The Houston Association of Realtors just released year end MLS stats for 2007 and results were positive for the year! Despite total sales and dollar volume being down compared to 2006, 2007 marks the second best year on record for the Houston market as sales prices continued to rise slightly and marketing time registered well below the national average. Single family home sales in December 2007 were 18.3% below last December with 4,976 properties selling. Dollar volume was also down 14% compared to a year ago.

The number of days it took for a home to sell increased to 85 in December which is the highest number of days the average home took to sell since February 2006. During December, the average seller had to negotiate 4.3% off their asking price to get their home sold, marking the highest negotiating percentage we have seen in recent years. Pending sales on December 31st stood at 3,230, a 9% decrease from December 31, 2006. Active single family home listings were up to 33,926 homes, an increase of 13% in inventory since December 31, 2006. December was the fourth month in a row of declining numbers over the corresponding months in 2006.

In Harris County the January foreclosure postings increased to over 3200 properties, compared to right at 2000 in December. It is quite evident that we are seeing increasing softness in the Houston market, especially in homes valued under $200,000. However, if the inventory of homes does not increase drastically and unemployment stays under 4.5%, overall home values should remain stable in the Houston area. I believe we can expect to see some home values declining in the price ranges below $200,000, where the majority of the mortgage delinquencies exist and many buyers are finding it difficult to qualify for financing with the much stricter financing guidelines. Despite their negative effects on our market, these stricter guidelines for financing do have a positive influence on the rental market as many families are forced to rent. This increase in renters will help absorb an over-supply of rental homes in many suburban neighborhoods that have seen a lot of investor activity the past few years. We can expect rental rates to gradually increase and leasing times to decrease.

Although we expect the first half of 2008 to follow somewhat in the path of the rest of our nation, we are optimistic that Houston's vibrant job market and healthy energy industry base will keep us from seeing the large declines in sales volume and prices expected to be experienced by the rest of our country. Steady or moderate appreciation rates are expected to continue and overall market conditions are predicted to improve the latter part of the year as long as our employment base remains solid.

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