The Greater Houston Builder Association (GHBA) held it's mid-year forecast luncheon with Mike Inselmann of Metrostudy presenting 2008 and 2009's outlook of the housing markets in Texas. Metrostudy is a nationwide provider of real estate housing market information as well as related industries.
The overall theme of the presentation was the real estate industry's current struggle with the publics' perception of the housing and financing markets, when in reality our supply and demand is not out of balance but quite normal and holding at a 6 month supply. Much of the statistics that reflect a downturn in the real estate markets are due to the abnormal imbalance in supply and demand where homeowners sold their houses in one week and many times had full price back up offers.
However, in light of the financing markets tightening of credit approvals and down payment requirements, most consumers view buying a home today as a negative. They fear the real estate market will go down even further causing them to loose money if they buy now. Therefore, they are in a holding pattern and are adding to the high increase of apartment rentals. When these renters are comfortable again with entering the home buying market, we will have an influx of demand for inventory.
The homebuyers, who initially entered into the real estate market when prices were high, interest rates were low and few options of inventory were available, had the expectation of making money from their real estate purchase. It is not per say the market that is out of balance, it is the consumer's expectations and perceptions.
Inselmann projects that 2009 we will see an increase in home starts and a move toward a progressive real estate market rebound. Where will this happen? Texas, of course. Texas boasts five cities that are among the top ten job markets in the U.S. Over the past 12 months, 43% of the total US increase in job markets came from Texas. Houston represents 17% of the 43% increase. Dallas, Fort Worth, Austin, San Antonio, and Houston all contribute to the highest ranked job markets.
Per Inselmann, we are currently in the second best real estate market in the history of the Houston real estate market. The first was from 1977 to 1982 and many of us remember that market as well as the fall shortly after this boom. Metrostudy noted that the 1980's downturn in the market created a loss of a quarter of a million jobs, very much unlike the state of our job markets today. We are in a good economic cycle and therefore attracting not only people but also companies with quality jobs to offer. Among these industries are energy, healthcare, social assistance, and manufacturing, just to name a few.
In 2007, Texas experienced population growth in its' four major cites which are ranked nationally as; Dallas/Ft. Worth #1 by increasing 162,000 people; Houston #4 increasing by 120,000 people; Austin #8 increasing by 65,000 people; and San Antonio #10 increased by 54,000.
Quoted from the Greater Houston Builder Association Last year we had an all time high of 45,000 new homes. What does this mean to growing cities in Texas? The National Association of Home Builders (NAHB) estimates that the construction of 1,000 single-family homes generates: 2,448 full-time jobs; $79.4 million in wages; and $42.5 million in federal, state and local revenues and fees. Translating those numbers, the local industry generated 110,000 jobs; more than $3.5 billion in wages; and $1.9 billion in government revenue based on these figures.
Additionally, each new homeowner spends on average $8,900 for furnishings and décor. That's another $4 billion pumped into the local economy for a total of $9 billion delivered as a result of new home construction. That figure does not even take into account the millions of dollars spent on remodeling or resale.
Cynthia Perkins, MA
Realtor, Educator, Coach
Champions School of Real Estate