Bigger and Better: Why Houston Real Estate Is Booming
They say everything in Texas is bigger, and in the case of Houston, it keeps getting even bigger. While currently the fourth largest metro area, Houston is on target to overtake Chicago as the third largest city in the next few years. That’s no surprise to local Sotheby’s International Realty real estate agents who are seeing out-of-towners flock to the city to take advantage of the culture, diversity, relative affordability – and yes, appealing tax status.
Diverse housing options abound
One of the things that makes Houston so attractive is the fact that “anything goes,” zoning wise. “Most people don’t realize it is the largest city in the United States without traditional zoning,” explains Sotheby’s International Realty agent Jay Monroe, a long-time Houstonian who also holds a master’s degree in architecture from the University of Houston. In practical terms that means older neighborhoods are governed by “deed restriction,” rather than city ordinances, he says. “The result is that in the same zip code we have all types of architecture – apartments, high rises, condos and mansions – which creates a unique fabric in older neighborhoods.”
He finds that appeals to residents, but also investors. “They are attracted to the fact they could buy something that could later be developed; for example turning two bungalows into a 10-story residential building.”
But that’s just the beginning of the charm of the urban core, he says, listing off everything Houston has to offer for any lifestyle or hobbies: temperate weather; all the major sports teams; a vibrant arts scene, with museums, symphony, ballet and opera; and an international airport that serves as a hub for multiple major airlines, offering quick direct flights anywhere you might choose to go.
Sotheby’s International Realty agent Lisa Baer, who has worked in the market since 1980 and specializes in the Inner Loop neighborhoods, characterizes it as a “suburban-urban feel, where you have outdoor living and ample space yet is near to the downtown amenities. It’s a unique vibe that offers the best of both types of living, something you can’t find in other major cities like Los Angeles or New York City. “Residents prize the walkability to shops, restaurants and the farmer’s market,” she says, adding that the presence of a world-class medical center is also a big draw.
And, she says, the diversity of the city extends to the vitality of the residents, describing it as a warm and accepting community. “It’s not one of those old-fashioned cities where you had to have lived here for three generations to be accepted. It’s a dynamic city that embraces newcomers, and anyone can get involved and contribute. I like to say it uses the resources of its people to achieve greatness.”
Sotheby’s International Realty agent Walter Bering, describes it as a “melting pot.” Although he himself is a sixth-generation Houstonian, he says the majority came from elsewhere, which creates a friendly and inclusive community. “People are drawn to the quality of life and appreciate the welcoming and entrepreneurial spirit.”
Relative affordability drives demand
In addition to these appealing characteristics, people flock to Houston because of its reputation as a good value, where you can get a lot of home for a reasonable price.
The geography contributes to that, says Monroe. Without any natural boundaries – you don’t hit mountains or water – the city continues to expand.
That means there is room to spread out, which is spurring growth. “When you’re in Houston it’s an hour from Houston,” laughs Monica Brashear, a successful Sotheby’s International Realty agent who previously practiced law.
That leads to single-family homes that boast desirable features, including coveted outdoor areas. Monroe mentions out-of-town buyers from pricey places like California, who sell a 2,000-square-foot cottage for $3 million and are able to purchase a 6,000-square-foot estate. While those moving in from California and New York are grateful to be able to enjoy outdoor living again, the sellers of those larger homes often have discovered they could work from home and decided to downsize to a smaller pied a terre, maybe even in another area.
“When people were cooped up during the pandemic, they went online and browsed real estate, and their reactions ran the gamut,” says Bering. “Where some people wanted to upgrade to a larger home, others decided they could scale down and find a second home elsewhere to escape to.”
New residents come from all over, including both coasts, along with international buyers. Because of the favorable tax structure, it’s also a good place for a secondary or investment residence. In addition there has been a steady influx from Austin, who found that market had outgrown them and they wanted something more affordable. “There’s a diversity of high-end homes, and our luxury market is not as pricey as Dallas or Austin,” notes Bering.
“We are proud Houstonians who truly enjoy selling lifestyles across the greater city of Houston. Last year we brought together well over 3,300 buyers and sellers,” says Martha Turner Sotheby’s International Realty President, Robin Conner. “Just like in 2021, our new listings continue at a traditional pace, but due to the number of buyers coming into the market, the inventory is moving much faster than usual.”
Urban or suburban? Take your pick
One desirable community is The Woodlands, a suburb 27 miles out of the city, which was recently named No. 1 on the “Best Cities to Live in America” list from Niche.com. As a long-time resident herself, Brashear knows exactly why. “It has excellent schools, low taxes, and wonderful dining, shopping and other amenities, yet the city of Houston is at your fingertips, with all it has to offer.” The beautiful, heavily wooded community is entirely connected by bike and walking paths.
While supply is limited, there is still movement, given that the residents are mostly white collar professional families, many of whom are working their way up the corporate ladder. “There are always people transferring in and out because that’s where they are in their lifecycle,” she says.
While homes The Woodlands go for a premium, there are other opportunities in the surrounding areas, where you can still be part of the Houston metropolitan area.
In fact, despite recent growth, it’s not too late to get a good value, says Monroe. We’ve seen healthy appreciation but it hasn’t been insane, as it has been in in markets like Austin. However, he says that could be changing as inventory dwindles, which means that competition can be fierce.
The right agent makes the difference
Agents note that would-be Houston-area buyers have to act fast. “Buyers are very educated and have already seen everything, so if a new listing comes they are going to pounce,” Bering says.
Brashear recounts a recent listing that got 16 offers, eventually selling for $100,000 over asking price, with inspection, appraisal and repairs all waived. “Buyers need to work with an agent who will help them be aggressive,” she says. For example, she has helped potential buyers identify key areas and put notes on doors asking the resident to have their agent call if they are interested in selling.
That can be a good tactic, says Bering, given that many interested home owners may be reluctant to sell with the lack of supply. “Our job as agents is to convince people it’s a great time to sell,” he says. After all, it’s the best market he’s seen in 43 years in real estate.
That’s where a network can make the difference, he says, citing a couple from New York, a referral from another Sotheby’s International Realty broker. They were looking in River Oaks, a high-end luxury enclave that didn’t have many listings. Through his robust referral network, he was able to book some off-market one-time showings with home owners who were only beginning to consider selling. The astonishing offer helped them feel confident to move forward, proving you don’t know what’s out there without talking to a connected agent.
Baer finds that Sotheby’s International Realty strong local and international reputation allows them to maximize results, while working with like-minded agents who share similar commitment and values.
Real estate is not about houses, she says. It’s about people – honoring your customer’s objectives and helping them immerse their family in a new community. That’s what really makes the city tick, she says. Houston is not about a map; it’s about the people who live here.