Bidding wars to continue for entry-level homebuyers this spring

Home sales in the Houston area may have slowed but that doesn’t mean entry-level buyers here have an easier or cheaper road to homeownership.

There are more homes available for sale than a year ago, but mostly in the upper price ranges, according to a new report by real estate marketplace Zillow. Locally, the supply of entry-level homes in Houston — those valued between from $137,000 to $255,000 according to Zillow — is up by 12 percent over the year. While that provides some relief for buyers competing for those homes, it’s well below the 28 percent increase in the supply of top-tier homes — those priced from $360,00 to $788,000. The inventory of Houston-area mid-tier homes — priced from $255,000 to $360,000 — is 41 percent higher year over year.

Nationally, the supply of homes for sale in the bottom price tier rose by 1 percent over the year, compared with gains of 8 percent for the middle tier and 13 percent for the top tier.

“Buyers shopping for the least-expensive homes this spring aren’t noticing much difference from the pandemic-era market heat,” Skylar Olsen, Zillow’s chief economist, said in the report. “Competition is fierce, but there aren’t many homes for sale, so buyers should be patient but prepared to move quickly and anticipate a bidding war once they find a home they love.”

Also, the value of Houston-area starter homes has grown more than that of middle or top-tier homes, according to Zillow, rising by 41 percent since February 2020, just before the start of the pandemic. The most expensive homes, meanwhile, gained 33 percent during the period. That compares with a gain in values of 48 percent for entry-level homes and 33 percent for the top-tier of homes nationally during the pandemic, according to Zillow.

Zillow’s estimation of a home’s value in a specific region, however, doesn’t always equate with a home’s list or sale price. 

RELATED: Texas near top of the nation for foreclosure starts, but solid property values means foreclosure rates remain relatively low

In the past year, U.S. home values, as determined by Zillow, rose by 8 percent for the least-expensive tier of houses, while that of the most-expensive homes fell by 1 percent, their first decline since 2012. Entry-level homes in Houston gained 4 percent in value, twice the rate of the middle and top-tier homes in the past year.

Meanwhile, rising mortgage rates have boosted competition for lower-priced homes. When rates were around 3 percent, more expensive homes were attainable for more buyers. Once those rates soared beyond 7 percent during the past year, more shoppers were forced to compete for lower-priced homes, according Zillow.

Making matters worse for would-be buyers of entry-level homes, in Houston, 12 percent of those homes are still selling above list price. That’s a drop from the 18 percent pre-pandemic but now also on par with homes in the middle and top tiers, Zillow said. 

Woodson’s Reserve opens new section

Three years after announcing a major expansion, Woodson’s Reserve in Spring is preparing to open a new section planned for about 800 homes. 

The 1,630-acre community, south of the Grand Parkway at Woodson’s Reserve Parkway, will open eight model homes by Toll Brothers and Tri Pointe Homes this spring. The community is about 5 miles east of Interstate 45 in southern Montgomery County.

Woodson’s Reserve has an amenity center, pool with lazy river, fitness center, tennis courts, nature reserve with lakes, a dog park and on-site Conroe ISD schools. 

Toll Brothers and Tri Pointe Homes are opening eight model homes in Woodson’s Reserve. 

Woodson’s Reserve

The new homes at Woodson’s Reserve will be built on lots ranging from 50 to 80 feet wide. Prices will start in the $400,000s. The model homes are expected to open in May and June.

The community opened in 2015 to accommodate growth in north Houston spurred Exxon Mobil’s new campus in Spring that consolidated thousands of employees to the region.

Lakeside homes planned in Conroe

Grand Central Park, a Johnson Development Community planned for 1,600 homes in Conroe, has broken ground on an exclusive neighborhood planned for 16 homes along the 12-acre Deer Lake.

Located in the community’s new South Village, Deer Lake Estates will offer custom homes by J. Patrick Homes and Jamestown Estate Homes on 75-foot and 80-foot wide lots. The enclave will be within within walking distance to Deer Lake Park, which is adding a kayak launch, pavilion, fishing dock, hammock grove and outdoor table games.

Prices will start at about $750,000 and homes will start at 3,400 square feet. Located off Grand Central Parkway and Interstate 45, Grand Central Park is about 40 miles north of downtown Houston. About 1,000 of the community’s planned 1,600 homes have been built.

katherine.feser@houstonchronicle.com