Homes in East Shore in The Woodlands are among those for sale in a high-end market.[/caption]

The Woodlands residential real estate market is seeing a slowdown this year, and properties priced in the upper spectrums are shifting to a buyer’s market, according to Better Homes and Gardens Homes Sales Real Estate Report.

Overall, the inventory of homes in The Woodlands has risen and home contracts are more sluggish than the year before, despite oil companies moving to the area.

Realtor Kurt Zimmerman of The Zimmerman Team said the anticipation of companies like ExxonMobil moving to The Woodlands area initially spurred a demand for homes— until oil prices plummeted.

“Things got out of balance with the high demand,” he said. “The last two or three years created quite a seller’s market, and then recently this year, with the oil price in the oil industry, [the housing market] suffered some setbacks. I think it’s really affected the higher-end housing market—those homes have slowed down considerably.”

A seller’s market occurs when houses average one to two months on the market, Zimmerman said. A stable market is when houses are on the market three to four months.

“Anything greater than that combined with higher inventory leads to a buyer’s market,” Zimmerman said.

All residential properties priced $600,001 and over are taking eight months or longer to sell, according to the Better Homes and Gardens report. Homes priced below that range are taking 5 months or less to sell.

“[With] the market for the more expensive homes you have fewer potential clients. That makes the market more sensitive to fluctuations in the industry,” he said.

Inventory is up in ’15

The Woodlands enjoyed a period of above-normal demand for housing in 2012-14, created by the ease of securing loans, said Tim Welbes, co-president of The Woodlands Development Company.

Loans were not as easy to obtain in the period prior to 2012 because mortgage-underwriting modifications made it more difficult to qualify for a loan. In addition population growth combined with a low supply of housing led to a high demand.

“So you had several years of pent-up demand, and you had a lack of supply being built,” Welbes said. “Mortgage rates were very low, a number of factors came together in our local market. Exxon[Mobil] and fracking were doing pretty well in Houston, so all of those factors built up a crescendo of housing sales in 2013-14. And now it’s getting back to more homes being built by the builders. There’s no more pent-up demand, so we’re getting back to a normal supply-demand relationship.”

Ken Brand, real estate manager with Better Homes and Gardens, said people were reluctant to sell their homes over the past two years, which created a lack of inventory. Sellers were waiting for the financial climate to improve. Now that the news about lower oil prices has quieted down, inventory is surging due to seller confidence, he said.

“You don’t have screaming headlines,” Brand said. “There were a lot of dire predictions. That has stabilized now. It’s not in the news that [oil prices] are a threatening thing.”

In fact The Woodlands has seen a marked rise in its inventory of homes in 2015, according to the Better Homes and Gardens report. In May of last year, 497 homes were available, but as of this May, 818 homes were available.

Ted Stanley, College Park Village Association president, said residents in his village have noticed the time on the market for houses has lengthened, especially those on the higher end of the price scale.

“I know that there are a few higher-priced houses that are staying on the market longer than they used to,” Stanley said. “Buyers don’t feel like they need to rush into something. I think they’re taking the time—doing more research, making sure they get what they want—trying to find a better deal.”

Sales trending downward

The Woodlands saw a decrease in the number of properties placed under contract by nearly 15 percent compared to two years ago. In April 2013 the number of contracts written was 327, according to the Better Homes and Gardens report. By April 2015 that number had dropped to 279.

From January to April 2014 the year-to-date sales in The Woodlands were 732. For the  same quarter in 2015, the year-to-date sales are 679, a decline of seven percent, according to the Houston Association of Realtors Multiple Listing Service.

The number of days in which houses in The Woodlands remain for sale has risen by nine days over the course of a year, according to the Better Homes and Gardens report.

Some buyers will postpone purchasing homes until they are sure the financial climate has improved, Brand said, but the sales numbers have improved from the first of the year.

“It’s less of a concern in May then it was in January and February,” he said. “The headlines said [the cost of oil] was ‘the end of the world.’”

Defining normal

The Woodlands is following a similar trend across Houston, with sales down and prices up, according to HAR.

Yet figuring out what is considered normal for a market is subjective, Brand said. 

Welbes said the demand in the real estate market in The Woodlands two years ago was above normal.

“Houston was enjoying a market of sales of unprecedented numbers,” he said. “Yes, there are more homes listed, but I think what we’re getting is a return to normalcy, not the extraordinary market of 2013 and 2014. If you look at the number of sales over 10 years, the aberration of [2013-14] is way above the trend line.”

Residential real estate in The Woodlands is at healthy levels, Welbes said.

“It’s a great selection, low mortgage rates, and if you’ve got kiddos going to school, you want to be in a good school district,” he said. “There’s been more than one oil price dip that Houston has dealt with, and then there tends to be a flight to quality. The better master-planned communities are not as impacted as others if the market gets really tough. Places like The Woodlands are doing fairly well.”