SterlingResidential.com | Buying & Selling Residential Properties in Texas | Houses for Rent Houston Area | Humble Atascocita Kingwood & Spring Texas Realtors | Sterling Residential®, Realtors® | Real Estate Broker: Why should I pay asking price if the housing market has dropped 15%

Today’s Houston real estate asking prices are derived from local market conditions based on comparable sales prices paid by home buyers in a particular neighborhood. Despite recent sales volume declines, prices are holding steady across Houston. While that may not be true for all Houston area neighborhoods, there hasn’t been an overall 15% drop in Houston home values. The housing supply is growing — tending to favor home buyers — but it hasn’t increased enough to force home sellers into large double-digit price reductions.

While analysts are trying to gauge demand and anticipate market trends, today’s information is imperfect and doesn’t reflect what’s happening in Houston’s neighborhoods. Media reports are giving more weight to troubled markets in places like California, Nevada, and Florida — reports that have less bearing on the local market. Home sellers are unlikely to discount their list prices based on predictions of what’s possible in other markets — they are responding to what’s happening down the block — whose house sold today and at what price?

Here are some sites examining the potential for price declines in Houston:

While Houston’s sales volume is down by double-digit percentages from the peak sales years 2006 and 2007 — at current sales volumes, 2008 will still be the 5th best sales year ever. Despite the lower sales volume, there are still a large number of home buyers in the market every day closing thousands of purchases each month. So far, demand is keeping pace with supply.

Although current inventory growth favors home buyers, Houston’s housing market remains relatively balanced between supply and demand. Inventory is growing and that could translate into price declines at some point, but that hasn’t happened — Houston’s median price remains around $155K and has been hovering around that level for months.

Is the market changing? Yes — many sales indicators have been trending negative for months. There are some neighborhoods in town with large numbers of foreclosures where prices have declined, while other Houston area prices remain relatively unaffected. There are areas with more inventory and some with less, and there are areas that haven’t seen any changes at all. Houston’s metro area includes many sub-markets with their own sales characteristics and each should be analyzed individually.

A home seller’s asking price will usually reflect the market conditions where they live. A look at pending sales will confirm that inventory is selling even though the sale’s pace is down. If you take a look at today’s listings in 120 days, most will be sold — indicating that today’s list prices are in line with buyer expectations. Media analysis and TAMU Real Estate Center studies are not perfect indicators of market prices — they are lagging indicators at best that can’t capture local conditions as they occur. Home buyers discounting list prices 15% may not get any serious consideration if the comparable sales don’t support their offer price — in some ways, it’s still business as usual.