For the second year in a row, Texas home sales hit an all-time high. According to the 2016 Texas Real Estate Year in Review Report released by the Texas Association of Realtors (TAR), both home sales and home prices reached record highs last year.
In a statement released by the TAR, Chairman Vicki Fullerton said, “Last year’s record home sales activity was fueled from the momentum of multiple years’ strong job and population growth across the state, despite the fact that Texas job and economic growth began to slow in 2016.”
According to the report (available in full here), median home prices rose 7.7 percent in 2016, to $210,000. Home sales volume increased 4.6 percent, to 324,924 homes sold. Average days on market held steady from 2015 at 58 days. Active listings grew six percent last year.
Statewide Housing Affordability Challenges
Experts don’t see the record-breaking growth as sustainable — or healthy. While steadily rising home prices make for a bustling real estate market, they offer a less-than-rosy outlook for first-time and low-income home buyers. Record-breaking median home prices remain only a single factor in what may ultimately become a housing-affordability crisis.
Jim Gaines, Ph.D., chief economist with the Real Estate Center at Texas A&M University said, “The 2017 Texas housing market is projected to keep pace with last year’s strong levels, but it may be difficult to match 2016 levels due to current housing supply levels. Household incomes are rising at a disproportionately low rate than home prices, creating housing affordability challenges across the state. In housing development, labor shortages and regulatory barriers are slowing construction and in turn, driving up new home prices.”
According to the Real Estate Center at Texas A&M University, between 6.0 and 6.5 months of inventory represents a healthy balance between supply and demand. By comparison, inventory in Texas stayed low, closing out the year at 3.3 months.
“Rising home prices and skyrocketing property taxes are driving up the cost of home ownership at an alarming rate. Growth in property values makes home ownership a strong investment, but must be balanced by lower tax rates so that Texans are not being forced out of their homes,” Fullerton said. “The Texas Association of Realtors urges state legislators to pass legislation that ensures an honest and transparent conversation occurs at the local level if more tax revenue is needed and gives property owners the right to decide when their tax rates should be raised.”