Since mid-October the River Oaks real estate market, and several other of Houston’s pricier areas, have been moribund.
And there has been absolutely no new activity whatsoever relating to the speculative new construction market – neither new contracts for the finished product nor purchases of land for future speculative development.
It was expected and predicted, on the basis that for every major election year River Oaks shuts down a few weeks before the election takes place and picks up again soon after the results are known. Interestingly, the actual results don’t seem to affect the pace of the market that resumes.
The four weeks of continuous tap-dancing on the spot have been exhausting for some of us realtors, not to mention sellers and buyers. But that strenuous activity is better than the alternative, indulged by so many market participants, namely worrying that the market is crashing, based entirely on industry chit-chat. Unfortunately, that worrying soon begins to infect the mindset and decision-making of the customers, which is when mistakes are made.
We have it on good authority that our market is fine, albeit not as ebullient as it was last year. Most buyers and sellers are just waiting for the indication that it is safe to proceed.
The spec builders, almost annoyingly ubiquitous last year and through May of 2022, have been seeking cover. Not only has there been virtually no finished product sold since July (one house in total), but there have been no lot sales for the spec market. Even worse, a spec builder who bought a plot earlier this year has put it back on the market asking the same price he paid for it.
In our opinion, if spec builders could figure out how not to build the houses so big and flashy, they would be doing very well, since there is a deep pool of qualified buyers looking for a move-in-ready house in River Oaks.
The graph below succinctly illustrates what we are dealing with. Almost all of the October activity occurred in the first two weeks of that month. Compare the pending contracts numbers for November 2020 and 2021 with November of this year.
Thanks to the dangling election results last week, followed immediately by the typically slack week preceding Thanksgiving, the resumption of River Oaks sales may take a week or two longer than usual, but we are confident that the year will end strongly.
The graph for showing activity corroborates the observations above. Please note the red arrows pointing to the drops of activity around election time.
You may also observe the drop in activity in November 2021, not a national election month. In that case, after the frenetic activity of 2021, there was simply nothing left to buy in the critical $2 million-to-$4 million market in River Oaks.
The River Oaks market will be picking up again in the coming weeks. Many law firms, energy and finance companies are making bonus announcements – the customary crack of the starting pistol for the final sprint of the River Oaks market.
Most important, we are directly aware of healthy numbers of River Oaks buyers who, until mid-October, had been looking but have not taken the next step. Many of them will do so before year-end.