Sep 21, 2023 - Real Estate

Houston buyers don't want fixer-uppers

Illustration of two hammers forming an "X" shape.

Illustration: Maura Losch/Axios

The sale of Houston-area homes continued to decline in August, per a new Houston Association of Realtors report.

What's happening: Single-family homes are staying on the market longer, for 42 days compared to 32 last year, according to the report.

Why it matters: Houses that stay on the market for more than a month are usually overpriced or in need of major work, according to Redfin deputy chief economist Taylor Marr.

Between the lines: Home buyers already hampered by gravity-defying prices and mortgage rates don't want to spring for a place that looks like an HGTV "before" photo.

By the numbers "Fixer-upper" listings comprised 0.2% of sales here in the first half of 2023, per Zillow data, while those advertised as redone made up 19.7%.

What they're saying: "As far as fixer-upper homes, we don't see as many investors as we did the same time last year just because interest rates are so much higher," HAR chair Cathy Treviño tells Axios.

  • "And buyers that are coming into the market, they're already stretched, so if they can purchase a home that's already fixed up and not in need of repair to move in, then those are the homes that they're moving into."

The big picture: Seller-identified fixer-uppers are typically selling for less, and more slowly, than expected, according to Zillow data shared with Axios.

  • Across the U.S., listings that mention "fixer-upper" — 0.3% of sales in the first half of the year — sold at a 3.1% discount and took 3.2 days longer to sell relative to expectations, the data showed.
  • Listings pegged as "remodeled" or "renovated," which accounted for 24.1% of U.S. sales, sold at a 1.2% premium and went 1.8 days faster than expected.

The bottom line: "Most home buyers right now simply don't have enough money left over to invest in major repairs or remodeling," Redfin's Marr told the Wall Street Journal.

Zoom out: August was the 17th straight month of negative sales in the area, though the rate of decline has been shrinking, per HAR.

  • Single-family home sales fell 3.8% year over year, while the supply of homes climbed to 3.3 months. Treviño says this is leading to a more balanced and healthy market, where sellers and buyers have to negotiate.
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