Local real estate agents are classifying the housing market in the Tomball and Magnolia area as a seller's market, which is a result of the depleted monthly inventory of available homes in the region. The low inventory is sparking an increase in the construction of single-family developments to accommodate for the surge in demand.
"There's a real low inventory [in Tomball and Magnolia] that's creating almost a frenzy of people [looking for homes] certainly in the $200,000–$250,000 pricing [range], and above that they still sell quickly," said Pamela Sitterly, a real estate agent with RE/MAX in Tomball and Magnolia. "People are trying to put offers in without even seeing the house—even with rentals it's crazy. They want to sell their house, but they don't want to be homeless."
The average number of days a home spends on the market in the Tomball and Magnolia areas has decreased by at least 10 percent from January to May in 2014, compared to totals from the same time frame in 2013, according to the Houston Association of Realtors' Multiple Listing Service.
The last time the area was classified as a buyer's market was in 2007 and 2008, Sitterly said.
Low inventory levels
Homes in the Tomball and Magnolia area are selling at a faster rate than last year, with the monthly inventory of available homes in the Tomball area decreasing any where from 7 percent to 18.8 percent from May 2013 to May 2014. In the Magnolia area, the monthly inventory of available homes is down by at least 32 percent in May 2014 compared to where it was in May 2013, according to HAR's MLS.
Not all of the surrounding areas are following the trend. For example, the monthly inventory of available homes in the Pinehurst area experienced a 26 percent increase during that same time frame.
Barbara Gardner, a real estate agent with Berkshire Hathaway HomeServices–Anderson Properties, said she has noticed a trend of prospective buyers from out of state relocating to Tomball and Magnolia in addition to a significant number of buyers looking to retire in the area.
"I represent a couple of builders, and it's very hard for them to find supply," Gardner said. "It's the same for houses. When I try to search for houses, now I might pull up only 10 [listings]. New homes are selling quickly."
Randy Stuewer, senior consultant for Metrostudy—a Houston-based company that compiles data on new home construction—said home inventory in the Greater Houston area reached 193 months of supply in 2010, and it has since dropped to about 38 months.
"In the Houston area, what we call an equilibrium or normal months is somewhere between 20-24 months," Stuewer said. "What's happening is it is still working off some of the lots remaining from the Great Recession."
New housing starts
Stuewer said the number of new housing starts in the Tomball and Magnolia area has grown four or five times from the number of starts in 2010.
In the Greater Houston area market, Tomball and Magnolia make up about 1 percent of all the new housing starts in the region compared to less than .5 percent four years ago, Stuewer said.
The Tomball and Magnolia area is drawing residents from The Woodlands as part of a spillover effect since homes are being sold at a faster pace this year compared to previous years, he said.
"When we had our housing crisis a few years back, builders were just out of luck," Sitterly said. "There were no homes being built for a while. New homes and new constructions were hurt worse than other areas, and it's just them trying to catch up. They're back and it's wonderful to see so much growth."
There are several new single-family complexes under construction and proposed for development along major roadways, including Cimarron Creek Estates, Wildwood Glen and Willow Lake Village.
JD Townsend, sales counselor for Infinity Classic Homes in Magnolia, said the company is constructing a new single-family community called Magnolia Ranch Estates with an estimated 102 new half-acre and acre home lots along Nichols Sawmill Road and Butera Road. Townsend said the 2.5 percent tax rate in Magnolia is appealing to buyers.
"A lot of people seem like they're downsizing from larger homes in Stagecoach and Indigo Ranch, and there's several empty nesters," Townsend said.
In addition, Friendswood Development Company held a groundbreaking event June 27 to introduce its new 488-acre master-planned community, Woodtrace, which is under construction along Hwy. 249 and Woodtrace Boulevard, northwest of Tomball.
Woodtrace will include about 840 homes when build-out is reached by late 2018, said Tim Fitzpatrick, community development manager for Friendswood Development. The first lots are expected to be ready for move-in early this fall.
"In the case of Woodtrace, Hwy. 249 is a well-known corridor, and road improvements are underway," Fitzpatrick said. "The Grand Parkway is coming in, and Tomball has great retail support. It's about as good as it gets."
The city of Tomball has scheduled two public hearings July 7 and July 14 to consider annexing 70.36 acres into city limits for the Alexander Estates housing project. If approved, the estimated 138-home community proposed along FM 2978 and north of Spell Road near Tomball will add to the growing landscape of single-family options in the area.
New single-family housing complexes, ExxonMobil, Baker Hughes and improvements to Hwy. 249 and the Grand Parkway are positioning Tomball and Magnolia for an influx of growth despite the market's current low inventory levels, Gardner said.
"I think that our area, Tomball and Magnolia, was not hurt as bad as the rest of the country," Sitterly said. "This is what we've been waiting for. This is the recovery that we knew would come, and it is here. I see it going on for another two or three years, as long as interest rates play a part."