The Houston real estate market was one of the strongest in the country last year. In 2011, it could enjoy the same distinction. This is the general consensus among many real estate and economic analysts. Here’s what people are saying about the Houston housing market in 2011.
Home Prices in Houston
Clear Capital, a company that provides real estate valuation services for the mortgage industry, recently released a report showing home-price projections for major metro areas in the U.S. In addition to the forecast for 2011, their report showed actual home-price data for 2010. The Houston real estate market was ranked #2 for 2011, in terms of home values. The city had another distinction as well. Only a handful of cities that experienced price increases in 2010 are expected to do so again in 2011 — Houston was one of them.
The image above is an excerpt from the January 2011 report released by Clear Capital. The red circles and rectangle have been added for our purposes, to highlight their predictions for the Houston housing market in 2011.
Credit Suisse, an international finance company, recently released their monthly housing survey. As with the previous report mentioned above, the survey covers fifty of the largest real estate markets in the United States. The data showed price changes from November to December 2010 (most recent data available). Of the top five markets in terms of price increases, two of them were in Texas. Austin was ranked #2, and Houston was ranked #4. This further supports the notion that the Houston real estate market could be one of the strongest in the country, for 2011 and beyond.
Property Values Rising
In the first week of January 2011, Harris County officials sent out their updated property assessments. Nearly all of the assessments for Houston showed an increase in property values. Overall, assessments in Houston increased from $252 million in 2010 to $269 million in 2011 (as of January). The appraisers who come up with these values look at many factors, but real estate market trends weigh in the most.
Like most cities in Texas, Houston avoided the kind of bubble-to-bust cycle that wrecked so many other housing markets in the country. According to Ana Orozco, an economist with IHS Global Insight: “Texas wasn’t as hurt by the recession because it didn’t having the housing price bubble in the pre-recession years.” Because Houston home prices were never inflated to begin with, they didn’t suffer much depreciation during the housing “crash” of 2008.
Positive Signs in Job Market
The job market in Houston is also growing much faster than the national average. In 2010, the Houston area gained nearly 10,000 new jobs. That’s not ideal. But when you consider the 100,000+ jobs lost a year ago, it’s certainly a positive sign.
The state of Texas as a whole is expected to add 1.5 million jobs by 2016. Much of this economic growth will take place in cities like Houston, Austin and Dallas. This brings in new residents from elsewhere in the state, and from across the country. Many of these new residents are educated and upwardly mobile young people (the 25 – 34 demographic is booming).
Magnet for the Upwardly Mobile?
The image below shows the metro areas that attracted the highest percentage of young people, during the later part of the 2000s. Of all the major metro areas in the United States, Houston ranked #4 in terms of attracting this demographic. This trend will likely continue for the first part of 2011, and possibly beyond that. This will give the Houston real estate market a steady stream of potential home buyers, which will support home values for years to come.
The data above was compiled by demographics researchers at the Brookings Institution.
Houston Real Estate Market is Attractive
This is all good news for homeowners in the Houston area. It also gives hesitant home buyers a reason to move forward with their purchases. Mortgage rates are expected to stay below 5 percent for the first part of 2011, and home prices in Houston are equally attractive. But all of the current data suggests that home prices will rise steadily in the coming months. Mortgage rates may very well do the same. You hear the phrase “now is the time to buy” thrown around a lot. But in Houston, that phrase actually applies.
Objectivity Notice: We do not have any stake in the Houston real estate market — personal, financial or otherwise. This article is simply an objective review of (what could very well be) one of the strongest housing markets in 2011. We encourage home buyers to do ample research before entering the market. This article is a great place to start.