The development boom comes after the housing market in the Greater Houston area largely stagnated in the second half of 2022 due to increased interest rates, inflation and limited inventory, said Jennifer Wauhob, chair of the Houston Association of Realtors.
According to a HAR December market report, single-family home sales fell 30.4% across the Greater Houston area from November 2021 to November 2022, dropping from 8,374 units sold in 2021 to 5,827 units in 2022.
“Because Houston housing was hyperenergized at the beginning of the year, concern arose when interest rates increased, and we began experiencing a consistent decline in sales volume,” Wauhob said in the market report. “Our market is battling the same forces as the rest of the country. ... Fortunately, the Houston area has weathered the downturn better than many other markets.”
Deborah Rose Miller, a Lake Houston-area Realtor with Rose Realty, said the trend was also reflected in the Lake Houston area, noting roughly 1,100 fewer homes sold in the last 180 days of 2022 compared to the last quarter of 2021.
“We are seeing incredibly low inventory, and houses are taking longer to go under contract in today’s current market,” she said.
However, Rose Miller noted the bevy of new development projects—which include a mix of single-family housing, build-to-rent communities and additions to existing master-planned communities—coming to the area should help inventory demands.
New developments
Among the new neighborhoods coming to the Lake Houston area in 2023 are Harmony Cove and Townsen Landing, which will bring 412 and 350 single-family homes to Humble, respectively. In Porter, developers are continuing the build-out of The Highlands, a 4,000-home master-planned community.
Additionally, a pair of build-to-rent communities is planned for Atascocita, including the 92-unit Bluewater at Balmoral and the 162-unit Leva Living Atascocita. The Residences at Kingwood will also add 240 apartments and 49 townhomes to the area.
Stephanie Wiggins, chief economic development officer of Partnership Lake Houston, said she believes residential development in the Lake Houston area helps spur local business growth.
“The Lake Houston area is geographically appeasing as it offers an easy commute to businesses in various areas of the Houston region,” Wiggins said. “Additionally, the cost of living in the Lake Houston area is relatively lower than some of our competing markets like Katy and Pearland.”
Rose Miller said she believes local school districts, including Humble ISD, have likewise helped spur residential growth.
Demographers at Population and Survey Analysts in a March 2020 report projected HISD’s jurisdiction will add more than 14,000 new housing units by 2029. To address the expected growth, voters within HISD’s boundaries approved a $775 million bond in May that included a new middle school and several expansions to existing schools and facilities.
“The 2022 bond referendum was designed to accommodate growth over seven years,” said Jamie Mount, HISD chief communications officer, noting the district has no plans for a future bond referendum at this time.
Mount said PASA officials are scheduled to begin research for an updated HISD demographic study in August 2023, noting the district should receive the report during the 2023-24 school year.
Effect on home prices
While development progresses locally, fewer Houstonians could afford the median home price of $349,500 as of the third quarter of 2022, according to the HAR. Just 41% of households earned the minimum annual required income for that price point—compared to 53% one year earlier.
“Homebuyers had to navigate an overheated market over the last year, but conditions have been cooling to prepandemic levels in recent months,” Wauhob said in the December market report. “We’ve seen home sales slow, prices level off and inventory rise. These are all indicators that we’re moving closer to more normal, prepandemic conditions.”
While inventory has increased in the Lake Houston area, Rose Miller said home prices have remained high.
According to Texas A&M University’s Texas Real Estate Research Center, home inventory in the Atascocita area has risen from a 0.7-month supply in November 2021 to a 1.7-month supply in November 2022, meaning it would take an estimated 1.7 months to deplete the active inventory.
Despite the increase in inventory, median home prices in Atascocita rose by 8.3% from $276,000 to $290,000 during that same time span, according to the Real Estate Research Center.
In Kingwood, inventory rose from a 0.9-month supply to a two-month supply from November 2021 to November 2022, market data shows. During that same time frame, the median home price rose by nearly 20% from $246,000 to $295,000.
However, Rose Miller noted the new development projects should help inventory demands.
“If inventory increases, we would normally see prices get more competitive and lower, but nothing has been normal as of late,” Rose Miller said.
