Kingwood Housing Market Report For March 2nd 2009

Kingwood Housing Market Report

The Kingwood housing market has fared very well during this market downturn. This is shown by the Kingwood overall housing inventory sitting at just 5.1 months of inventory, which is the bottom range of what is considered by economists as a neutral market (inventory levels of 5-6 months is deemed neutral). To explain just how well the Kingwood market is doing we need to compare the 5.1 months of inventory to the inventories of the rest of the country. The national average inventory is sitting at 10.7 months which is considered a deep buyers’ market. Here in Kingwood, we have less than half the inventory meaning that the market here in Kingwood is doing twice as well with homes selling at least twice as rapidly when compared to the national scene. This is due in large part to Kingwood’s master planned communities being completed, and so it brags mature landscaping commingled with excellent maintenance granting exceptional neighborhoods for its residents. Add all this to some of the best schools in the Houston metro area, and you have a high demand community that apparently not even a credit crisis can hold down.

TOTAL BREAKDOWN OF HOUSING INVENTORY FOR THE KINGWOOD HOUSING MARKET

Months of Inventory	Sold Data – Prev. 1 Year		Current Active Data
	Number Sold	Average Price	Number Active	Average Price
5.1	1,034	$214,874	443	$321,496

Even though the overall inventory level paints a rosy picture, the entire Kingwood market is not uniform in activity. There exists a broad spectrum from super heated sellers’ markets all the way through to stone cold buyers’ markets. The $100,000 and below market has only 7 listings, as of March 2nd 2009, leaving the inventory level at just 2.1 months. Anything under 5 months is considered a seller’s market by industry standards.

The $100,000 to $200,000 price point in the Kingwood housing market is not as insanely hot, but it is still a hot seller’s market when analyzing the inventory level. The inventory as of March 2nd was just 3.5 months with the total number of active single family homes on the market at only170. Historically, it has been common for prices to not only hold steady but to increase at higher than inflation rates when inventory holds a point below the 4 month mark.

The Kingwood housing market starts to take a turn in the $200,000 to $300,000 market where it sat at 5.3 months of inventory. An inventory level of 5.3 months is not what you would consider bad and is deemed neutral for buyers and sellers. This means that neither the buyer nor the seller have an upper hand when it comes to negotiations. However, a 5.3 month inventory level is truly worlds apart from the 3.5 months and 2.1 months of inventory noted in the price ranges below $200,000.

Inventory levels in the $300,000 to $500,000 price range start looking gloomy for sellers. This market price point logged at 8.4 months of inventory. Inventory levels exceeding 7 months are considered a buyer’s market and historically prices have begun to drop when the market place has had more than 9 months of inventory. With continued credit market issues and an inventory level of 8.4 months, it is likely that we will see some price declines in the coming months for this price point.

The $500,000 and above price point is in a deep slump and is a strong buyer’s market showing inventory levels of 20.7 months. Some price drops on a square footage basis have already been seen in this price point, and they will likely mount as there is nothing to indicate that inventory levels will get better in the near future.

KINGWOOD INVENTORY REPORT FOR 100,000 AND BELOW

Months of Inventory	Sold Data – Prev. 1 Year		Current Active Data
	Number Sold	Average Price	Number Active	Average Price
2.1	40	$85,460	7	$84,871

KINGWOOD INVENTORY REPORT FOR 100,000-200,000 PRICE POINT

Months of Inventory	Sold Data – Prev. 1 Year		Current Active Data
	Number Sold	Average Price	Number Active	Average Price
3.5	578	$150,892	170	$153,729

KINGWOOD INVENTORY DATA FOR THE 200,000-300,000 PRICE RANGE

Months of Inventory	Sold Data – Prev. 1 Year		Current Active Data
	Number Sold	Average Price	Number Active	Average Price
5.3	243	$235,392	107	$248,374

KINGWOOD HOUSING INVENTORY DATA FOR 300,000-500,000

Months of Inventory	Sold Data – Prev. 1 Year		Current Active Data
	Number Sold	Average Price	Number Active	Average Price
8.4	140	$369,360	98	$400,338

KINGWOOD HOUSING INVENTORY ABOVE 500,000

Months of Inventory	Sold Data – Prev. 1 Year		Current Active Data
	Number Sold	Average Price	Number Active	Average Price
20.7	36	$649,459	62	$807,825

Conclusion

In conclusion, the rapid change in market conditions at the $300,000 price point is likely because of conditions in the credit markets. Home loan opportunities are still available within the FHA loan limits where the cutoff point is $271,500 , therefore, it makes sense that once this threshold is crossed, the market changes rapidly with the decrease in available funding. The extreme changes seen in the above $500,000 market is very likely to the mangled Jumbo market (Jumbo loans are loans in excess of $417,000). The stratification caused in the market place due to credit, low interest rates, and the $8,000 first time home buyer tax credit make for rare opportunities for certain classes of buyers. The low interest rates in the market place help all buyers, but the real benefits are available to first time home buyers and move up buyers. First time buyers purchasing a home below $300,000 have an opportunity to get an $8,000 tax credit just for making a purchase. They get to make their purchases at the lowest interest rates in almost 50 years, and the purchase is likely to hold value well because inventory levels in that price range are low. Move up buyers are likely sitting in the best position as the low inventory rates in the lower price ranges allow them to get top price for their home while they can negotiate heavily when they go to make their new home purchase. Those looking to downsize would be wise to hold off if possible as the market place is unlikely to be kind to them. They will have to give concessions on their home and most likely will not see any when they make their purchase.