Tomball, Magnolia housing market slows while inventory builds up

Residential developers are continuing to eye the Tomball and Magnolia area for a number of new master-planned communities and subdivision expansions amid a nationwide slump in the price of crude oil.

Meanwhile, the steepest decline of home sales for the year in the Greater Houston area took place during the month of October, according to a Houston Association of Realtors report from Nov. 11. Single-family home sales fell 10.2 percent compared to October 2014.

While the oil industry remains uncertain, new homes are continuing to be built despite an overall decrease in home buying in the area, according to HAR statistics. This trend can be seen in both Tomball and Magnolia as buyers are waiting to see how new residential development affects the real estate market, said Pat Navarette, owner and broker at Tomball-based real estate company Texas Sage Properties.

“All of a sudden we’ve had an influx of sellers that were going to sell, but now they want to hold onto property and lease it and see if the market turns [around] next year,” Navarette said. “We’re leasing [properties] as quickly as we can get them.”

Residential growth

Magnolia Economic Development coordinator Tana Ross said the city is expecting thousands of new homes to be built in the next five to seven years, particularly in the northeast area.

“I think one of the reasons [for the increase in development] is that these developers can buy the land for a relatively inexpensive [price] right on the edge of The Woodlands,” Ross said. “Once they sell, everybody has access to The Woodlands so quickly.”

Easy access to The Woodlands and the Greater Houston area has made the Tomball and Magnolia area a solid investment for developers, said Karl Mistry, Houston division president for luxury homebuilder Toll Brothers. One of the company’s newest developments north of Tomball, NorthGrove at Spring Creek, is slated to offer 1,000 homes at build-out and will begin placing new houses on the market in early 2016.

“The area really benefits from fantastic access off of [FM] 2978, the proximity to the soon-to-arrive Grand Parkway and access to employment,” Mistry said. “There are still so many jobs in the area and so many people moving to Montgomery County and north Houston. It makes a great place for us to build homes.”

In addition, several existing neighborhoods are planning to expand to accommodate new residents. Colony at Pinehurst developer Legend Homes has begun work on 482 future home sites, and Magnolia Ridge is expected to offer another 1,000 new home sites in the near future, Ross said.

“Based on the projection of 3.2 people per household, we could easily see an unprecedented population increase,” Ross said. “That is why the city is planning now for increased sewer and water services.”

In Tomball, work on new phases of existing subdivisions is also underway. After opening its first homes earlier this year, Hayden Lakes recently began its second phase of development. The Reserve at Spring Lake also began construction in August on a second section of new homes near Zion Road.

“All of a sudden we’ve had an influx of sellers that were going to sell, but now they want to hold onto property and lease it and see if the market turns [around] next year. We’re leasing [properties] as quickly as we can get them.”

—Pat Navarette, owner and broker at Tomball-based real estate company Texas Sage Properties

Rental demand increases

However, even with hundreds of new homes expected to be complete in the coming months, buyers may not be ready to purchase a new home, Navarette said.

The oil industry’s effect on the economy during the past year in the Greater Houston area has made some residents more hesitant to buy or sell their homes, Navarette said. Because of this trend, interest in rental properties has also increased as residents continue to move into the area, she said.

Ross said the variety of housing options in the works will help keep renters in the area for when they are ready to buy a home.

“Some [people] moving here with ExxonMobil are leasing apartments to become familiar with the area,” Ross said. “I see this as a great advantage for Magnolia with its home values and the many options of small acreage available for homebuyers.”

To accommodate a wide spectrum of residents, new rental communities, such as Grand Oaks near downtown Magnolia, are offering starter homes. The development offers three- and four-bedroom homes for lease with prices starting at about $1,100 per month, Grand Oaks leasing agent James Rodriguez said.

“A lot of the folks who do come in [to rent with us] are saving up [to buy a house] and starting their family,” he said.

Rodriguez said the low price points offered in the area make it more attractive for buyers when compared with real estate prices in surrounding areas.

School appeal

For many new residents coming to the area, school districts are a key deciding factor when looking where to purchase a new home, officials said.

“The majority of my buyers are people with kids, so schools are a very big driving point in their search,” Navarette said. “It’s one of the No. 1 things people look at when they start their search.”

“The oil industry, it’s got its cycles, and it will cycle back. We’ve got more lucrative days ahead, and developers are betting on that.”

—Bruce Hillegeist, president of the Greater Tomball Area Chamber of Commerce

Highly rated school districts, such as Tomball and Magnolia ISDs, have helped make the area attractive to both potential residents and developers, said Bruce Hillegeist, president of the Greater Tomball Area Chamber of Commerce.

“We’re seeing more and more people come this way, and that will continue with the opening of the Grand Parkway and the Tomball Tollway,” Hillegeist said. “The oil industry, it’s got its cycles, and it will cycle back. We’ve got more lucrative days ahead, and developers are betting on that.”

Looking forward

Although the real estate market was relatively rocky this year, buyers and sellers could be looking at a more stable market by the end of next year as developers begin introducing new homes, Navarette said.

“The trend that I saw across the summer is that the builders are no longer sitting on a huge inventory [of available homes], and that made it where the demand was even higher,” she said.

Navarette said an increase in inventory early next year could help the area become more of a buyer’s market. However, she said she does not anticipate the market to return to conditions similar to 2008 before the nationwide housing market collapse.

“It’s going to take a year or more [for the market to stabilize], and I don’t know that it will ever be the way it was before,” Navarette said. “But it’s actually kind o