Low oil prices to slow Houston’s luxury housing market?

HOUSTON – Houstonians purchased 1,411 homes that each sold for at least $1 million last year, up from 688 five years earlier, according to the Houston Association of Realtors (HAR). But the market’s swift surge is now threatened by strains in the energy industry that fueled much of the city’s high-end real estate boom.

Houston had the highest number of luxury home sales among Texas’ four major cities last year, a report released by the Texas Association of Realtors showed. That represents almost 2 percent of the area’s total housing transactions.

Million-dollar-plus home sales were up 13 percent in 2014 over the previous year, according to the second-annual Texas Luxury Home Sales Report, which looks at high-end home sales in the state’s largest cities based on sales data from the first ten months of the year.

Texas economist Dr. Jim Gaines, who remains bullish on the local property market, has reasons to believe demand for luxury properties will continue.

"The statistics will look different, but it’ll still be a decent year," said Gaines of the Real Estate Center at Texas A&M, which analyzed the data in the association’s report.

He cited lower rates on jumbo mortgages, those hefty home loans too big to be sold to Fannie Mae and Freddie Mac that make high-dollar borrowing more accessible.

While layoffs are expected and forecasts for Houston-area job growth are at least half of what they were last year, Gaines said the most skilled, high-paying energy jobs are less at risk.

There could be a shift in buying patterns, however. "A lot of people who might have been buying $3, $4 or $5 million homes might buy a $1 million home," Gaines said.

He posed another caveat: If the price of oil falls into the $30-per-barrel range and stays there a while, "there will be some readjustment," Gaines said.

Here’s the number of homes that sold for at least $1 million across the Houston area, by year, according to HAR:

2014: 1,411
2013: 1,252
2012: 896
2011: 728
2010: 668