Dave Roedel

HOUSTON - (February 19, 2008) - Consumer worries about the nation's real estate crunch and the traditionally sluggish Christmas-New Year holiday period combined to slow property sales across greater Houston during the first month of 2008. On the heels of one of the best years on record, January sales of single-family homes dipped to the lowest level since January 2005, according to statistics released by the Houston Association of REALTORS? (HAR).

Total property sales for January 2008 registered 4,353, which represents a 17.2 percent drop compared to January 2007 and marks the fifth consecutive monthly decline; it's an improvement over last month's 23.5 percent fall. Properties sold during the month totaled more than $811 million compared to nearly $890 million in sales one year earlier, an 8.8 percent decline. The average price of a single-family home rose 4.9 percent last month from January 2007 to $190,233, representing the biggest increase since last August. The median price of a single-family home dipped 2.8 percent to $139,000.

"It's not unusual to see a decline in property sales at the beginning of a new year, when consumers are generally recovering from holiday spending," said Michael Levitin, HAR Chairman and principal of HTownRealty.com. "The latest numbers suggest that consumers may also be reacting to news reports about the troubled national real estate landscape, despite the fact that Houston has enjoyed a comparatively robust housing market, thanks largely to local job growth. Home buyers in Houston stand to benefit from low interest rates, affordable pricing and a good selection of inventory."

The year 2007 shaped up to be one of the best on record for property sales in Houston, second only to 2006, according to statistics released by the Houston Association of Realtors® (HAR). That milestone was achieved despite a fourth consecutive decline in sales in December that reflects the effects of the real estate slowdown that has taken a particularly heavy toll on markets outside Texas.

Total property sales for December registered 5,957, representing a 23.5 percent decline compared to December 2006. However, total dollar volume for 2007 reached its highest level ever with year-end sales of 83,432 properties totaling $16.6 billion. The average single-family home price for December rose 5.7 percent from last December to $216,433, while the median home price for a single-family home increased 2.4 percent to $153,630. The full-year median sales price was $152,000, or an increase of 1.6 percent compared to 2006. The full-year average sales price was $206,393, or an increase of 3.9 percent compared to last year.

"Having the second best year on record for property sales and a record dollar volume level is no small achievement, especially in light of what other markets are experiencing," said Michael Levitin, HAR Chairman and principal of HTownRealty.com. "Although the nation faces tough economic times as a result of the subprime mortgage meltdown, Houston has the distinct advantage of a vibrant job market and healthy energy industry base. That, coupled with the continued increase in home pricing, gives us reason to enter 2008 with a sense of cautious optimism about the local marketplace."Average and median single-family home prices continue to rise despite a fourth consecutive decline in sales in December

Texas' future prosperity will derive from more people, more jobs and expanded personal income. Increases in employment will result in growth in personal, per capita, household and family incomes. Between 1980 and 2005, Texas' total personal income grew by 422.8 percent, from $142 billion to $741 billion. By first quarter 2007, total personal income was up to $841 billion. Extending the long-term trend in personal income since 1969 suggests that the state's total personal income could increase by $1 trillion by 2030. Household income would be expected to increase similarly. The 2005 Texas median household income of $42,139 could reach nearly $68,000 by 2030.
House Prices and Housing Affordability
Housing affordability may be one of the most significant growth stimulants for Texas during the first half of this century. Historically, the Texas housing market has maintained a relative balance of supply and demand despite periods of accelerated growth (the oil boom) and significant decline (the oilbust). Texas is the most housing-affordable high-growth state in the nation.
So far, skyrocketing home prices common to fast-growing states like California and Florida have not occurred in Texas. In mid-2007, the state's median-priced home ($151,000) was about two-thirds the national median ($229,000) and about 25 percent of California's median ($589,000).
The Texas Affordability Index measures the relationship between median family income and the ability to buy the median-priced home. Texas' current affordability index stands at 1.52 compared with the nation's 1.16. The index indicates that a family in Texas earning the statewide median family income has 152 percent of the income required to qualify for financing on the median-priced home. The national median family income is only 16 percent greater than the required income to purchase the national median-priced home.
A simple measure of home affordability expresses median house value as a multiple of median household income. More affordable housing is reflected by a lower multiple. The 2005 national median home value was 3.62 times the median household income. In Texas, the median home value was only 2.52 times median household income.
Current median prices to median household income multipliers are even higher, and the difference between Texas and national levels are even more pronounced. Texas' relative price-to-income ratio lags considerably behind the U.S level and the levels of the other most populous states in the country.