August 12, 2022

Maryland Heights Residents

Crazy About Home & Real Estate

What’s the future of Houston real estate for 2022?

17 min read

Table of Contents

Trying to predict what will happen in the residential real estate market in 2022 is a bit like trying to forecast the weather months in advance, but while the future of home sales and development has become increasingly unforeseeable, real estate professionals continue the work of advocating for their clients.

We spoke with Houston real estate leaders to learn what they see coming down the road for the industry. While buyer preferences for more space — both inside and outside the home — remain and supply chain issues continue to stifle home construction efforts, other factors, such as the potential increase in interest rates, are expected to change the game in 2022. Check out our Q&A with some of Houston’s top players to learn more about what they’re planning for over the next 12 months.

 

* Nancy Almodovar, president and CEO, Nan and Company Properties

* Jeremy Collett, executive director of capital markets, Guaranteed Rate

* Charles El-Moussa, president, Coldwell Banker – Texas

* Jennifer Hamelet, owner, Mirador Builders

* Alex Kamkar, managing shareholder, Bold Fox Development 

* Lance Loken, CEO, Loken Group

* Robin Van Zant, real estate agent, Douglas Elliman

 

Will residential real estate have a good 2022? Why?

Van Zant: I anticipate that 2022 will bring a more balanced and, hopefully, less stressful market for homebuyers. As the market is slowly cooling off post-pandemic, we are seeing a slight shift/slowdown which should increase the inventory of available homes. Mortgage rates are also predicted to remain stable into 2022, which is favorable for homebuyers.

Loken: Yes, residential real estate will see a strong 2022. The available inventory is still extremely low, and we dont anticipate it getting above two months of inventory before the end of next year. Before the pandemic hit, we had been between three and four months of inventory for about five years, and weve been holding steady under two months of inventory for the last 10 months. Strong buyer demand will continue through 2022, and the Houston area continues to be a top destination for relocation buyers.

Almodovar: Yes, things are not slowing down at the end of 2021, and the momentum will only build in 2022.

 

What changes have you made to the way you do business since the onset of the pandemic, and what changes do you anticipate making in the coming year?

El-Moussa: We used our digital platforms to stay connected with our affiliate agents and provided a virtual educational series that would help refresh and equip the agents with valuable information and resources to help them retain or grow their businesses. Shifting to virtual platforms helped the agents to quickly learn and adapt to using digital channels to support various aspects of their business. While our offices have reopened, we continue to make our services and support virtually accessible to accommodate those who prefer to conduct their business remotely.

With the influx of out-of-state buyers and relocation trends that emerged as a result of the pandemic, our affiliate agents have benefited greatly from being part of a global network of over 96,000 agents. We will continue to encourage that connectivity that has proven successful to our affiliate agents throughout Texas.

Loken: When the pandemic hit, our first action was making care calls to all our clients to find out if they were doing ok or see if they needed anything, whether it was masks, gloves or even toilet paper. We offered options like virtual consults, virtual showings, and mobile notaries for closings, and did a mix of virtual and in-person events to cater to all of our clients and the manner that would make them feel most comfortable. As well, our team now has more of a hybrid work schedule, where they can be remote most of the time, only coming into the office for key team meetings or events. Our biggest need for 2022 is hiring more producing buyer and listing agents, so were hyper-focused on finding great talent.

Almodovar: At Nan, we have always stayed one step ahead in the digital sphere. We were already creating listing videos, digital walkthroughs and Matterports prior to the pandemic, so luckily we did not have to adapt too much.

 

What can agents do to succeed in 2022?

Almodovar: With the momentum the industry is seeing, agents need to be extremely organized, practice calendar integrity and be with a full-service brokerage that goes beyond just collecting a fee.

Loken: Real estate will always be primarily about relationships. Agents should put a priority on their network of sphere and clients, and make sure that they are consistently communicating with them.

Agents should also be focused on prospecting daily and keeping their pipeline full. With the listing inventory shortage, agents should be focused on getting listing business. In todays market, it will take at least twice the number of contacts to get the same number of listing appointments as it would have taken in 2019.

Van Zant: With the market constantly changing, its always best practice for agents to stay abreast of trends on a local and national level. Its important to remember that clients look to their real estate agent for guidance and advice based on their specific needs. From my perspective, the pandemic taught us to be resilient and flexible, which are positive traits we should continue to possess into 2022.

