dr. james gaines, chief economist, texas a&m real estate center
TRANSCRIPT
Dr. James P. GainesChief Economist
recenter.tamu.edu
June Luncheon
June 23, 2016
The Briar Club
HOUSTON’S CURRENT SITUATION
“The Future Just Ain’t What It Used to Be!”
Yogi Berra
Texas Outlook
3
Texas Economy is slowing down 2016 much slower
Energy sector downturn lagged impacts into ’16 &‘17
National economic expansion most positive factor
Global recession a growing downside risk
Job growth to diminish significantly in 2016
Population expansion continues, but will also slow
Local Growth Issues becoming more pressing,
causing greater strain on state and local resources
Source: Real Estate Center at Texas A&M University
Annual Texas Home Sales
103,344102,789
110,830
120,749
126,525
126,279
142,940
151,861
177,179
191,189195,568
204,084209,438
224,215
250,380
277,649
304,762
286,778
241,666
221,768211,640213,396
247,090
287,235
296,828
309,518
$50,000
$70,000
$90,000
$110,000
$130,000
$150,000
$170,000
$190,000
$210,000
$230,000
$250,000
$270,000
$290,000
$310,000
$330,000
50,000
70,000
90,000
110,000
130,000
150,000
170,000
190,000
210,000
230,000
250,000
270,000
290,000
310,000
330,0001
99
0
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Sales Avg Price Md Price
2015 Record Year:Sales ~4%
Avg. Price ~5%
Md. Price ~7%
Texas Residential Construction Leading and Coincident Indexes
40
60
80
100
120
140
160
180
40
60
80
100
120
140
160
180
Ja
n-0
0
Ju
l-0
0
Ja
n-0
1
Ju
l-0
1
Ja
n-0
2
Ju
l-0
2
Ja
n-0
3
Ju
l-0
3
Ja
n-0
4
Ju
l-0
4
Ja
n-0
5
Ju
l-0
5
Ja
n-0
6
Ju
l-0
6
Ja
n-0
7
Ju
l-0
7
Ja
n-0
8
Ju
l-0
8
Ja
n-0
9
Ju
l-0
9
Ja
n-1
0
Ju
l-1
0
Ja
n-1
1
Ju
l-1
1
Ja
n-1
2
Ju
l-1
2
Ja
n-1
3
Ju
l-1
3
Ja
n-1
4
Ju
l-1
4
Ja
n-1
5
Ju
l-1
5
Ja
n-1
6
Ju
l-1
6
Source: Real Estate Center at Texas A&M University
Leading Index
Coincident Index
Total Housing
Permits (12-MMA)
Texas Residential Construction Leading and Coincident Indexes
40
60
80
100
120
140
160
180
40
60
80
100
120
140
160
180
Ja
n-0
0
Ju
l-0
0
Ja
n-0
1
Ju
l-0
1
Ja
n-0
2
Ju
l-0
2
Ja
n-0
3
Ju
l-0
3
Ja
n-0
4
Ju
l-0
4
Ja
n-0
5
Ju
l-0
5
Ja
n-0
6
Ju
l-0
6
Ja
n-0
7
Ju
l-0
7
Ja
n-0
8
Ju
l-0
8
Ja
n-0
9
Ju
l-0
9
Ja
n-1
0
Ju
l-1
0
Ja
n-1
1
Ju
l-1
1
Ja
n-1
2
Ju
l-1
2
Ja
n-1
3
Ju
l-1
3
Ja
n-1
4
Ju
l-1
4
Ja
n-1
5
Ju
l-1
5
Ja
n-1
6
Ju
l-1
6
Source: Real Estate Center at Texas A&M University
Leading Index
Coincident IndexHome Sales
(12-MMA)
Houston Housing Issues
• Affordability: rents and prices increasing
• New Construction: not enough SF to balance; MF probably too much
• Development: Design, Density, Resources and Processes
• Regulatory Costs/Disruptions: lending; environmental; local land use• Federal
• State
• Local Growth Controls/Initiatives
Houston Annual Home Sales
21,451
14,84915,18713,09113,275
15,06516,495
20,139
29,183
33,443
29,726
32,48831,396
29,06529,74531,28132,264
35,657
39,314
47,144
49,72550,71652,067
54,685
58,724
64,764
70,397
78,326
75,110
63,015
58,116
54,92256,869
66,347
78,23780,469
78,657
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,0001
97
91
98
01
98
11
98
21
98
31
98
41
98
51
98
61
98
71
98
81
98
91
99
01
99
11
99
21
99
31
99
41
99
51
99
61
99
71
99
81
99
92
00
02
00
12
00
22
00
32
00
42
00
52
00
62
00
72
00
82
00
92
01
02
01
12
01
22
01
32
01
42
01
5
Source: Real Estate Center at Texas A&M; sales since 1990 from TAR Data Relevance Project
1998-2014 average 62,331
Houston Median Home Price
63,971
71,515
77,31178,94377,19977,26682,245
88,402
94,193
101,110
113,708
121,906
130,058133,598134,922
142,354
149,461152,851
152,781152,958153,695
155,000
165,000
181,528
199,900
212,000
218,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
$110,000
$120,000
$130,000
$140,000
$150,000
$160,000
$170,000
$180,000
$190,000
$200,000
$210,000
$220,000
$230,0001
99
