Houston is attracting more ‘ultraluxury’ homebuyers paying $10M+

To be fair, overall sales of Houston homes priced over $1 million dropped by 21 percent in the first half of the year, reflecting a broader housing slowdown thanks to inflation and elevated mortgage rates. But while wealthier buyers may proceed more cautiously on homebuying amid higher interest rates, they aren’t stepping away. Texas’ tax-friendly environment, population gains, strong oil prices and expanding wealth among the Houston-area’s richest residents are contributing to an uptick in ultraluxury deals, realtors say.

Five years ago, there were no homes priced over $10 million on the market in Houston, according to HAR data. This doesn’t include private sales and properties that weren’t listed on Multiple Listing Services. Last year, four homes on the MLS sold above $10 million. At least another two sold this year, and at least two are pending, according to HAR data. More off-market ultraluxury deals are occurring behind-the-scenes, too.

“In the past, seeing houses sell over $10 million in Houston was very rare. And now it’s becoming not uncommon,” said Mike Mahlstedt, a Realtor with Compass Real Estate. “Even though those numbers — (a few) for half of the year — don’t seem significant, when we’re used to zero, that’s a pretty big thing.” 

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One of Mahlstedt’s recent $10 million-plus listings was a 1990s-era French chateau-style mansion in River Oaks that the current owners plan to significantly renovate, he said. The house had three offers and closed within a week. Another ultraluxury home in River Oaks, 3403 Chevy Chase, also closed within five days in June, according to HAR. And last year, Houston’s ultraluxury market reached new heights when a Memorial mansion sold for more than $20 million.

These kinds of trades are establishing a case that there is small but growing base of buyers willing to pay $10 million for Houston homes, making developers more comfortable with investing in pricier land and building large, speculative mansions here. In February, for example, Houston builder Layne Kelly Residential bought a 1.98-acre lot abutting the River Oaks Country Club listed for $12 million. The site could potentially be used for a custom or speculative home, though details haven’t been released.

“We’re seeing a lot more ($10 million-plus homes) go on the MLS and it’s just high-profile resales, it’s multiple builders stepping up, putting out trophy product,” said David Gross, Realtor with Douglas Elliman Real Estate, who represented Layne Kelly. “(Developers have) looked at the numbers, they’ve looked at the market and said ‘Hey, you know we feel comfortable that there’s enough buyers out here.’”

These developers could find buyers among a steadily expanding base of millionaires in Houston. Oil prices that soared above $100 a barrel in 2022 buoyed the net worth of energy company executives and investors, and more wealthier individuals have moved here as the region’s population grew by almost 75 percent over the past 23 years.

Houston now has the nation’s fifth largest number of millionaires behind New York, San Francisco, Los Angeles and Chicago, according to a report from wealth intelligence firm New World Wealth. The number of millionaires calling Houston home increased by 65 percent in the past decade to an estimated 98,500, according to the report. Separately, data firm Altrata estimated that Houston has 4,420 ‘ultra wealthy” individuals with a net worth of over $30 million.

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Many of the region’s richest residents benefit from having their primary residence here, avoiding personal state income taxes, but they often have other homes in markets like Los Angeles; New York; Miami; Palm Beach, Calif.; the Hamptons on New York’s Long Island; Aspen, Colo.; and Hawaii helped those areas rank among the top ten areas with the most ultraluxury sales in the first half of the year — far outpacing Houston, according to Compass.  

Realtors don’t see Houston surpassing those markets, but they do expect the number of ultraluxury deals here to climb steadily.

“The wealth has exploded in the top 1 percent over the last few years, and so when you look at the amount of wealth that’s been accumulated, (real estate) is still incredibly cheap especially in areas like Houston,” said Elliman Real Estate’s Gross. “People are getting more comfortable with spending this type of money on homes.”