There has been a clear sense that market activity in River Oaks in the first quarter of 2017 has been the expression of pent-up energy from the second half of 2016. Buyers and sellers had held back since the summer of 2016. There was then a tangible change of mood in December, followed by a strong flow of new contracts and closed sales (15) through the end of March. April has been quiet so far, with market participants distracted by tax deadlines, school breaks, and Easter and Passover.
What is selling?
Most sales by category have been medium-size lots, none in particularly good locations. These have been for both speculative building and custom new construction. Those 15,000-square-foot lots have become the new desirable size for both types of buyer. The challenge has been the rarity of that size in excellent locations.
Another busy category was small lots. Again, most of these were not in great locations; nevertheless, the prices paid were super-premium.
There were a number of sales of large (not huge) houses in premium locations on large lots, in the range of $3.5 million to $4.5 million.
Showing activity in central Houston market areas
Showing activity in the River Oaks area is lower than it was at this time last year. In January and February of 2016 there was little activity at all, because of the mood. That changed with a big surge of showing activity in March 2016. The pace in 2017 has been steadier, with a gradual increase through the end of March – a sign that this is a more normal market than last year. We anticipate the activity in 2017 to pick up briskly in the second half of April and sustain at a strong pace through June.
In other comparable market areas, Memorial at the high end (over $3 million) has been very strong, and that activity has begun to spill over into Tanglewood as well.
What’s for sale now?
For a start, too many River Oaks houses listed for $4 million or more. These account for an astonishing 40 percent of the market of available houses, but only 20 percent of the sales so far in 2017.
The properties for sale consist of some aircraft carrier-class houses at the top end of the market and rather a lot of houses sitting around for a long while in the $4 million range. There’s another stubborn cluster at $3 million.
The word on the street is that there is nothing out there In River Oaks for under $2 million. Well, actually there is plenty out there. Sellers should be cautioned that this is a highly price-sensitive sector of the market. The tight inventory should not encourage over-ambitious pricing by sellers. Buyers will simply shop in other neighborhoods if they cannot find fair value in River Oaks.
