Read about different trends—from affordability to multifamily development—in residential and commercial real estate happening so far this year in the Katy area.
1. Some home values in the Katy area have risen faster than median household incomes
According to the U.S. Census Bureau, median home values in the area’s five ZIP codes —77094, 77449, 77493, 77494, and 77450 — rose each year between 2011 and 2015.
The highest home values were in the 77094 ZIP code, which lies south of I-10 between South Fry Road, Mason Creek and George Bush Park. Median home values grew by about 18.7 percent from 2011 to 2015 but median household incomes grew only 9.5 percent in that time, according to the Census Bureau.
But the 77449 ZIP code, the Katy area ZIP code with the lowest median home values saw the opposite effect in that time. Median home values rose by less than 1 percent from 2011 to 2015 while median household incomes increased by 7.9 percent. The 77449 ZIP code lies primarily northwest of I-10 and Grand Parkway between Barker Cypress Road and FM 529.
In addition, even when ZIP code 77450 and 77493 median household incomes fell at the time of the oil and gas downturn, the value of homes in those areas continued to rise, according to the Census Bureau.
Real estate broker Tim Sojka said the Cane Island master -planned community has starter home for sale but fewer places in the Katy area still do.[/caption]
2. Starter homes are limited in the Katy area
Although what is considered a starter home varies, real estate broker Tim Sojka, of See Tim Sell at Keller Williams Realty, said such inventory is moving quickly.
“Homes right now under $300,000 are flying off the shelves,” he said. “They’re selling quickly, selling near or above listing price.”
Sojka said the biggest market opportunity for homebuilders is in the $300,000 to $399,000 price range, but the amount of square footage available for that price varies by subdivision.
“It depends on the school that it feeds into,” Sojka said. “The better the school, the more that you’re going to pay.”
The Elyson and Cane Island subdivisions have new homes in that price range, but first-time homebuyers may need to purchase older, fixer-uppers to stay below $400,000, he said. As of July 2, Sojka said the 77449 ZIP code had the most homes priced under $300,000.
The University of Houston’s Bauer College of Business reported in June the Greater Houston area’s recovery from a 2014 oil price drop had fluctuated. However, Jay Thieme, a real estate agent with RE/MAX Cinco Ranch, said it has not hurt Katy area home prices.
“Builders are building more expensive homes, and new construction costs have risen,” he said. “It costs the developers more money to get the land.”
Veronica Mullenix, a Houston Association of Realtors board member, said the luxury home market is sluggish. Across HAR’s service area, 1,580 single-family homes sold for $150,000 to $199,000 in May took two months to sell while 412 homes priced between $400,000 and $499,000 took eight months.
Veronica Mullenix, a Houston Association of Realtors board member, said her millennial client base considers several factors when buying a home and that no two buyers are exactly alike. But one thing appears to hold true, she said.
“Millennials are smart in the way they want to handle money,” Mullenix said. “They recognize that real estate is part of their investment portfolio.”
The Houston-The Woodlands-Sugar Land area ranked fifth among 60 U.S. metropolitan statistical areas for millennial home listing views in a March report from www.realtor.com. The report said 25 to 34 year olds prefer urban markets more than their predecessors.
In Katy, Mullenix said she has seen significant millennial buying activity in the Cross Creek Ranch and Cinco Ranch communities. She added millennials wish to minimize their overhead costs.
“Even if they’re looking at older homes, they’re looking at improving the energy efficiency of that home to lower their bills,” she said.
Lenox Trails Apartments opened in Katy in January.[/caption]
5. Katy is seeing fewer multifamily projects
Lauren Sears, a marketing specialist for Trammel Crow Company, said in an email multifamily development had slowed so far in 2017 compared to 2016. She cited research from commercial real estate firm CBRE.
“Only 490 units were completed this year, but almost twice that delivered last year,” she said. “Slowing apartment development will allow time for these new units to be leased. Occupancy is already showing signs of a recovery in this market.”
According to commercial real estate services company Colliers International, six multifamily projects were completed in the Katy area in 2016 and two were completed in the first half of 2017. Three more projects are under construction.
6. Katy development moves westward, but east has demand
With available land and new commercial ventures such as Buc-cees in the future West Ten Business Park and Amazon off of I-10 and Hwy. 90, more development is expected on Katy’s west side in the near future.
Bill Byrd, a principal at commercial real estate services company Colliers International, said West Ten Business Park is driving the new development. On the residential real estate front, Veronica Mullenix, a Houston Association of Realtors board member, said the Firethorne subdivision is wrapping up construction. Cross Creek Ranch in Fulshear also has not completed its active adult residential development west of Fulshear Bend Drive and homes along northern Cross Creek Bend Lane.
“Once they opened up [the Grand Parkway], all the new developers bought land and Katy ISD bought land to build along [the Grand Parkway],” she said.
In the Katy area east of the Grand Parkway, Mullenix said housing remains popular. Houston workers like the area because of shorter drive times, she said.
“Doctors prefer to live within a 15- to 20-minute commute of their office because of the nature of their business,” she said.
Colliers International staff predicted the number of Katy area completed projects in 2017 would outpace that of 2016, based on data from the first half of this year.
“More than anything, it’s probably been the retail catching up with the master-planned communities,” said Bill Byrd, a principal at commercial real estate services company Colliers International.
With 19 projects finished between January and June, retail was the most popular type of commercial development in the Katy area, followed by 12 industrial projects; two of each in office, multifamily and medical office; one health care and one flex building project, Byrd said. Twenty-five retail projects are also under construction in the Katy area, he said.