El-Moussa: Communicate their value proposition. We know that building and maintaining organic relationships is essential in the real estate business. After all, real estate agents form part of a monumental and very personal decision in peoples lives. But now more than ever, agents must distinguish themselves through the expertise and the qualities that they bring to the table.

Agents need to show that their level of expertise is indispensable to the client. Showcasing your marketing and your reach is still a vital component, but being equipped with tools and programs that meet a variety of consumer needs helps agents stand out from the competition. Its why weve had success with programs like RealVitalize, which offers home sellers with home improvement resources with no upfront costs. The agents are now able to extend a service that the clients would have had to seek elsewhere, creating a smooth and efficient real estate experience for consumers.

 

Where will the hottest communities and neighborhoods be next year?

Loken: Were seeing a lot of builders looking for more land in the Tomball and Cypress areas, particularly near Highways 249 and 290. These areas have great school districts, and there are plenty of opportunities to continue developing new communities.

Almodovar: Inner-city Houston is going to continue to move at a fast pace in 2022.

 

How will tech ramp up in 2022?

Loken: If theres one thing that happened this year that further proved technology cant replace people and relationships, it was the demise of Zillow iBuyer. Technology will continue to help us support our business and make it run smoother, but the people behind it are the ones making the biggest difference. Were seeing more companies offer better, smarter platforms for CRM and transaction management, and we think more brokerages will be rolling out one-stop tech solutions for their agents.

Almodovar: Technology is always evolving, and any new software coming out is going to be used to our advantage at Nan. Technology that caters to real estate is on the rise, and I do not see this slowing down.

El-Moussa: Its about being effective in the eyes of consumers, which ultimately makes it all about productivity and consolidation within the technology that is already available. For us, its about providing the best experience for the consumer and enhancing the ability for agents to grow their businesses.

A great example of that is the recent Coldwell Banker announcement, coming in 2022. The ultimate real estate brand is about to have the ultimate real estate website. Were building the first true end-to-end experience for home selling and buying. This is an opportunity to be innovative and meet the needs of consumers where they need it the most. Its still in the early stages, but the new website will ultimately focus on helping sellers get an informative, clear picture and the full potential of listing their homes. Were talking about the ultimate destination for home sellers, with industry exclusive tools like the Move Meter that compares cost of living city by city, and a remarkable new Sellers Assurance Program. Were talking about revolutionizing what guiding people home means, reaching people at every stage of the process with personalized information and expert knowledge from our affiliated agents.    

 

What growth do you expect for your company next year? Do you expect your business to thrive, decline or remain stable? Why?

Almodovar: Thrive! At Nan, we always have a positive mindset. I would say we will see a 25%-30% increase in 2022.

Loken: Our company has been growing and increasing its business since we opened our doors in 2011. For 2022, we project our business will grow by 20% as we bring in additional agents and continue to have a robust pipeline of leads coming in every month.

 

Are you seeing continued migration to the suburbs, or is that beginning to reverse? What does it mean for sales?

Van Zant: The suburban areas have become quite popular for urban dwellers who began working from home during the pandemic. Many of these buyers were looking for more space, especially a designated home office, and were less concerned with commute time due to work from home protocols. However, we continue to experience a very stable market in the urban area of Houston, which has historically remained highly desirable.

Loken: We are continuing to see migration out to the suburbs, as people are seeking homes and neighborhoods that fit their lifestyle. Many companies in our area are still offering remote or hybrid remote-work schedules, so buyers are also looking for larger homes that will provide home office space for one or more people in the family.

El-Moussa: Many companies are implementing permanent remote-work opportunities for their employees which continues to drive the exploration of suburban markets and the relocation of domestic buyers, as well as those who had delayed their move due to limited inventory on the market. The influx of buyers from the east and west is feeding the suburban markets and with the reopening of international travel, there are many foreign buyers interested in the investment opportunities throughout the greater Houston region.

 

What will be the biggest challenges and opportunities for agents, lenders, and brokers in 2022?

Loken: For agents, it will be finding listings consistently to meet the demands of buyers, as well as finding entry-level homes for buyers that have been pushed out of the market. Traditional brokers will need to find a way to adjust their business model so they can be more competitive with virtual brokerages.

El-Moussa: The challenge is still the inventory level not meeting demand in the market, even with an increase in new construction. For our affiliate agents, its an opportunity to leverage the tools and resources that give them a notable advantage over competitors and that are also tailored for the consumersexperience. For example, a tool like RealSure, a program offered through Coldwell Banker which provides home sellers with a choice of a guaranteed cash offer for their home while they test the market with a professional real estate agent to beat the cash offer. It also gives home sellers the advantage of being able to bid with confidence on their next home while marketing their current one. Its leveraging the right tools in response to consumersneeds that can provide opportunities for agents to bolster their businesses now and in the years to come.

