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Whew….what a start to 2023! I looked up and realized it’s been almost 6 months since my last market update. Things have changed, but predictions are ringing true.

The Theme has and Continues to be: Turnkey and Priced Right Sells

Market volatility is high, with buyer demand swinging by the week based on news headlines. On the ground, we are seeing a relatively normal, seasonal uptick in activity for showings and offers. It appears correctly priced homes are still selling quickly, and those that are overpriced are tending to sit.

In terms of total listings in North Houston, we are settling in around pre-pandemic levels.

This is largely due to a “restocking” of new listings coming on the market. In fact, the number of new listings has exceeded that of the last 10 years.

The coming few months will tell us if housing supply exceeds demand, but with demand continuing to rise as interest rates stabilize (and projected to dip slightly), I’m not confident we will see the return of a strong buyer’s market anytime soon.

Perhaps most interesting, and my anecdotal experience replicates this, is the number of homes still selling at or above listing price. It trails 2021 and 2022 levels, but is still significantly higher than the pre-pandemic average. This may be artificially inflated by an increasing amount of seller concessions, which has been beneficial to buyers as they tackle inflationary sales prices.

On the flip side, the percentage of homes selling below list price follows the same trend. With 2023 tracking higher than 2021 and 2022 but still below the pre-pandemic average.

Above, I alluded to increased sales prices. The North Houston housing market remains strong and a safe place to invest funds. Sales price have grown rapidly, with signs of a minor slow-down in appreciation. I would expect to see some stagnation in sales price for 2023, with a return to typical levels (2-4%) in 2024.

LLPA’s – Is there Really an Unfair Penalty for those with High Credit?

Very, very briefly, I’d like to hit on Loan Level Pricing Adjustments, or LLPA’s. Before we delve into the news, a little definition is important. LLPA’s were implemented in 2008 and are a borrower-specific fee added on top of the base guarantee fee borrowers pay.

Now…..You’ve probably seen on the news on May 1, the new LLPA matrix took effect. Many new headlines may have you thinking this is a socialist movement aimed to punish those with high scores to reward those without.

It’s not.

If you only view the matrix that shows the percent change in LLPA’s, then yes, it appears that lowering your credit score will get you better rates. Before you stop paying your bills, let’s look at the outright LLPA matrix to get a better idea.

It’s now easy to see a person with a 780 credit score still pays far less than someone with a 640 credit score. Using a LTV of 90%, the 780 credit score has an LLPA value of 0.250% vs someone with a 640 credit score who has an LLPA value of 2.000%.

A great article for more information on LLPA’s can be found Here

Final Thoughts

Our North Houston market has quite a few good things going for it. Texas continues to be an economic powerhouse with a diversified, and strong, economy. The financing marketplace is still allowing for reasonable interest rate buy downs. Supply is starting to come back up, while demand appears to be normal for the season.

Time will tell how the macro- and micro- economies of the Nation and the regional market will weather the economic volatility. I think we have some challenges looming with housing affordability. The headlines of an economic downturn and recent bank bailouts have the potential to shift the winds, but I’m not sure these will take all the wind out of the Texas sail. We tend to be somewhat protected, at least for the moment, particularly with all the area and business growth in North Houston.

For both buyers and sellers, flexibility and creativity are crucial. Be open to new ideas and letting go of previously held beliefs about how the homes buying/selling process should go. If you have a will, there is a way!