Update on the High End

In our recently mailed 2020 Mid-Year River Oaks Market Report we remarked that, while sales in the first half of 2020 at the high end of River Oaks – that is, properties priced $4 million or higher – did not exceed the number for the same period in 2019, they were not very far behind. And that is despite COVID-19, ping-pong oil prices and typical election-year unease.

A surprising number of clients (and prospective clients) have contacted us for more about this surprising phenomenon.

Some of the questions asked were: Did most of the sales take place before COVID? Were these distress sales? How many were new construction? Where did the buyers come from? What are my prospects of selling between now and year-end? And what’s the competition looking like?

Here is an attempt to answer some of those questions and to flesh out the current climate at the high end.

Inventory

There are many ways to count the inventory. If one is simply looking at the numbers on MLS, there were 23 houses for sale on the day this update was written (Friday, August 7, 2020). Nine of these were speculative new construction. At least three of the houses are, we are sorry to say, teardowns.

Then, if one peeks behind the curtain, there are another three resale houses on the market but not on MLS (a questionable strategy), plus another nine houses gearing up to return to or enter the market soon. Seven of this last group are speculative new construction. Additionally, there are a further five new construction houses further down the pipeline, but on their way.

It gets complicated, eh? And pretty crowded, too.

And there are another half-dozen hovering just below $4 million.

Keeping close tabs on what is truly for sale at any one time, we maintain the following graph to provide clients with a snapshot of the current numbers compared with recent years.

Timing and COVID-19

While it was true that most of the sales happened, or were in the works, before the onset of COVID in Houston, two of the top three sales closed in July, both of them new construction. Clearly, there is still some energy in this market, despite uncertainty about the coming months.

What has been selling and why?

In the $4 million-plus market there were four sales in the big-house-on-small-lot category, which were either new or very recent construction. Additionally, there were many more in this category that, despite trying, were not able to close above the $4 million mark.

There were some instances of seriously unprofitable markdowns for speculative builders who had misjudged the market.

Most of the sales were clustered at the lower end of this price category, indicating a limited audience in Houston for the really expensive stuff.

But land was key. Including the two lot sales in this price range, nine of the 14 sales that closed above $4 million this year were for properties of half an acre or more.