With new and experienced agents looking to partner with a brokerage that can help empower them in a fast-paced and growing market, one of our biggest opportunities as a company is to communicate our value proposition — and our position as a trusted and nationally recognized real estate brand for consumers, as well as our global reach. Providing the best of technology to support our affiliated agents where they need, like with our Listing Concierge program — a powerful marketing program that utilizes state-of-the art technology to provide a comprehensive, high-quality marketing plan for listings that consumers across all spectrums, and helps agents win more listings and prove their value proposition.

 

Is the work-from-home trend changing the way people are shopping for homes? How are buyer preferences changing beyond wanting more space for a home office?

Almodovar: More than ever, people are looking for excess space in their homes. I have had a lot of clients looking for homes with enough space for two home offices or a home gym. Consumers are wanting to bring the elements of their daily routine to the comfort of their own homes!

Loken: The work-from-home trend is changing what buyers want in homes today. Beyond having more space for a home office – or having two home offices – buyers are also looking at homes that offer more land or nicer outdoor spaces. If you can work from home, why not also work outside on your decked out patio? Todays buyer is looking for homes that meet their desired lifestyle and in their desired environment.

El-Moussa: Remote work has changed the reason people live where they live. Without needing to be close to an office or having to worry about the time it takes to commute, homebuying has become centered around lifestyle and opportunities for investment. Those who work from home also dont want to worry about having to do any construction work in the home, and weve seen a higher demand for move-in ready homes because of this. Weve seen younger millennials motivated to purchase their first home, and remote work has given them the opportunity to seek out more affordable markets throughout the Houston region.

 

Do you think the number of new people getting real estate licenses will grow in 2022?

El-Moussa: As other industries were heavily impacted by the shutdowns, we saw many people take interest in real estate as a new career choice, especially those from the hospitality industry. News of the hot real estate market coupled with the schedule flexibility and the opportunity to be in control of their own income stream makes it a very appealing choice. But theres a difference in getting a real estate license and being a working real estate agent. Were already seeing teams grow with the addition of new agents recognizing the need to learn from the experienced agents who can help them expand their knowledge and skillset.  

Loken: Yes. The number of real estate agents in the greater Houston area has increased 15.9% since 2019, and with a strong real estate market projected for 2022, we anticipate continued growth in agent count.

 

What do you see happening with home prices in 2022?

Loken: The average home price will continue to rise over the next 12 months, somewhere between 5% and 10%.

Almodovar: We are lucky to be in Houston, the home prices here increase at a conservative pace. I foresee the home prices taking a steady increase in 2022.

El-Moussa: The National Association of Home Builders reported that greater Houston has had the highest number of filed single-family home permits, over the past decade, than in any other metro in the country. Its no surprise, as the metro regions throughout Texas were already hot real estate markets experiencing massive growth in development and in the employment sector, long before the pandemic. There continues to be expansion of new developments, especially throughout the emerging markets within greater Houston.

 

How is the pandemics impact on the oil and gas industry affecting the Houston real estate market? Will those trends continue into 2022?

Loken: Part of the changes are being driven by more people working from home. Weve already seen Exxon make plans to shut down two office towers in The Woodlands and consolidating employees into their downtown location. As they shift back to in-office in 2022, this may have an impact on where people choose to live next.

However, with the supply issue, the price of oil has been going up to $80 per barrel and we may see the price go up to $90 per barrel by the end of the year. Well see oil and gas companies ramp up production, which will in turn help fuel jobs in Houston and provide a boost to our real estate market.

 

What do you expect to see in the mortgage lending industry in 2022? 

Collett: In 2022, well see a continued focus by the industry on growing purchase market share. I expect interest rates to rise, which means refinance activity will fall. Well also see lender profit margins get squeezed, which could result in an uptick in consolidation within the industry. I expect the Government Sponsored Enterprises (GSEs including Fannie and Freddie) to focus heavily on affordable housing. In addition, well likely see a slew of new products and energy poured into expanding home ownership opportunities to communities traditionally underserved by the market.

 

Will interest rates remain low next year, and what should homebuyers be watching for regarding mortgages?

