Houston’s condominium market has seen a notable decline in prices, with the median price dropping 21 percent year over year in September, according to CoStar. The city is experiencing a buyer’s market, and along with Dallas, it has one of the highest percentages of discounted sales in the country as of August.
However, real estate agents report that these trends are mostly affecting the lower tiers of the market. New luxury condo developments in the Houston metro area appear to be less impacted. Agents are currently marketing residences under well-known brands such as Ritz-Carlton, Auberge, and St. Regis, and they state that demand for high-end condos remains steady.
“There’s been a big separation in Houston between aging inventory and new luxury product,” said Catherine Lee, president of new development for Douglas Elliman. “If anything, luxury has gone the other direction over the past year.”
The lower tier of the condo market is facing more challenges, partly because Houston has more homes for sale than any other city in the United States. The city’s single-family home inventory has reached record levels this year. According to Rosie Meyers, an agent with Martha Turney Sotheby’s International Real Estate, some residents in older, lower-tier condos are considering moving to less expensive houses in the suburbs.
“If you take an old building that’s got lots of problems, then yes, just like Miami, you’re going to have a lot of depreciation right now because there’s work to be done,” Meyers said. “Our overall high-rise market is very strong because there’s no supply in Houston. I don’t see it devaluating this year in high-rises.”
Luxury residences such as the St. Regis are targeting a specific demographic, typically older couples looking to downsize, according to Lee. These buyers are not usually the same as those who might view condos as a temporary step before moving to the suburbs.
“We’re seeing more locals being open to getting into condo living,” said Adriana Banks, a Douglas Elliman agent selling the St. Regis Residences.
Luxury condo projects also differentiate themselves with a variety of floor plans, which helps them avoid the pricing competition seen in lower- and mid-tier buildings. Misty Meredith, a Douglas Elliman agent marketing the Mondrian and the Sophie, noted this distinction.
“I think part of that is the life cycle of aging inventory here in Houston. There’s just not new product in that price point being built,” Lee said about less expensive condos. “And so you are starting to see some of those challenges with buildings that are greater than 15 years old.”
