Texas property markets likely to cool but still outpace U.S., economist says
Real Estate News from the We Buy Houses Team
Texas property markets will continue to outpace the nation, but things are likely to cool a bit through next year.
“The Texas housing markets are going to be spotty,” said Dr. James Gaines, a research economist with Texas A&M University’s Real Estate Center.
Some residential markets “will be doing very well and some will be doing poorly,” Dr. Gaines said to a corporate real estate group meeting in Addison on Thursday.
With the tougher lending standards and a pullout by home investors, the drop-off in sales in Texas could have been much steeper.
“Sales volumes should have fallen somewhere around 40 percent, but they haven’t fallen that far,” Dr. Gaines said. “It’s a testament to the strength of our economy and the fundamentals in Texas.
“Generally our housing prices are sustaining and holding up.”
Statewide home prices are up about 1.4 percent this year.
In the Dallas-Fort Worth area, median home sales prices fell by 2 percent in the first half of 2008.
“From a total market perspective, this is not too bad - it’s not the end of the world,” Dr. Gaines said.
But the recovery of Texas’ housing markets may take awhile – particularly on the construction side.
“Residential projects are almost dead in the water now,” he said. “It’s very difficult to find lenders willing fund them.”
The housing markets in Dallas-Fort Worth and the rest of Texas will benefit from huge population increases, he said.
“The D-FW Metroplex is bigger than the state of Arizona in population,” Dr. Gaines said. “It’s bigger than 30 other states.”
Likewise, job growth in the area is close to the highest in the country.
So far, that’s kept the commercial real estate market in North Texas and other markets strong.
“Rents and occupancy rates in Texas commercial properties will probably stay high for the rest of this year,” Dr. Gaines said. “But we are seeing early signs that market will settle down a little bit.”
Developers have been adding millions of square feet of new construction in Texas.
“Demand so far is keeping pace but we are not sure that is going to keep up.”