Rising prices in tight market bear impact for area real estate

Published 7:50 am Monday, March 26, 2018


By Ken Stickney


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Flood-affected Greater Port Arthur and Mid County are facing an unhealthy real estate market of late, with too few homes to sell, rising prices, delinquent payments and the imminent uncertainty of new flood maps.

But agents may tell you, jokingly, it’s nothing that a few hundred salable homes wouldn’t help.

Nationwide’s Index of Healthy Housing Markets, which measures data in 400 housing markets across the U.S., ranks Beaumont-Port Arthur at No. 397, trailing only Sherman-Denison, Texas; Rapid City, South Dakota; and Victoria, Texas.

“The market is fine; we’re holding our own,” said Sandra Harris, association executive for the Port Neches-Port Arthur-Nederland Board of Realtors.

But inventory, the supply of homes for sale, is “very low,” the lowest she can remember, she said. That’s the case across the country, with existing homes on the market in December 2017 at an all-time low, Nationwide says. It’s especially true in this market, where homes were ravaged by Hurricane and Tropical Storm Harvey in August 2017.

A recent report showed Beaumont-Port Arthur had a 2.9-month supply of homes on the market; a healthy housing market should have a four-month supply of homes for sale.

‘Ultra-low levels’

Nationwide reported “ultra-low inventory levels,” in its first quarter 2018 report that said there were only 1.5 million homes available nationwide. Two implications for housing stand out: sales transactions are rapid and prices are rising.

“It’s really a seller’s market, especially if your house didn’t flood,” Marla Miller of Coldwell-Banker said. “I listed one home last week and had three offers that day.”

Nationally, homes sold on average in 120 days; across 200 metropolitan statistical areas in the U.S., that dropped to 67 days in 2017 and in many markets in the first quarter, that’s dropping to less than 40 days, Nationwide said.

Nationwide calls such housing markets “overheated,” and suggests that prices are rising faster than people are earning money. The first-quarter report says most of the bottom 10 markets — Beaumont-Port Arthur falls there — “have worsening affordability because of rising prices and because delinquency rates are rising in those bottom markets.”

“Delinquency rates rose sharply in MSAs along the Gulf Coast of Texas and in Florida as a result of hurricanes, lowering the rankings for these areas,” the report said.

Heather Lange, a realtor for American Real Estate, said the market is tougher to navigate for first-time homebuyers. Qualifications and loans have changed in recent years. Interest rates are rising and first-time buyers can be on strict budgets.

But she sees promise for an improved market, eventually.

‘It can go fast’

She said some investors are buying in depressed area — we’re talking house prices in the teens, around $20 a square foot, she said — and making improvements. Others are making efforts at gentrification of a sort, buying in places like North Beaumont, Orange County, Port Arthur and flooded areas of Groves.

In fact, she said, for some buyers the threat of flooding is outweighing other factors in purchasing property, such as the reputation of the school zones.

“If it’s cute, affordable and dry, it can go fast,” she said.

Another favorable factor is that even in some areas where it flooded, it has never flooded before and may be unlikely to flood again. Her own childhood home in Groves never flooded until Harvey, Lange said, when water rose to the countertops. That may never happen again, which may make the home a good risk for purchase.

Lange said flood maps are due to change this year, which may affect sales if some homes land inside — or even outside — flood zones, which may affect the necessity of flood insurance. Orange and Chambers counties may see changes, she said.

Miller said things change quickly, though. In 14 years of selling homes, she said, she’s come to appreciate how unpredictable housing markets can be.

“You can go from a seller’s market to a buyer’s market overnight,” she said.