Texas Economy 2019 = Great Time to Buy or Sell Real Estate

Texas Economy & Real Estate

Texas Economy 2019 = Great Time to Buy and Real Estate

How does the booming Texas economy and job creation impact your decision to buy a home, sell a home, downsize or upsize?  

My dad always stressed that homes are the singular best investment in securing a financially sound future.  Obviously, our housing needs differ from single family to town homes but the basic premise is the same.  Homes are a great investment because valuation rises (providing increased equity), mortgage obligations (loan) remain the same and are outpaced by inflation and the tax benefits of home ownership is clear.  

An interesting side note is that home ownership seems to also provide a sense of accomplishment, stability and an increase in earning potential.  These side benefits are real and have probably been dissected by social psychologists to uncover the underpinnings.  Unfortunately, that is outside of our current discussion but I may go ahead and do a future blog on the subject as it would seem interesting to me, at least.

In a previous blog, we reviewed the housing sector growth and market conditions.  This blog is an explanation of what is driving that growth and why investing in real estate is a great financial move.  So how is the Texas economy doing in comparison to national averages and why is Texas uniquely poised to offer more stability in the housing market?  

From the period of September 2018 to 2019, the Texas economy added more than 300,000 non agricultural jobs.  This equates to an annual growth of over 2.4 percent which is favorably compared to nationwide job growth of 1.4 percent.  The non government sector added 290,500 jobs which is an annual growth rate of 2.7 percent rivaling the nationwide growth rate of 1.6%.

Surprisingly all industries, with the exception of the information industry, showed a marked increase in growth.  The construction industry has ranked first in job creation followed by leisure and hospitality, other services, financial sector, manufacturing, education, health services, transportation, warehousing and utilities.  This makes total sense in that supporting the demand for housing, offices and other industries are directly impacted by people movement and increase in demand.

The government produced the largest growth in jobs followed by trade, professional and business services, education and health, leisure and hospitality and finally manufacturing.

The Texas Metropolitan areas ranking the highest in job creation were Dallas-Plano-Irving area followed by San Antonio-New Braunfels;  McAllen-Edinburg-Mission; Houston-The Woodlands-Sugar Land and finally Killeen-Temple-Fort Hood. 

The Dallas-Plano-Irving area ranked as first with 3.9 percent job growth since September 2018.  That is fantastic for those of us who reside here as respects to our real estate investment.  As noted in the previous blog, the real estate market in the North Texas area has shown a “market correction”.  Please read previous blog.  However, it is still considered a “seller’s market”.  What makes it a “buyer’s market” as well, is the sharp drop in interest rates and the fact that homes are staying on the market longer than two years ago.  Both of these conditions make this a great market to sell and buy.  This is unique. 

I am a Real Estate Broker practicing in the North Texas area which encompasses Dallas-Plano-Irving areas.  We have lenders uniquely poised to offer great mortgage packages to first responders, first time home buyers and those with lower credit scores.  We also offer assistance in offsetting closing costs in order to make the buying and selling experience easier financially.  Contact me at 214 876-6777 to discuss your specific needs and check out my website affinityconnect.net for more information.  We look forward to hearing from you.

Is it a seller’s market or a buyer’s market?

how does interest rate impact housing?

Interest Rates and Housing

Is is a seller’s market or is it a buyer’s market?  Not an easy response to the question but as in anything else financial it’s complicated. Interest rates are going down.  This is not news as they have been for some time.  But how does that effect the housing market?  How does the interest rate drive the process of buying and selling your home? How do the interest rates impact the number of new home construction? 

The numbers: New home construction has gone up by 12% in August of 2019 making it the best single month increase since 2007.  This signaled that the downturn in the beginning of 2018 may be over and that recovery is at hand for the housing market. Moreover, permits for building new homes has also risen by 8%,

What about the concerns about the potential impact of trade wars on consumer confidence and more to the point the slowing economic growth coupled with lower income taxes on corporations?  As these factors continue to trouble economists, the housing market is being propelled by reductions in interest rates.  The drop in interest rates, has eased the affordability factor faced by home buyers. 

In line with these developments, builders are focusing their energies by providing more entry level housing but the short supply of developable land in desirable locations makes this task difficult. In my practice (the North Texas market), I have assisted home buyers with negotiating with new home builders to get my client the best selling price and adding builder incentives as well.  But there have been instances when purchasing pre-owned homes was the best option.  Of course, the choices are situational and no single course of action is best.  

Real estate professionals often differentiate market conditions by referring to them as seller markets or buyer markets.  There are times, when we should talk about them as being both. The current environment is the case in point.

In 2017, the real estate market was rife with multiple offer situations, offer and counter offer warfare and climbing price points.  Most homes were snatched up prior to going to market as a “coming soon” or at listing and within 30 days of their appearance on MLS (Multiple Listing Service).  The biggest issue was whether the property would actually appraise as market value (what a buyer would be willing to pay) and comparative market analysis clashed. 

Since 2017, we have had a “market correction” of sorts.  Property values are stabilizing and properties are lingering in the marketplace for longer periods of time.  Multiple offers are rare and competition is down.  

So is it a seller’s market or a buyer’s market?  My thought is that it is both because of lowered interest rates.

Sellers are currently listing their homes at lower price points and are willing to reduce the price point as the property sits longer on the market.  However, It is still a seller’s market because the number of days on the market are not exorbitant.  The panic most home sellers face is due to a large degree on the recent past and not necessarily on true market conditions.  I caution sellers to lower expectations of a fast sell and the need to jump on the first offer unless it is a good one.  In determining whether it is a good offer, offered price is a big consideration but so are other considerations inclusive of type of loan, buyer viability, lender and a multitude of other factors.  A measured realistic approach is best but at times difficult and counterintuitive.

It is also a buyer’s market because seller’s are more attuned to market activities in the recent past and more likely to jump at offers.  Property tenure on the market is higher than previous years and even seasoned real estate professionals are not grasping that this in itself is a market correction.  It is a buyers market chiefly because interest rates make these homes more attainable.

I am a real estate broker practicing in the North Texas area.  Please contact me to discuss your options.  My commitment is to provide you with honesty, integrity and information.  

 

 

 

 

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