Profile of the 2010 Montgomery County Housing Market

Many years ago George Bernard Shaw said “If all economists were laid end to end, they would not reach a conclusion”. In today’s much more complex world, his statement is more relevant than ever. While it appears that economists have differing outlooks on 2011, they seem to be slightly more upbeat than the last couple of years. And although I share cautious optimism with many of my fellow Realtors, I’ll refrain from making any of my own predictions for 2011. Instead, I’ll look back on 2010 and share a few insights. That’s a much easier task

As Montgomery County’s housing stats for 2010 are being finalized, results are shaping up to be a mixed bag. For Montgomery County as a whole, sales of single family residences were relatively flat with last year, but still around 30% below the peak year of 2006. The good news though is that the median home price rose about $3,000 in 2010 as a result of slightly larger homes sold and a slight increase in the average price per square foot.

In taking a closer look at the results, it appears that prices had to resist some heavy downward pressure from foreclosures. Foreclosures were very high as they have been for a number of years and still represent about 20% of all homes sold. The median sales price of foreclosed homes was down significantly in 2010 as banks appeared to more aggressively dispose of their inventories. The average price reduction from 2009 on foreclosures was approximately $9,000. The contrast in the average profile of a non-foreclosed home and foreclosed home in 2010 was remarkable. The average non-foreclosed home was 2,430 SF in size and sold for $89.76 / SF. The average foreclosed home was about 20% smaller and had a 35% less cost per square foot. Of course, many foreclosed homes are not in tip-top shape, but most of these foreclosed homes were great buys.

Without these large numbers of low priced foreclosures, our market would have fared much better in 2010. Since many of the systemic weaknesses in mortgage lending practices have been eliminated, I suspect that far fewer high risk mortgage loans are making their way into the banking system. And as foreclosures get back to the lower levels existing before the housing crisis, housing prices should improve. But I wasn’t going to get into any predictions, so I will let you come to your own conclusions.

Finally, from a geographic perspective, results indicate that southeast Montgomery County was the hottest housing market in 2010 with a 12% increase in sales and a 7% increase in prices. I should also note that new construction represented a third of all sales in this area compared to about a sixth of all sales in the rest of the county. With easier access to major employment centers and with The Woodlands approaching maturity, it makes sense that developers and builders are targeting this area.

In summary, I would conclude that 2010 showed slight improvement. Overall prices have picked up slightly while sales volumes have remained steady with last year. And with Montgomery County having so much to offer, I feel that the future of our local housing markets is bright.

But having said all of the above, most of my clients are not affected by housing trends and predictions. Their decisions to buy or sell property are based on personal reasons, such as a growing family, an impending empty nest, a big promotion, or wanting a change of scenery, to name just a few. But be assured that whatever is driving your decision to buy or sell, you will get maximum value when you contact an experienced Realtor.