Texas is the 12th-best state when it comes to jobs, rent increases in Arlington are among the highest in the nation, and Dallas-Fort Worth is expected to add jobs this year. We have all the details in this week’s roundup of real estate news.
Texas was tops in the country for monthly average starting salary, but took 12th overall in a WalletHub ranking of the best states for jobs. (more…)
By Marcus McCue
Executive Vice President and Chief Business Development Officer
Guardian Mortgage Company
The national housing market remains strong, and Texas, in many respects, is leading the way with record existing-home sales in Dallas and robust price growth.
Some housing experts were surprised at just how vigorous the Texas housing market was last year. Sales and prices set records in Dallas, and new home construction in the state was the most robust it’s been in several years.
The global oil price slump presents some headwinds, however, and will challenge housing markets in some Texas regions this year. Houston, South Texas and Midland-Odessa already have felt the pinch from low oil prices, and layoffs in the energy sector have begun to ripple through other business sectors.
James Gaines, chief economist for the Real Estate Center at Texas A&M University, noted in a recent report that job losses in the energy industry haven’t stopped and likely will pick up this year. But growth in other industries such as healthcare, technology, business services, construction, and hospitality should help buoy the state’s economy.
In Texas, it’s all about jobs, jobs, jobs.
A new report from the Real Estate Center at Texas A&M University says that the Texas economy gained 276,400 nonagricultural jobs from June 2014 to June 2015, an annual growth rate of 2.4 percent, compared with 2.1 percent for the United States. Many of the major metropolitan areas in the state saw much bigger gains, like North Texas.
The Dallas-Plano-Irving metro area ranked No. 2 in job creation in the state (Midland was No. 1), followed by Odessa, Beaumont-Port Arthur, Austin-Round Rock, and San Antonio-New Braunfels. Fort Worth-Arlington ranked No. 7, with 2.7 percent job growth.
“The North Texas economy is more dependent on the U.S. economy, so it’s not energy-based, compared to the Houston or Midland-Odessa economy, where energy has a bigger weight,” said Real Estate Center research economist Luis Torres. “Because the U.S. economy is growing and doing better, you’re seeing that reflected in the Dallas economy.”
In fact, every single Texas metro areas except Wichita Falls had more jobs in June 2015 than a year ago.
Big sectors for job growth were:
“The correlation between the Dallas economy and the U.S. economy is very high, and the main reason is because Dallas is a transportation hub and all the goods and services that pass in the state use Dallas transportation systems,” said Real Estate Center research economist Ali Anari.
Let’s just say that my eyes widened a little without the help of coffee when I read this story from Steve Brown. According to Fitch Ratings, Texas home prices are way overvalued, by 11 percent they say, and there could be a reckoning coming thanks to falling oil prices.
The financial analysts at Fitch are concerned about the year-over-year growth in Houston, Austin, and Dallas, which posted home price increases of 20 percent since 2011.
Dallas is one of 15 top markets poised to attract baby boomer homebuyers because of an affordable cost of living, sunny weather, and friendly business climate, according to new research by the National Association of Realtors (NAR).
NAR looked at 100 metro areas with lower state taxes (or none at all, as is the case in Texas), stable job market conditions, and strong migration patterns of “leading-edge baby boomers” (those 60-69) moving to that area. By doing this, they predicted which housing markets are likely to see a boost from baby boomers. Cost of living, housing affordability, and housing inventory availability were also factors in their rankings.
For these reasons, Dallas was identified as one of five markets with strong potential for attracting baby boomer homebuyers.
“It comes down to housing affordability, and lower tax rates in the Dallas area and the state as a whole,” said Adam DeSanctis, NAR economic issues media manager. “More boomers after 65 are working, some because they have to, or feel like they have to, but also those that are healthier and want to maintain an active lifestyle. Those [baby boomer] business owners come to Dallas for its dynamic local economy.”
During the course of the year, spring and summer tend to be the hottest seasons for home sales, with the pace of closings slowing as fall takes hold and school starts. That’s not what happened in Texas during the third quarter of 2014, says the Texas Association of Realtors Quarterly Housing Report, which was released just now. Additionally, inventory increased this quarter each month, continuing to fuel brisk sales in some areas.
In Dallas, though, sales are down year-over-year by 2.36 percent, while median home prices are up 8.73 percent and inventory is down precipitously from Q3 2013 by 10.71 percent. Logic says that, until inventory increases, home prices will continue to increase and sales will continue their slow, downward trend. Still, some areas are seeing increases (Midway Hollow, Lakewood, Lake Highlands, West Kessler) while some areas and price ranges remain sluggish. All real estate is local, y’all!
“The third quarter of the year is typically a much slower sales period – summer is over, school has started and families are staying put for the upcoming holiday season. That was not the case this year,” said TAR chairman Dan Hatfield. “Texas home sales continue to slightly exceed last year’s levels. If this trend continues, 2014 will surpass 2013 to become the second-best year ever for Texas real estate.”
Jump for more:
So, as it turns out, if household income increases, then more families have more money to buy new homes.
I know. I’m totally shocked, too.
What you’ll find interesting is that Texas, with our steady job market and low taxes has resulted in the Lone Star State leading median household income growth AND new home sales for 2013. In Texas, homebuyers are basically like this:
And home builders, they’re like Liz Lemon here:
“This year’s Texas Homebuyers and Sellers Report is showing the impact of the last few years’ strong housing market and economic growth on Texas homebuyers and sellers,” said Dan Hatfield, chairman of the Texas Association of Realtors. “Households are earning more income and new home development continues to play an increasingly important role to meet our state’s ever-increasing housing demand.”
Yup, we’re makin’ it rain, folks. The report, which uses data from the National Association of Realtors, says that Texas homebuyers’ median household income is up 9.6 percent to $91,700 year-over-year in 2013. That’s almost twice the increase in buying power of the average American homeowner, which increased just 5.6 percent to $83,300. First-time homebuyers are making more scratch, too, with a 9.3 percent increase in median household income to $67,800 year-over-year. Repeat homebuyers are making more modest gains, though, with median incomes up just 4.9 percent to $107,100. Still, that’s a lot of simoleons, peeps. And I wonder how many of these new homebuyers are using homebuilding concierges such as Page One to make their experience even better.
Interesting takeaways from the report:
1) Of all homes purchased in Texas for 2013, 30 percent were new homes, up 4 percent from 2012 and almost twice the proportion among home sales nationwide.
2) With tight-fisted lenders rivaling Scrooge McDuck and home prices skyrocketing, married couples continue to lead the homebuyer demographic, up 2 points in 2013 to 71 percent.
3) First-time homebuyers in Texas are a shrinking share of the market, down 2 percent to 33 percent.
4) “In 2013, the average Texas homebuyer was 43 years old, while the average first-time buyer was 31 years old and the average repeat buyer was 50 years old. This is on trend with the ages of homebuyers nationally,” the report stated.
5) The time frame a homeowner actually owns a property decreased from nine years to eight in 2013, but nationally, figures still show homeowners staying in their home nine years. tenure of owning a home in Texas decreased one year to eight years in 2013, but remained unchanged at nine years nationally.
6) 94 percent of Texans sold their home with a Realtor in 2013 (YAY!), compared to 91 percent nationally. Likewise, “FSBO homes in Texas sold for significantly less than homes sold using a Realtor. The average Texas FSBO home sold for $153,500, compared to $200,000 for the average Realtor-assisted home sale.”
What tidbit of data strikes you the most?