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More evidence the Houston economy and housing market will weather the oil price fall…….
 

 
From Houston Chron

s Houston headed into a more normalized real estate market as predicted at the beginning of the year? According to Ted C. Jones, chief economist for Stewart Title, that is not likely to happen by year-end.

The Houston Association of Realtors’ (HAR) most recent MLS report stated that Houston’s housing inventory for April was at a 2.9-months supply. While this represents a slight increase over last April when inventory levels were at a 2.6-months supply, the latest figures are still far below that of a balanced market, where inventory levels would be at a six-month supply.

Meanwhile, home prices reached record highs in April, with increases reported in both the average and median prices.

So, what does all of this mean for people who are moving to Houston intent on purchasing a home? Simply put, it means that Houston is still very much a sellers market, in spite of declining oil prices.

“Historically a downturn in oil prices has been very vicious to the Houston economy. What we have going for us this time is a broader-based economy than we may have ever seen in our lifetime, and as a result we are not seeing the Houston economy hurt nearly as bad,” said Jones.

He added that it is all about jobs. Even as rig counts continued to decline, Houston fared much better than most people thought it would in terms of job losses.

Although Houston’s job growth has slowed since the beginning of the year, Jones stated that there is still a great deal of pent-up consumers demand, and many people who believe that now is an excellent time to buy a home, especially while interest rates remain low.

Another factor that Jones said is driving demand for homeownership in Houston has to do with the high rental rates associated with many of the multi-family luxury properties that have been built in the past 3 to 4 years. He said that there just haven’t been enough new rental properties that were geared towards the middle-income individual or family.

As a result, many would-be renters have become home buyers. This puts even more buyers in the marketplace, competing over the low inventory of available properties.

Despite rising home values, purchasing is still becoming a much more favorable alternative to these individuals, particularly with the tax benefits of homeownership,” said Jones.

For people who are moving to Houston and trying to understand the local real estate market, it is important to point out that the Greater Houston area is really made up of several distinctive micro markets.

As such, the real estate market of the inner city is much different from the markets in suburban locations, like The Woodlands, Katy or Sugar Land.

Jones emphasized that many of the Houston suburbs are actually becoming major cities unto themselves. Due to the growth of areas like The Woodlands, where a tremendous number of companies and businesses have opened shop, an increasing number of residents not only live there, but also work there. This represents a shift away from the idea of suburb living being synonymous with long commutes into the city.

It’s nice to have so many areas, neighborhoods, and housing choices when moving to a city the size of Houston.

“One of the nice things that we have here is tremendous variability across the economic landscape of Houston, in terms of the different housing types and prices,” Jones said.

As we enter the second half of the year, Jones said that he thinks that the housing inventory will remain tight, and that based on current trends, job growth will be flat.

But, Jones added that there might also be a bright spot in the months following the horrific flooding that the Houston area recently endured. He said that retailers at home improvement stores are likely to see a big increase in sales and jobs just to repair what was damaged.

Finally, in looking at appreciating home values in the Houston area, Jones said that he had predicted an increase of 4.5 to 7.5 percent this year. As the year progresses and as interest rates rise, Jones said that he thinks that home price appreciation will slow down, especially within the luxury market.

“Our high-end homes have had a great appreciation, and what we’re really seeing today is a renaissance, not just in Houston, but across the country as our entry-level home buyers come back into play,” said Jones.

“This means that if they become available, we will sell a lot more of the entry-level, mid price range homes than we have in the recent three or four years, because the entry-level home buyer was just not in the market.”