After two years as a seller’s market, the Katy housing market has stabilized and is headed toward a buyer’s market due to new inventory and the downturn in the region’s oil and gas industry, according to local real estate officials.
Lawrence Dean, Houston’s regional director for Metrostudy—a national company that tracks real estate trends—said while the home resale market remains stable, new construction in several master-planned communities is raising the inventory in the single-family home market. Those construction projects are providing buyers with more options, especially as Katy goes into the summer months, which is known for increased activity, he said.
“Summer is definitely the key home buying season; it always has been,” Dean said. “And in Houston, ours tends to start a little later than other parts of the country. We’re just now getting into the optimal sales season.”
The Katy Area Economic Development Council tabs the current population for the Greater Katy area at over 317,000, with the population growing by 84 percent between 2000 and 2010.
Several real estate professionals said people are moving to the Katy area for the strong school district and the accessibility the Grand Parkway provides to much of the Greater Houston area.
Veronica Mullenix, a member of the Houston Area Realtors board of directors, said with interest rates on mortgages around 5 percent and the oil and gas industry stabilizing, Katy continues to be a choice destination for many home buyers.
“What is affecting their motivation [to buy homes] though is that low interest rate,” Mullenix said. “With the very low interest rate that’s going on right now, more people who are planning on buying a home are looking to do it sooner rather than later.”
Resale versus new homes
In addition to low interest rates increasing buyer incentive, a number of different factors go into a home purchasing decision.
Real estate professionals agree the Katy market is strongest in the $200,000-$300,000 price range and softens at around $500,000. Mullenix said municipal utility district property taxes can influence a buyer to opt for a less expensive home or even an equally priced home in an older, cheaper MUD district.
“Property taxes are killer for some newer areas because it makes such a large chunk of their house payment taxes versus principal,” Mullenix said. “So they’re going to buy a smaller house or less expensive house so they can afford the total payment.” [polldaddy poll=9452705]
Dean said much of the growth in the western half of Katy can be tied to six new communities under construction or beginning construction soon: Falls at Green Meadows, Cane Island and Elyson in the northwest quadrant; and Young Ranch, Tamarron and Cross Creek Ranch in the southwest quadrant.
While Cross Creek Ranch is in Fulshear, the other five collectively account for 515 new homes started in the last 12 months and 11,051 homes either under construction or planned for the future as of the end of the first quarter of 2016.
Of the 570 total newly constructed homes that had been finished in the five neighborhoods as of the end of the first quarter of 2016, 166—or roughly 29 percent—were vacant, according to Metrostudy.
Dan Naef, president of Rise Communities, which is developing Cane Island, said since property taxes are competitive across the board for most newly constructed developments, it is up to companies to compete with new and existing neighborhoods based on amenities.
“The investment is important, and they buy the community because they know that values hold better in master-planned communities,” he said. “The next thing is they buy in communities where the amenities are done, not promised.”
Nathan McMartin—a professional Realtor consultant with Coldwell Banker—said that there are 1,665 homes available in Katy, and they have been on the market for an average of 67 days.
He said those numbers illustrate a buyer-oriented market compared to June 2014—when 604 homes sold and were on the market for an average of 34 days—because inventory is up while demand is down.
Dean said the total number of homes available is holding Katy in a steady seller’s-market, but the area may be headed toward a buyer’s market.
Resale homes tend to favor the seller, while the market is shifting in the buyer’s direction for new homes, he said.
“There’s not enough inventory in resale or new homes for it to be a total buyer’s market,” he said. “There’s more inventory than there was this time 18 to 24 months ago.”
Several real estate officials said the popularity of the Katy area can be tied to three key factors: Cinco Ranch, Katy ISD and the Grand Parkway.
Lu Haas, vice president of sales for Coldwell Banker in Katy, said name recognition developer Newland Communities achieved with Cinco Ranch is responsible for the immense growth in the southern part of Katy.
“I think it all started with Cinco Ranch,” she said. “Newland—when they bought Cinco Ranch—did a magnificent job on their publicity, their marketing.”
Real estate professionals said Katy Mills and Typhoon Texas Water Park are both attracting families to the Katy area.
Denisse Cantu Coffman, Katy ISD’s director of communications, said KISD continues to see an influx of families to the area. KISD was given the highest possible rating by the Texas Education Agency, and Seven Lakes High School consistently lands on Newsweek’s annual list of America’s Top 500 Public High Schools.
“The schools are a huge driver; that’s probably really one of the primary drivers of Katy’s housing growth really over the last three or four decades,” Dean said. “But then now having the Grand Parkway connect so much further and to so many different places, that’s also really helped and probably will make it to where more families can choose Katy ISD independent of where their employment is.”
Oil and gas effect
Real estate officials said the present state of the oil and gas industry also plays an integral role in Katy’s housing market.
The price per barrel of crude oil hit a decade high back in 2008 at $140 and a decade-low at less than $30 in January. It currently sits around $50 per barrel as of mid-June.
Bruce Craig, area president at Beazer Homes, said although plenty of oil and gas employees are still looking for work, the lower price of oil has helped to improve the new home market because it has reduced the cost of construction resources for builders and stimulated the workforce of other industries.
“We can’t ignore the fact that oil has [a] drag on the Houston economy,” Craig said. “But we also cannot ignore the fact that Houston’s economy is pretty diverse. As a result, not every single person in town is impacted negatively when oil prices decline.”
Lawren Eckhardt, director of marketing for residential developer Johnson Development Corporation, said the growing workforce diversity has minimized the oil and gas industry’s effect on the Greater Houston region’s real estate market.
“Houston is a strong enough market in general—even the west side where there’s that whole Energy Corridor—there’s a huge medical presence out there,” she said. “Houston is diversified enough in the jobs that it offers that we haven’t really seen a huge decrease [in home buying] with the oil issue going on.”