With the national media focusing heavily on the negative markets highlighted by States such as California and Florida, very little attention is being paid to the markets that are thriving and continuing to grow. And with recently released data it is evident that the Texas real estate market is not only thriving but poised for considerable growth.
The Current Texas Real Estate Market
As I have stated, the Texas market, contrary to what you hear in the national news, is thriving. Consider the following.
o 4 major Texas cities were recently included in the Forbes Top 10 recession proof cities. These included San Antonio at #2, Austin at #3, Houston at #7 and Dallas at #10.
o Unemployment rates for all 4 cities have fallen across the state and job growth has increased in many cities (Austin, Dallas and Houston all showed an increase)
o Almost all Texas counties showed a no decrease in house price. The majority of Texas counties showed and increase of up to 5%!
At a meeting in College Station on January 7, 2008 Dr. Jim Gaines, Ph.D., a research economist at the Real Estate Center focusing on housing and land development issues gave an overall report on the Texas Economy with the following points:
o Texas is running ahead of the US economy
o Employment is steadily increasing
o Low unemployment
o Personal income growth
o Population growth
o Housing market still relatively strong
Dr. Gaines’ Texas Outlook for 2008 includes the following:
o Continued steady increase in population
o Slower growth in employment
o Interest rates to have minor changes probably going down
o Slow but positive absorption for commercial properties
o Continued, good demand for housing but 2008 probably still down from 2007
“Texas foreclosures have been relatively moderate compared to US Trend. US filings are up 72% year to date, Texas is down 3.7% year to date (as of November 2007),” stated Dr. Gaines.
US and Texas median home price charts show: “We are the most affordable state in the US” stated Dr. Gaines. Texas is a housing bargain. The gap between the US and Texas median price has widened from around 25% to 33%.
Dr. Charles Gilliland, Research Economist and Clinical Professor of Finance in the Mays Business School discussed specifically Texas Real Estate Rural Land Prices on January 7, 2008. He stated there were significant increases in Texas Rural Land due in large part to foreign investment in Texas Agricultural Land. Based on his research here are his estimates:
o 2003-2007: Average growth rate 18%
o 2007 – Prices continued to soar due to land usage for recreation, investment and farming
o 2008 – $2,535 per acre projected
o 2010 – $3, 529 per acre projected
o Texas Hill Country becoming “Little California”
All of these indicators show that the Texas market is not feeling the affects to the extent the rest of the nation is. While we are not in the boom market we were two years ago, it is evident that the Texas real estate market is healthy and growing.
The Future Texas Real Estate Market
While it is important to be current on where the market is, it is perhaps even more beneficial to know where the market is going, as this holds the key to being able to capitalize on upcoming opportunities.
“Texas – Poised for a 21st Century Boom”
sited Dr. Gaines in his presentation discussing where the Texas market is headed. Accordingly he presented the following data for what Texas currently has going for it:
o Population and economic growth
o Low cost, affordable labor
o Pro growth attitude
o Migration into state from elsewhere
o Attractive retirement areas
o Pressure on infrastructure, government sources, public finances
o Most affordable state for land, housing and overall cost of living
Population growth has tremendous bearing on the health of a real estate market and the projections for population increase in Texas are quite exciting.
o The Texas population from 2000 – 2030 is estimated to increase turkey property citizenship by 13.6 million people. This is the equivalent of adding another Dallas-Ft Worth Metropolitan area, PLUS another Houston metropolitan area, PLUS another San Antonio metropolitan area PLUS another Corpus Christi.
o In the next 20 years 2/3 of all Texas households well be Hispanic households, next highest percentage Anglo, followed by Black and the difference being under “other”.
o 2010 Dallas and Houston should see an explosion in the metropolitan statistical areas population. In 20 years Austin is positioned to move into 3rd place city in population, surpassing San Antonio according to Dr. Gaines’s presentation and research.
To quote Dr. Gaines “we are the most affordable State in the US. Texas housing is a bargain…land sales are going up…commercial rents continue to go up… You draw the conclusion to how is the real estate market in Texas and what potential does it hold?”