Collett: While interest rates may move slightly higher, I do believe they will remain at historically low levels, maintaining an advantageous environment for homebuyers. Professionally, Ive been through about 6-8 rising rates cycles and they always fall short of expectations; I simply dont think the markets can function on significantly higher rates.  

 

What will be the most popular loan types? 

Collett: I think conforming and jumbo 30-year fixed-rate mortgages are here to stay. With a couple of rate hikes expected by the Federal Reserve in 2022, we will likely get a flatter yield curve, which doesnt bode well for adjustable-rate mortgage products. With tighter profit margins, lower origination volumes and the sharp focus on affordability by the GSEs, well likely see credit widen a bit.

 

How will tech change for loans in 2022?

Collett: With lower volumes, well probably see additional resources poured into mortgage technology, which we are certainly doing at Guaranteed Rate. Lower profit margins means lenders will have to continue figuring out how reduce the cost to originate a loan. We should see the GSEs focus more heavily on mortgage tech as well; some of those initiatives lost focus under the previous administration, whose goal was to de-risk the agencies and move them out of conservatorship.

 

How will you add inventory in 2022?

Kamkar: Our company has several projects in the works with a pipeline that stretches out for some time.

Hamelet: Yes, I have three homes under construction, priced at $2,600,000, $4,500,000 and $12,500,000. I do have agents and buyers calling me for information on them.

 

How is your company responding to low inventory?

Hamelet: Mirador Builders typically builds 50% custom and 50% for sale homes.  I need to add lots for 2023.  My assistant immediately texts me any addresses in West University or in River Oaks, as soon as she takes a lot for sale call. 

Kamkar: The dynamics around housing are changing due to macroeconomic changes in the economy from new work at home policies. I think land across our region that was maybe five-plus years out is closer to two to three years out.

 

How will you deal with supply chain issues next year? Will this continue to be an issue for builders?

Kamkar: For developers, PVC pipe and RCP (reinforced concrete pipe) pricing is moving due to increased demand. For builders, weve heard lumber pricing has come back down. Bold Fox believes the supply chain stress will ease with some hiccups here and there.

Hamelet: Ive been selecting and paying for materials, well in advance.  From copper flashing to plumbing trim to large trees, getting out well ahead of the build is crucial. Lumber pricing is only good for two weeks now. Its making pricing a home for a client difficult. 

 

How important will agents be to your business in 2022?

Kamkar: Agents continue to be a critical part of the housing environment. For Master-Planned Communities, they have always been essential even more so now.

 

What impact will environmental concerns, particularly hurricanes and flooding, have on the Houston real estate market in 2022?

Hamelet: Mirador doesnt build in flood prone areas.

Kamkar: As odd as it sounds, we are still in the aftermath” of Harvey. The regulatory framework around drainage and engineering is still adjusting. That being said, the civil engineers in our area have always been ahead of the curve in helping us make communities that are resilient and keep families safe. I believe in 2022, families will be looking for value and safety, and that means being in a master-planned community.

 

How is the pandemics impact on the oil and gas industry affecting the Houston real estate market? Will those trends continue into 2022?

Loken: Part of the changes are being driven by more people working from home. Weve already seen Exxon make plans to shut down two office towers in The Woodlands and consolidating employees into their downtown location. As they shift back to in-office in 2022, this may have an impact on where people choose to live next.

However, with the supply issue, the price of oil has been going up to $80 per barrel and we may see the price go up to $90 per barrel by the end of the year. Well see oil and gas companies ramp up production, which will in turn help fuel jobs in Houston and provide a boost to our real estate market.

Hamelet: The pandemic created an interest in larger homes with flexible space. Two home offices, a home gym and a pool are high on buyers lists.

Kamkar: The pandemic has turbocharged oil and gas. As of today, the spot price on WTI is $84.65, and for natural gas it is $5.88. The world needs energy to run and even more so now coming out of the lull period of COVID-19. I expect this trend to continue in 2022.

 

Will Houston continue to be a hotbed of activity for new construction in 2022?

Almodovar: 100%! This month alone, we are breaking ground on four brand new communities encompassing 100 homes each. New construction is bombing in Houston and this will not be slowing down in 2022.

Hamelet: I think so. I get a lot of calls from both coasts, as well as within Houston.

Loken: YES. The Houston market saw almost 33% increase in new construction starts this year, and our area still has the second highest volume for new home starts in the U.S.

Kamkar: Talking to industry insiders, they described the market as white-hot currently. Bold Fox believes in 2022, builders will start taking profits, while keeping the industry and sales fairly robust.

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