Galveston’s real estate market is shifting as an influx of vacation rentals hits the listings. Rising costs and cooling demand are turning the beach town into the Houston area’s top buyer’s market.
The real estate market in Galveston is quickly cooling down. Homes have been on the market for more than five months, the longest time in the greater Houston area. Who did it? Many owners of short-term rentals are selling their properties after having a hard time with prices going up and demand going down.
Linda and Greg Stickline, who have lived in the area for a long time, feel the pinch. Their renovated 100-year-old Victorian home, for sale for $1.05 million, has been on the market for more than 120 days and hasn't gotten any offers, even though it's in a popular area and has had open houses.
Linda Stickline said, "We didn't expect this." "This isn't how things usually work for us."
Luxury prices can make it take longer to sell, but local buyer Tom Schwenk says that price isn't the main problem. "Most people aren't even looking," Linda said.
Galveston's inventory rise is caused by owners wanting to leave the vacation rental business. After buying many properties during the pandemic, many owners are now selling homes they can't afford or keep up with. Nearly 5,000 short-term rentals were listed in Galveston in 2023, which is 78% more than in 2020. However, bookings have been more seasonal and unpredictable than many people thought they would be.
Diane Moore, head of the Galveston Association of Realtors, said, "A house that sold for $300,000 before COVID was suddenly $600,000 or $750,000."
Broker Louis Salas remembers getting up to six calls a week from eager investors during the boom. Many depended on unrealistic rental projections and didn't know how the Galveston market worked.
Salas said, "Some of them were being helped by real estate agents who didn't know much about the island." "They didn't look at the numbers or the comps." They were just happy.
But the fun has worn off, and the truth has set in. Owners are having a hard time because bookings are dropping during certain times of the year, property taxes are going up because home values have gone up by almost 50% in some ZIP codes, and upkeep costs are going up.
Schwenk said, "Galveston is beautiful, but we're not the Hamptons." Investors who bought at the end of the peak price period are now having a hard time making money.
But things have changed for buyers. Galveston is becoming the best place to buy in the Houston area because supply is high and demand is low. It offers historic charm and beachside living at more reasonable prices.
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