Chad Ray, owner of C.R. Realty in downtown Katy, said Katy is a seller’s market. A seller’s market favors sellers with higher home prices and fast sales. Starter homes usually are two-bedroom, two-bathroom homes with a garage and a modest yard, he said.
Borden said nationally, starter homes cost between $150,000 to $175,000. In the Katy area, that number is about $20,000 higher or more, especially south of I-10 or in newer communities north of I-10.
“When I’m working with [first-time] buyers right now, we’re looking at homes in the $170,000s to $200,000,” Borden said.
Ray said he steers first-time buyers to communities north of I-10 in Katy to purchase newly constructed starter homes at a lower price. These homes offer easy access to the Grand Parkway.
“South of I-10 there are starter homes under $200,000, but they’re older homes that are going to require a lot of maintenance,” Ray said.
Two markets
The Katy real estate market is divided by I-10, Borden said.
“[First-time homebuyers will] see that the south side is going to be really restrictive on affordability,” Borden said.
The two Katy regions differ in affordability because of how Katy developed historically, Borden said. Thirty years ago the Cinco Ranch area developed as master-planned communities. Homes in master-planned communities tend to increase in value over time and were built by established companies, she said.
Listings available through the Houston Association of Realtors showed 54 percent of 193 homes listed for sale between $150,000 and $215,000 in the Katy area as of July 2 were northeast of I-10 and the Grand Parkway. Only 3.6 percent were southwest of that intersection. The remainder were northwest or southeast of the intersection.
Prior to the 2007-08 real estate bust, north of I-10 evolved differently, Borden said. Less-established developers built north, she said, while older ones built south.
“There were a lot of poorly developed communities going in north of I-10,” Borden said.
Kristin Esparza, Pulte Homes division director of sales for Houston, said lower prices near the Grand Parkway keep new home prices lower north of I-10. Starter homes there are about $170,000 because of their age.
“[Buyers] are wanting new, so they’re going for a different type of look, so they’re going towards new communities that are further out,” Esparza said.
Market factors
Esparza said builders like Pulte look at multiple factors to determine price points for homes in a given area. Factors include land price and availability, schools, commutes, labor and material costs.
“Then we also look at the market conditions. What are comparable homes in the area selling for?” Esparza said.
Esparza said less land is available south of I-10 now, so land is cheaper north of I-10, which keep prices lower there.
“Depending on the cost of the land and the availability of the land, that’s going to determine the price for the consumer,” Esparza said.
Newland Communities said only about 70 homesites of 15,000 are available in the Cinco Ranch area. Newland is the developer of Cinco Ranch.
Schools help determine interest and price in a market, Esparza said. Borden agreed, pointing out that high-performing and newer schools in Katy ISD increase demand.
“You can see some of that with the new Paetow High School that’s north of I-10,” Esparza said. “[Communities] between I-10 and [Hwy.] 290, west of the Grand Parkway that are zoned to that high school [are] doing really well.”
The Grand Parkway was completed in December 2013 and changed the market, Esparza said. The tollway provides easy access to employer locations on I-10 and Hwy. 290.
“I really, truly believe that the Grand Parkway has made a huge difference in shifting [the market] more north, because now people have easier access,” Esparza said.
Esparza said the Fry Road area north of I-10 has not benefited as much because it is mostly developed, and traffic is heavy. According to NewQuest Properties, which develops shopping centers in Greater Houston, more than 46,000 vehicles pass through the intersection of Saums and Fry roads daily.
Ray said buyers can find starter homes, even with tight budgets. People come to Katy across demographics because of the schools, community feel and quality of life, he said.
“If someone’s really stuck on Katy, we can find [a house] here,” Ray said. “You’ve just got to be a little more patient.”
Ready to buy/sell
Esparza said homebuyers may be priced out between I-10 and FM 1093, but starter homes can be found near Katy.
“North of I-10 and south of [Hwy.] 290 around the Grand Parkway, there’s definitely affordable new housing options for homebuyers,” Esparza said.
Katy-area real estate experts said the key is planning ahead. Ray said prospective buyers should get pre-approved for financing as a first step.
“We call that the ‘golden ticket,’” Ray said. “Once you’ve got the golden ticket, we can start the shopping process. We’ll know how much you can spend and where that home will be.”
Rick Carrier, loan officer with Hancock Mortgage Partners, a mortgage firm servicing the Katy area, said about 80 percent of his clients are first-time buyers. Many are in their 20s and qualify easily for loans but prepare differently than prior generations.
“They’ve saved some money and they’re coming from their parents’ houses, and they’re buying,” he said.
Income, pay method, credit scores and employment length factor into approval, Carrier said. He recommends the self-employed and those paid irregularly plan home purchases two years in advance.
“With self-employment, bonuses, overtime and commission, you’ve got to establish history in order to consider that income,” Carrier said.
Ray said he works with new homebuyers to expand home searches north of I-10 along Clay Road.
Starter homes in King Crossing near Clay Road start at about $200,000, according to Houston Association of Realtors listings. Similar homes in Firethorne, along FM 1463, begin at about $250,000.
Flexibility in location helps buyers save money and get a home they love, Ray said.
Borden and Ray said they are seeing buyers look north of I-10 for that reason. Buyers can get more home for the dollar on the north side, they said.
Borden said buyers should be up front about their budget with their Realtor. Knowing the budget helps the Realtor direct house shoppers toward homes realistically.
“It’s so I don’t show them something that’s beyond their reach, and then they forever compare everything they see to that one fish that got away,” Borden said.
