What to Know About Real Estate in Houston, TX and the Four Markets

November 27 19:40 2018

Real estate is all about the purchase and sale of pieces of property. A piece of property can be anything from a single-family house, acres of vacant land, and a high-rise building, among others. Real estate includes not only the building and land itself, but also the air rights above the property and the water and other natural resources found on the piece of real estate. In this article we will be discussing the four types of markets to give you a better idea of how the Houston real estate market hits all-time high

The Real Estate Markets 

When we talk about a “market” we are talking about the groups of people and businesses in a certain area. This is the reason why you hear about financial markets and why in real estate there are markets by state, county, city, and even neighborhoods. No matter how large a market might be, it is always defined by a set of parameters that dictate the rise and fall of supply and demand, and the sales and purchases that arise from it. So, what are the four types of real estate markets? 

  • Buyer’s Market Phase 1

  • Buyer’s Market Phase 2

  • Seller’s Market Phase 1

  • Seller’s Market Phase 2


In a buyer’s market phase 1 there’s very little job growth, unemployment increases and thus the market gets oversupplied with properties. For these reasons bank foreclosures rise to their highest levels. In a buyer’s market phase 2 jobs are created, people begin to migrate into that market which begin to create more jobs and unemployment begins to decrease. Because there’s more money in the economy few if any bank foreclosures are left on the market. Rents begin to increase and thus investment property values increase. There’s little to no construction happening and the oversupply from the previous market phase is just starting to be absorbed. If the city has an aggressive program to attract jobs, companies will be committing to the area which will create even more jobs. This website may explain more and answer your questions.

A seller’s market phase 1 is the latter half of what is known as an emerging market. You can visit the Magnolia Realty website for more details. It now makes economic sense to start building again, based on absorption and rents reaching certain points. Local Investors are convinced the good times are here to stay, and they begin to invest in the market once again. Demand for real estate reaches its highest point, properties sell fast and above asking price, they are rehabbed and sold at high prices, and employment continues to rise.

In a seller’s market phase 2, the riskiest phase of the cycle, properties remain unsold on the market for ever-longer periods of time, and the number of properties on the market begins to increase. Business and job growth will begin to slow and the cycle will restart at the buyer’s market phase 1 once the market “crashes”. In conclusion in this article we briefly discussed what real estate is and described the four different cycles an investor will encounter in any given market.

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