part due to the major strength that buyers have in the negotiation process. I believe that this increase in inventory levels is mostly thanks to the troubles in garnering financing in the higher end housing market. Right now, it is pretty easy to obtain a home loan within the FHA loan limits (which is a loan amount of $271,500 in our area). Furthermore, these loans can be obtained for as little as 3.5% down. Once you move above this price range, financing tightens up, requiring a larger down payment. Once you surpass the $417,000 point for loan amounts into what is called the jumbo market, it gets very difficult to get a loan. Most lenders require as much as 25% down and are charging steep interest rates that run 2-3% higher than those that can be obtained below the $417,000 point.

HUMBLE INVENTORY REPORT FOR 80,000 AND BELOW

HUMBLE INVENTORY REPORT FOR 80,000-150,000 PRICE POINT

HUMBLE INVENTORY DATA FOR THE 150,000-300,000 PRICE RANGE

HUMBLE HOUSING INVENTORY DATA FOR 300,000 AND ABOVE

CONCLUSION

Increases in inventory for the market place should not be surprising since there is a lot of apprehension on the part of buyers right now. Some of this concern is well-founded. Some of it is not. It is highly unlikely that the Houston area will see large price drops like many of the other parts of the country, but those thinking about purchasing a house need to ensure that they do not over extend themselves. I am in the process of trying to reduce buyer worries about making a purchase by arranging insurance for all of my buyers against job loss. I have found an insurance product that will make ones mortgage payment if they were to get laid off. I am hoping that this will help those individuals that have a unique buying opportunity in this market. First time home buyers have a unique opportunity to receive an $8,000 tax credit, some of the lowest interest rates in 30 years, and plenty of inventory to choose from. Another group of buyer with a great opportunity are those that want to move up and own a home around the $150,000 and below mark, as they are likely to get top dollar for their homes, and then will be able to have an upper hand in negotiations when they go to purchase their new home in the higher price points in the market place. The one group I would strongly suggest that they wait if possible is those who are looking at downsizing, since they will likely have to give concessions to get their home sold, but then will end up not having a lot of negotiation strength when they go to purchase their next home. So, if you are selling a home in the upper price ranges and want to move into a smaller place, I would strongly suggest that you hold off until the market improves.