Houston home builders are using a cautious strategy for luxury home development, according to a recent article in the Houston Business Journal. The energy sector slump has slowed the pace of Houston luxury home sales during 2016, which creates cash flow challenges for builders who operate on relatively narrow margins. The longer it takes to sell a home, the less capital a builder has available for their next project. There are three major trends emerging as a result.
Houston home builders are focusing on smaller lots in the city and suburbs, as land acquisition costs have risen. Move-up home buyer tastes are also trending towards smaller, lower-maintenance lots in walkable communities.
Home builders are avoiding neighborhoods that have been heavily impacted by the energy sector decline, such as the Memorial area. While this area remains coveted for its beautiful, well-constructed homes, good schools and abundant amenities, it is also home to a large number of energy sector employees. Consequently, while Memorial homes are still selling for good prices, home inventories are higher, and home sales are taking longer.
Seeking quicker home sales, luxury builders are actively targeting neighborhoods that are home to a large number of medical professionals, particularly in the south and southwest portions of the city.
Overall, luxury home builders are seeking the most profitable locations with the fastest possible home sales. While this is nothing new, current economic conditions are driving new luxury home development into a variety of neighborhoods.
This can present both opportunity and challenge for luxury home owners who plan to sell. Luxury homeowners in the Houston Energy Corridor and Memorial area will face less competition from new homes in the near-term.
However, homeowners living near the Texas Medical Center may find new luxury homes popping up in unexpected places. New development can improve local home values, but it can also provide competition to sellers of older homes.
KW Energy Corridor Team
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Houston, TX 77079