Tags Archives: Houston Luxury real estate market news

In recent years, home buyers from China have been among the most prolific investors in U.S. luxury real estate. During 2016, the number of Chinese buyers has declined. This has affected Houston luxury real estate to some degree, and has been felt sharply in the New York and California markets. Here is a summary of what’s happening, with points from Bloomberg magazine, and our own insights:

China’s government is protecting the yuan and its foreign exchange reserves. Chinese currency depreciated 4% during 2015. The onshore yuan fell 2.92% against the U.S. dollar this last spring, representing the biggest quarterly drop since 1994. After seeing an economic outflow of $108 billion in December 2015, China established new regulations to control the outflow of cash to other countries, intentionally slowing foreign investment. China has also cracked down on illegal banks and other mechanisms that allowed its populace to funnel fortunes out of the country.

Chinese buyers pay in cash when buying U.S. real estate, and new regulations affect them. As a burgeoning Chinese economy created new millionaires, Chinese investors sought the safe haven of U.S. real estate, making all-cash purchases. During 2015 alone, Chinese buyers spent $28.6 billion in U.S. real estate. Since the regulatory changes took effect, that number has fallen to $27.3 billion.  The number of units purchased also fell, from 34,327 units to 29,195 units.

China’s economy is slowing. While the U.S. would envy this kind of “slowdown,” the decline of economic momentum in China signals that it may have finally reached a ceiling. China’s economy expanded by 6.9% during 2015, with 22 of the mainland’s 31 provinces decelerating from a year earlier. This is China’s slowest economic growth in 25 years. The milestone has caused concern for the Chinese government, which seeks to avoid a devaluation of the yuan.

Chinese buyers are adjusting, not retreating. 

According to industry analysts, U.S. luxury homes priced between $2 million and $3 million have been among the most affected by the tapering of cash flow from China. As Chinese buyers work to comply with new regulations, they have been spending less per transaction, and buying fewer properties. Yet U.S. luxury real estate remains attractive for Chinese investors, who have inched back, but have not fled the market.

Looking to sell your Houston luxury home? The KW Energy Corridor Team can help you attract buyers from around the block, or around the globe! Contact us today for your complimentary market analysis and personal consultation.

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Michael Bossart

11757 Katy Fairway | Suite 930
Houston, TX 77079
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After a year-long slump in sales volume amid softening home prices, the Houston luxury market is showing signs of revival. According to the Houston Association of Realtors, sales of single-family homes priced at $500,000 and above surged by 5.8% during August 2016.

As a whole, existing home sales totaled 6,815 in August, up 8.2% year-over-year. The average sales price rose 3.4%.

The fresh sales momentum is welcome news for Houston’s luxury home sellers, who have endured weakening prices and longer days-on-market for the past several months. However, energy sector declines continue to affect portions of the luxury market, and not every neighborhood is experiencing a sales rebound. For example, luxury home sales in the Memorial neighborhoods are doing a bit better than those located in Katy.

Long-term, Houston’s luxury real estate market has reason for optimism. According to the Houston Business Journal, new residents continue to be drawn to the city, despite the energy sector downturn. Houston added 159,000 new residents last year, and the city’s economy keeps growing, thanks to advances in the medical, petrochemical and shipping industries.

For the balance of 2016, luxury home sellers should continue to remain patient and flexible. Sellers at the top strata of the market should keep in mind that it can take 1 to 3 years to sell a multi-million dollar home, depending on the location, lifestyle, amenities and material qualities it presents. Of course, each local real estate market is unique, and each luxury home must be evaluated according to its distinctions. Obtaining the expert advice of an experienced luxury real estate agent is your first step for a successful sale.

Contact us today for your personal luxury real estate consultation!

KW Energy Corridor Team
Michael Bossart

11757 Katy Fairway | Suite 930
Houston, TX 77079
908-872-9332

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Unlike typical buyers, Houston luxury home buyers are not motivated by low mortgage interest rates. They also feel less pressured about home inventory, as the luxury real estate market has an ample supply of homes on the market. With no sense of urgency to goad them on, Houston luxury home buyers are exercising caution due to weakness in the energy sector, and doubts about future fiscal policy in an election year.

Yet luxury home buyers are seeing positive signals in the economy. The stock market had a strong summer, with the DJIA returning to lofty territory, climbing above 18,000. Meanwhile, energy prices have gradually stabilized, and concerns about China’s slowing economy are easing.

According to real estate analysts, luxury home buyers are keenly influenced by the direction of the stock market, as this represents a common source of down payment and home purchase funds. Therefore, issues that affect stock market performance – everything from looming elections to economic benchmarks – can make luxury home buyers feel more optimistic or discouraged, depending on the direction of the news.

Recently, more good news was added to the mix. During July, national employment figures posted a gain of 255,000, beating the month’s forecast of 180,000. Wages and hours worked per week both saw some improvement over the prior month.

Employment strength indicates a healthy business climate, which in turn leads to profits and stock market gains.

Here in Houston, our employment figures are improving after a bumpy start in the first quarter. While our local economy feels the brunt when there is softening in the energy sector, our diversified industries are adding jobs. We detailed some of this in our prior blog post.

Houston luxury home buyers who plan to hold property long-term, have some excellent opportunities today. Luxury home sellers are negotiating, and there are beautiful homes for sale in some of West Houston’s most desirable neighborhoods.

Contact us today for your personal luxury real estate consultation!

KW Energy Corridor Team
Michael Bossart

11757 Katy Fairway | Suite 930
Houston, TX 77079
908-872-9332

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Visit Our Website
Become Our Facebook Fan
Follow Us on Twitter
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Contact Us Now