Hello everyone,

We are happy to report more good news about Houston Real Estate. The following is a review of the key drivers of the Real Estate market.

• Strong job growth has led to high demand for housing and consequently low inventories of all kinds, as home builders and land developers struggle to keep up.
• Houston is currently the third highest job growth market in the country, however the highest of the top 10 by percentage growth as illustrated by the chart below.
• Houston is approaching 3,000,000 jobs and growing.  

 

 

Strong demand for homes has led to uncharacteristically low housing inventories. Remember, the holy grail of economics is supply and demand. During this time of short housing inventories, Houston’s rate of appreciation is running ahead of its long term average. This is good news for those investing in Real Estate.

 Source: Houston MLS

New Home starts have recovered to some 60 percent of the top of the market.

 

The graph below depicts the number of lots being delivered to the market along with the number of new home starts (lot absorption). Lot deliveries fell by 80 percent from the peak in 2006 and have only recovered approximately 1/2 of the previous pace. The lack of lot inventory is holding back home builder’s ability to start new homes. Because of the long time frame to deliver lots to the builders, we believe housing will continue to be in short supply for several more years. Supply of housing cannot catch up with demand from previous population growth until the home builder's increase Houston’s housing stock to catch up with the population increase.

Below are a few recent articles regarding the market you will find interesting:

For your convenience, we have pulled a few of the salient points from the articles:

U.S. Job Growth Rebounds in September; Jobless Rate Falls to 5.9% 

The pace of hiring has stepped up this year, with gains in payrolls over the last six months the strongest for any six-month period since before the 2007-09 recession. Houston's unemployment rate rests at 5.4 percent, well below the national average. For context, full employment is considered to be 4.5 percent (unemployment rate). Four and 1⁄2 percent of U.S. workers are considered unemployable. 

• The jobless rate fell below 6% for the first time since 2008.
• Nonfarm payrolls grew a seasonally adjusted 248,000 last month, the fastest pace since June.
• Revisions showed stronger job growth in prior months than previously estimated. The economy added 180,000 jobs in August instead of the initially reported 142,000. It created 243,000 in July.
• The report showed broad-based job growth across industries. 

 

Area Population Exploding 

Census data show city outgained all but NYC/Houston Chronicle.

It’s hard to find enough superlatives to describe Houston’s population growth and the increase in jobs to employee our new neighbors. While the city of Houston grew at an impressive rate of 4.4 percent, Harris County increased at 6.7 percent.

• Major Texas cities and their suburbs continued to enjoy robust growth. The state boasted seven of the 15 fastest-growing U.S. cities — including the booming Houston suburb of Pearland, whose population exceeded 100,000.
• Experts said the Texas growth was fueled by employment gains in vibrant industries, especially in the energy, medical and technological sectors, and by a moderate cost of living and relatively low taxes.
• The census figures show that people are still flocking to the suburbs and unincorporated areas of Harris County faster than they’re moving into the city. Houston’s population grew by 4.4 percent over the past three years, while that in the rest of Harris County increased by 6.7 percent.

 

Kind Regards,

David Jarvis
Executive Vice President McAlister Investment Real Estate

McAlister Investment Real Estate
David Jarvis is leaving Metrostudy for McAlister Investment Real Estate.