Skip to main content

Real Estate CEO on What's Driving Record Home Sales in Houston Region

Published Aug 04, 2021 by A.J. Mistretta

Jacob Sudhoff, credit Johnny Than.jpg

Jacob Sudhoff, photo credit Johnny Than

Last year’s collapse in oil prices and the onset of the COVID-19 pandemic couldn’t keep the Houston region’s housing market down for long. Area realtors ended 2020 with 115,523 home sales, up 11.6% from the year before and a new annual record for the region. The median price of a single-family home also reached a new peak of $259,011 in 2020, up 6.4% from 2019. 

For perspective on how the local home market continues to evolve alongside the ongoing economic recovery, we chatted with Jacob Sudhoff, CEO of luxury real estate firm Douglas Elliman Texas. Sudhoff took the helm of the firm’s Texas operations in September 2019 when his decade-old Sudhoff Companies joined forces with Douglas Elliman—one of the nation’s largest independent residential brokerages. We talked with him about what’s driving demand, where luxury buyers are coming from now and which areas of the region are currently the hottest. 

We’ve seen an incredibly active period in residential real estate over the last year or so in Houston driven by a number of factors. Can you break down some of those for us?

A couple of factors have impacted this active period. First would be interest rates; since they hit all-time lows last year, home ownership became more affordable. We saw a lot of people in Houston leave high-rise rentals due to the high rental rates and purchase a home for the first time.  

Secondly, after people were stuck in their homes for so long during the pandemic, they started to think more about how they live because they were more focused on their quality of life. People working remotely began thinking about whether they wanted a home office. Families wanted a dedicated place for their kids to do schoolwork, to be close to a park, and to have a backyard.

Your brokerage deals primarily with listings in the market’s upper tier. Are the dynamics of this price point different from the rest of the market right now and if so, how?

Yes, the dynamics are different. In the upper tier we are seeing that a lot of buyers are relocating from California, New York, Chicago, etc. The market is not as robust in the Houston upper tier as it is in the lower tier. For homes under $1 million we are seeing bidding wars on homes, we aren’t seeing that as much in homes on the market in the upper tier. The market is still very good, and we are still breaking records on a regular basis, but the buyer demographic is different – it’s more of a want in the upper tier versus a need in the lower tier. 

How have you seen the pandemic reshape what clients are looking for in a new home?

We saw a significant premium for larger lots. For example, in The Heights, lot sizes that were above average sold for almost 10 to 12% above list price. Additionally, people now want a home office, storage for package delivery since they stopped shopping in-person and began shopping online, and air filtration to enhance air quality as they began to consider cleanliness more. People are spending more time in their houses since they are working from home and their kids are being homeschooled, so they want to make sure they have the space to accommodate those needs. Before the pandemic, many were moving to smaller spaces, but now, people want larger spaces. 

At the same time that we’re experiencing more demand in the market, we’ve also seen a precipitous rise in construction prices. How is the new housing market dealing with that reality?

Replacement cost is now substantially higher. Inflation is here. It’s on average anywhere from 15 to 20% more expensive to build a house today compared to what it was 6 to 12 months ago. The beautiful part about the new construction is that the market has kept up with the inflation and the demand has also kept up with the pricing, so builders are still able to make a profit and build new houses.

Which areas of town are you seeing the most demand right now?

Actually, the hottest areas are the suburbs right now, due to the great school systems and safety. Inside the loop, The Heights is the hottest market. We’ve never seen the suburbs as hot as they are as today.

Real estate is still outperforming the stock market. For those investing in the long term, where do you think buyers will see the most return on their investment?

Real estate is a safe harbor for inflation and more people are going to be investing in this area. It can be rental homes, multi-family, retail centers, etc., any aspect of real estate is a great investment. A lot of people are fearful of the stock market so real estate right now is a great place to put your money. In real estate you have three sources of revenue: depreciation, appreciation, and the income.

You were one of the early players in the local luxury condo market. However, condos have not proven as robust a market segment here as they are in other Texas markets like Austin or Dallas. How do you explain that and do you think it will change over time?

The condo market around the world took a pause during COVID because you are living in a building with multiple people and usually the average age is older, and that demographic was staying at home. Since then, the condo market has picked up significantly across the country, including Houston. This year, we have sold more than we have in the past couple of years. It is not as robust as we want it to be like it was a long time ago, but I think those days are close as oil continues to rise. 
What else should we know about the market right now?

