Texas housing market recorded a resolute second quarter for the single-family home sales. From the second quarter statistics, Houston contributed a great deal in Texas home sales—by accounting for over 25-percent of the single-family sales. Although the home sales in the state sees a monthly downward trend after it recorded an all-time high sales in April, the cumulative quarterly average saw an upward trend from previous year in courtesy of Houston city, according to the report on the Texas A&M University’s website.
On the supply side, there was an increase in the number of single-family housing permits, which triggered the start of construction in Texas. The Texas Residential construction Cycle (Coincident) Index—which monitors and measure the construction activities in the state—recorded an upward trend in construction activities with the quarter seeing the highest level of construction activities since the great recession. However, this extended and improved economic activities contributing a great deal to the Texas housing market.
Also, Over 100,000 homes were sold in Texas in the second quarter—which is one-percent more than the same quarter in previous year. Houston is spear-heading the quarter’s growth with a 0.1-percent year-over-year (YOY), increasing the inventory sales in the quarter to 25,336.
According to Tray Bates, the chairman of Texas Realtors, as recorded on Houston Chronicle, “The Texas housing market experienced a strong kickoff to the summer selling season with more than 100,000 homes sold during the second quarter.” She added, “While specific conditions vary by market, the statewide trend has good news for sellers and buyers. Sellers are selling for a slight higher median price, and buyers have access to more properties for sale in the state.”
Median Home Prices
However, the home sales statewide doubled-down after breaking records in April, but at the end of the second quarter, the housing market stabilized and had turned upward due to the lower mortgage rates that spur the purchasing activities. Although there was an increase in the housing permits and construction activities statewide, as recorded by the Texas Residential Construction Cycle Index, existing homes—which is typically cheaper than its equivalent new home—contributed more on the quarter’s upward trend because buyers moved to buying cheaper homes.
The median price of homes in the state also increased to $245,000 in the second quarter, which is a 2.9-percent YOY increase. Houston median home price rose by 3.8-percent more than previous year to $249,000. While Austin and Dallas-Fort Worth region median home prices rose 3.1-percent to $325,000 and 1.9-percent to $280,000 respectively. Finally, San Antonio market recorded a median price of 4.3-percent to 234,607—making it the biggest among the four largest cities in the state but with a home price lower than the state median price.
Houston, Dallas and San Antonio saw an excellent increase in the number of active listing in the state with each of them experiencing an intense upward trend. The capital of Austin saw a downward trend of 2.9-percent to 8,016 listings. However, Texas experiences a 7.5-percent year-over-year active listing to 116,950 in the quarter.
Also, the monthly housing inventory in the state increased to an average of 4.1 months. Houston home inventory saw an increase of 4.4 months from 4 months, while Austin remains the best in terms of inventory sale with 2.7 months down from the 2.9 months in the second quarter of the previous year.
The chief economist at the Real Estate Center, Jim Gaines, concluded that “Statewide, we’re seeing more of a separation in sales activity between large cities compared to medium and smaller cities due in part to increased population and job growth concentrated in major markets.”
Why Now is the Best Time to Invest in Texas
From an investor’s viewpoint, Houston, Dallas and Austin have a greater economic impact on Texas’ housing market. Although home prices in recent years have been rising steadily, properties can still be bought at a plausible price in this cities—which is good news for investors planning to enter into Texas’s housing market. Is now the best time to invest in Texas? Here are few reasons you should consider.
Job Creation and Employment
Of course, one of factors that fuel economic development in a state is job creation—which reduces unemployment rate. Texas’s economy remains strong and is continually supported by variety of industries and institutions. The state has been a safe haven for job seekers in recent years. For example, Texas added 391,000 jobs in 2018, reducing the state’s unemployment rate to an historic 43-year low of 3.7%—which is 0.2% below the country’s rate. Job growth rate in Houston, Dallas and Austin is nearing 4-percent—which is twice the national average. Based on the
Also, The Federal Reserve Bank of Dallas forecasted that by the end of 2019, 321,800 jobs would be added, therefore employment will increase to 12.9 million—causing jobs created to rise by 2.5 percent. With 80-percent confidence band of between 1.7 to 3.3 percent, this shows that now is the right time to invest in Texas, because by the end of this year more people would have migrated into the state in search of jobs, which would increase the demand for properties.
Since 2010, Texas’s population has increased steadily by 3.5 million—which is a million more than most popular states like Florida and California. According to the stats recorded by the world population review, the state’s population has substantially risen from the 25.1 million recorded in 2010 census to an estimated number of 29.09 million—making it the second most populous state behind California. This is due to the rising growth rate in the state—currently 1.34%, making it the second in the country—and the increase in industrialization—as 5 out of the 15 fastest growing cities in the US are in Texas.
This means that for years to come there would be increase in the demand for homes—single-family, townhouses, condominiums, and so on. Of course, workers migrating to the states would need where to live. Interesting? It would further intrigue buy-and-hold investors that most residents relocating to Texas prefer to rent than to buy.
Real Estate Trends in Texas
For many years, Texas has turned into a haven where families can live for less. However, in recent years the economic growth of the state has changed this. According to the Federal reserve bank of Dallas, the cost of homes in Texas has outnumbered the nation since 2011 and it’s forecasted to continue to increase. This is due to the robust economy brought about by the increment in jobs and population.
Based on the statistics above, we discovered that the homebuilders in Texas are struggling to meet the demand for home in the state. For Example, between 2007 and 2014—after the great recession—Texas lost almost two million of its workers and it is recorded that only 40 percent returned to their job.
The Federal Reserve of Dallas reported that during the recession, construction job counts fell and it took a lot of time to turn back up. The shortage of construction workers in the state has an impact on the price of home because the demand is more than the supply; thereby, increasing the price of the few homes available.
Also, according to an article on Forbes, the Texas housing market are classified to three categories—the High-growth, medium-growth and low-growth market. The high-growth markets are considered as the market that has high economic growth and home demands are good. Homes prices in these cities saw a rise of around 7-percent in 2018. While the medium- and the low-growth market has both medium and low rise in home prices respectively.
If you are investor planning to enter into the market, you are advised to do so as soon as possible, because statistics shows that the prices of homes in this state will rise in coming years. And it may become difficult to buy properties in coming years.