There are several factors playing into our market in Houston. Statistically, when the price of oil goes above $100-a-barrel, we have the highest appreciation in the city of Houston. I believe we are about to see that price skyrocket. I’ve heard that oil will hit $100-a-barrel by the end of the year, and that it will potentially be higher in the next couple of years. If that does happen, Houston will boom.

Also, Texas is benefitting from the growth of the many companies that are moving here. What’s interesting is that there are many buildings being built for tens of thousands of new high-paying jobs in Austin, but those people are not even there yet. Those buildings deliver between 2023-2025. This means there are many people moving to Austin and there isn’t enough housing for them, even today. There is not a way to keep up with demand for Austin at this moment, so what will happen is that Houston will get a lot of spillover. Houston has the infrastructure and workforce; we can support the growth of the rest of the Texas markets, so we are positioned well for the future. 

See the latest home sales data.


Related News

Living In Houston

Houston a Destination City for Leisure Activities

Renowned worldwide as a mecca for performing and visual arts, complemented by its vast array of parks and green spaces, and award-winning culinary scene, Houston continues to attract people from across the globe for its abundance of leisure activities.   Early projections from Houston First Corporation reveal that the Bayou City welcomed over 51 million visitors last year, earning the title of Most Popular City in Texas for Overseas Tourists, according to Trips to Discover. Additionally, Houston was named one of the top American cities with the most fun things to do by CommercialCafe.  Arts & Entertainment Click to expand At the heart of Houston's allure lies its world-class museums, such as the Menil Collection and The Museum of Fine Arts, which serve as gateways to explore art, history and science. The Orange Show and Smither Park, constructed from recycled materials, stand as mosaic wonderlands, a testament to the city’s folk art. Moreover, recent additions to Houston's art scene, such as Meow Wolf and the Museum of Illusions, introduce immersive installations and exhibits that create unique attractions in the Bayou City.  Click to expand Adding a flare to the arts, Houston's entertainment district provides exclusive access to some of the world’s best musical, dance and theatrical talent, featuring prestigious organizations and theaters such as the Houston Ballet and Symphony alongside the Hobby Center for the Performing Arts and the Wortham Theater Center. Meanwhile, venues like the House of Blues and the White Oak Music Hall provide electrifying concert experiences, showcasing both established acts and emerging talents.  Parks & Outdoors Click to expand With nearly 400 parks and more than 200 green spaces, including the beloved Buffalo Bayou and Memorial Park, Houston also offers plenty of outdoor activities within the city. Hidden in-between downtown skyscrapers lies Discovery Green, a 12-acre urban park, which offers free yoga classes and movie screenings alongside the skating rink and green spaces. Nestled within the iconic Houston Zoo lies Hermann Park, which features a Japanese garden, golf course and modern play areas, making it one of the best city parks in the nation.  Click to expand Among the city’s top attractions are its amusement parks, including Downtown Aquarium, Space Center Houston, Galveston’s Pleasure Pier, Kemah Boardwalk and the Houston Funplex. Great Wolf Lodge, a massive resort and indoor water park, is also expected to open this year.    Sports Click to expand Houston is also a sports city, boasting many major-league teams and venues, including the 2017 and 2022 MLB World Series Champions – the Houston Astros, who call Minute Maid Park home. Among its crown jewels are also the Houston Texans, Rockets and the Dynamos, which occupy NRG Stadium, the Toyota Center, and Shell Energy Stadium. These state-of-the-art facilities will host a series of major sporting events in the upcoming years, including the 2024 College Football Playoff National Championship, 2026 FIFA World Cup, and the 2025, 2027, and 2031 AAU Junior Olympic Games.  Festivals & Events Click to expand The city also hosts several exciting events annually, including the Houston Livestock Show and Rodeo, recognized as the world’s largest and best fair and rodeo by the Academy of Country Music. In the 2024 season, the Houston Rodeo experienced record-breaking attendance, welcoming more than 2.5 million guests over the 23-day event. Other H-Town known events include the Houston Art Car Parade, the Bayou City Art Festival, Hermann Park’s Kite Festival, the Texas Renaissance Festival and the Chevron Houston Marathon, showcasing a dynamic variety of events with everyone in mind.   Discover more about living in Houston. 
Read More
Economic Development

Rising in Houston: Projects to Look Forward to in 2024 and Beyond

Houston experienced significant economic resilience and growth amidst looming concerns of a recession. Despite slowdowns across sectors, the Bayou City continued to create jobs, adding 53,700 in the first 10 months of ’23, according to the Partnership’s Houston Region Economic Outlook report. While the real estate market faced challenges, the greater Houston region saw many dynamic projects come to life, including the opening of Helix Park, the Texas Medical Center’s first phase of its new 37-acre campus.  Looking ahead, here are a few developments that will impact Houston’s economy in 2024.  Arco Del Tiempo Serving as the centerpiece in Houston’s East End Guadalupe Plaza Park, Arco Del Tiempo is a new environmentally sustainable art installation aiming to advance the region’s transition to an energy abundant future. Standing at a 100-feet tall, Arco Del Tiempo will not only generate power for the nearby City-owned Latino multicultural performing arts theater, Talento Bilingüe de Houston, but it also will offer a gathering space for the community. Arco Del Tiempo is set to be installed in 2024.  Click to expand Austin Point Austin Point is a first-of-its-kind 4,700-acre master-planned town that will feature 1,600 acres of mixed-use commercial development space and a walkable downtown area with hospitals, life sciences labs and corporate headquarters. The first phase of the development will include The 1824, a central park and community center with a café, wine bar, large front porch, an event lawn, children's play area, beer garden, food truck court, walking trails and a dedicated space for outdoor fitness activities and games.   Autry Park Spanning 14-acres in Montrose, Autry Park is an urban village designed to increase connectivity and walkability to food, entertainment, retail and living in the area. The project's first phase includes two apartment buildings, Hanover Autry Park, a 24-story apartment tower with 324 units, and Hanover Parkview, an eight-story mid-rise with 421 units, both have already opened. Phase two is projected to open at the end of 2024 with additional commercial tenants and retail space. BioHub II at Generation Park Generation Park, Northeast Houston’s massive commercial development, is set to open its new state-of-the-art, 45-acre biomanufacturing hub – BioHub II this year. The new master-planned campus will include 500,000 square feet for cGMP manufacturing, lab and office space and house the biomanufacturing workforce institute that will offer certificate coursework in bioprocessing to students, further expanding the region’s life sciences ecosystem and workforce.  Click to expand East Blocks  A redevelopment project led by Houston-based Pagewood and Wile Interests aims to transform former warehouses in EaDo into a walkable 10-block mixed-use district. East Blocks is expected to break ground in the second quarter of 2024 and will encompass 513,000 square feet southwest of Shell Energy Stadium. Phase one will include a unique blend of restaurants, shops, office and green space and will include existing tenants 8th Wonder Brewery and Pitch 25, while phase two will focus on additional retail and restaurant space. The Allen The Allen, a sophisticated new mixed-use development is currently underway in Houston’s Allen Parkway corridor. The first phase, The Residences at The Allen, includes the development of a $290 million, 35-story skyscraper that towers over Buffalo Bayou Park. The stylish new building offers luxury condos, high-rise penthouses and a sleek 170-room Hotel – the Thompson, which opened earlier this year. Phase II of The Allen is anticipated to break ground in early 2024 and will include more retail and restaurant space and luxury multi-family living.  Click to expand The Commons at Hermann Park Hermann Park is changing the game for green spaces in the Houston area with its new groundbreaking 26-acre development – The Commons. Slated to open to the public this week, The Commons aims to revolutionize the beloved park with a unique collection of play areas, including an immersive space-themed area and a life-sized carousel. The commons also features many new gathering spaces including a Central Lawn and the Live Oak Terrace.  The Houston Astros Entertainment District  The Houston Astros expect to break ground on a new entertainment district adjacent to Minute Maid Park in Nov. 2024 The district will feature a 17-story hotel, 60,000 square feet of retail space for restaurants and shops and a three-level gathering area for fans to watch Astros games and other major sporting events on a massive outdoor screen. The venue will also host live music performances. The Grand at 249 Situated at the corner of the Grand Parkway-Highway 249 intersection, the groundbreaking 65-acre retail center dubbed The Grand at 249 will span 404,256 square feet in Tomball, making it the largest retail concentration within Houston's northwest submarket. Slated for completion in 2025, The Grand at 249 will boast 12 pad sites and include tenants such as AT&T, Boomer Jack's, Gringo's, Jersey Mike's, Milano Nails and Two Pho Nine Asian Fusion.   Learn more about why businesses are choosing Houston and what it means to live, work and play in the Bayou City. 
Read More

Related Events


One Houston Together : Inclusion Solutions Part 1

Creating cultures of belonging and closing belonging gaps is a crucial strategy for every organization that wants to be competitive in the future and retain and engage employees of all backgrounds. The topic…

Learn More
Learn More
Executive Partners