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
Ma
y-1
6
Source: Real Estate Center at Texas A&M University
2012 up 6.5%
2013 up 10%
2014 up 10.1%
2015 up 6.1%
Price up 38% since 2010
Average of 5.7% per year
Houston MSA Home Sales
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Jan
uary
Fe
bru
ary
Ma
rch
Ap
ril
Ma
y
Ju
ne
Ju
ly
Au
gu
st
Sep
tem
be
r
Octo
ber
No
ve
mb
er
De
ce
mb
er
2012 2013 2014 2015 2016
Source: Real Estate Center at Texas A&M University
YTD 1Q16 +1.7%
Houston Months’ Inventory
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Jan
-00
Ap
r-0
0J
ul-
00
Oc
t-0
0J
an
-01
Ap
r-0
1Ju
l-01
Oc
t-0
1J
an
-02
Ap
r-0
2J
ul-
02
Oc
t-0
2J
an
-03
Ap
r-03
Ju
l-03
Oc
t-0
3J
an
-04
Ap
r-0
4J
ul-
04
Oc
t-0
4J
an
-05
Ap
r-0
5J
ul-
05
Oc
t-0
5J
an
-06
Ap
r-0
6J
ul-
06
Oc
t-0
6J
an
-07
Ap
r-0
7J
ul-
07
Oc
t-0
7Jan
-08
Ap
r-0
8J
ul-
08
Oc
t-0
8J
an
-09
Ap
r-0
9J
ul-
09
Oc
t-0
9J
an
-10
Ap
r-1
0J
ul-
10
Oc
t-1
0J
an
-11
Ap
r-1
1J
ul-
11
Oc
t-1
1J
an
-12
Ap
r-1
2J
ul-
12
Oc
t-1
2J
an
-13
Ap
r-1
3J
ul-
13
Oc
t-1
3J
an
-14
Ap
r-1
4Ju
l-14
Oc
t-1
4J
an
-15
Ap
r-1
5J
ul-
15
Oc
t-1
5J
an
-16
Ap
r-1
6J
ul-
16
Oc
t-1
6J
an
-17
11Source: Real Estate Center at Texas A&M
Inventory at extremely low level relative to market activity
Houston Home Sales by Price Distribution
Source: Real Estate Center at Texas A&M University
Price Range
Percent Distribution
2011 2012 2013 2014 2015
$0 - $69,999 13.8 11.6 7.4 5.1 4.2
$70,000 - $99,999 12.4 11.2 8.7 6.5 5.0
$100,000 - $149,999 21.7 21.2 20.7 19.2 16.4
$150,000 - $199,999 16.6 17.2 18.7 19.4 20.7
$200,000 - $249,999 9.9 10.9 11.5 12.2 13.7
$250,000 - $299,999 7.5 8.2 8.9 9.4 10.3
$300,000 - $399,999 8.1 8.8 10.7 12.5 13.6
$400,000 - $499,999 3.7 4.3 5.4 6.4 6.7
$500,000 - $749,999 3.5 3.9 4.8 5.7 5.8
$750,000 - $999,999 1.3 1.4 1.6 1.8 1.8
$1,000,000 + 1.3 1.4 1.6 1.8 1.9
Houston MSA Monthly Sales by Price
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
Jan
-15
Fe
b-1
5
Ma
r-15
Ap
r-15
Ma
y-1
5
Ju
n-1
5
Ju
l-15
Au
g-1
5
Sep
-15
Oct-
15
No
v-1
5
De
c-1
5
Jan
-16
Fe
b-1
6
Ma
r-16
Ap
r-16
Ma
y-1
6
$0 - $69,999 $70,000 - $99,999 $100,000 - $149,999 $150,000 - $199,999
$200,000 - $249,999 $250,000 - $299,999 $300,000 - $399,999 $400,000 - $499,999
$500,000 - $749,999 $750,000 - $999,999 $1,000,000 +
Source: HAR, Texas Realtor® Data Relevance Project; Real Estate Center at Texas A&M University
Houston MSA Active Listings by Price
200
700
1,200
1,700
2,200
2,700
3,200
3,700
4,200
4,700
5,200
200
700
1,200
1,700
2,200
2,700
3,200
3,700
4,200
4,700
5,200
Jan
-15
Fe
b-1
5
Ma
r-15
Ap
r-15
Ma
y-1
5
Ju
n-1
5
Ju
l-15
Au
g-1
5
Sep
-15
Oct-
15
No
v-1
5
De
c-1
5
Jan
-16
Fe
b-1
6
Ma
r-16
Ap
r-16
Ma
y-1
6
$0 - $69,999 $70,000 - $99,999 $100,000 - $149,999
$150,000 - $199,999 $200,000 - $249,999 $250,000 - $299,999
$300,000 - $399,999 $400,000 - $499,999 $500,000 - $749,999
$750,000 - $999,999 $1,000,000 +
Source: HAR, Texas Realtor® Data Relevance Project; Real Estate Center at Texas A&M University
Houston MSA Months Inventory by Price
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Jan
-15
Fe
b-1
5
Ma
r-15
Ap
r-15
Ma
y-1
5
Ju
n-1
5
Ju
l-15
Au
g-1
5
Sep
-15
Oct-
15
No
v-1
5
De
c-1
5
Jan
-16
Fe
b-1
6
Ma
r-16
Ap
r-16
Ma
y-1
6
$0 - $69,999 $70,000 - $99,999 $100,000 - $149,999
$150,000 - $199,999 $200,000 - $249,999 $250,000 - $299,999
$300,000 - $399,999 $400,000 - $499,999 $500,000 - $749,999
$750,000 - $999,999 $1,000,000 +
Source: HAR, Texas Realtor® Data Relevance Project; Real Estate Center at Texas A&M University
Houston SF Building Permits
21,160
25,763
30,56330,303
17,820
8,8867,8037,5148,093
9,89410,963
13,53515,15915,66115,76215,873
19,46320,854
25,41425,617
28,169
30,490
34,685
42,040
45,092
51,202
55,159
42,217
28,188
22,36922,328
22,887
28,624
34,543
38,31936,786
0
10,000
20,000
30,000
40,000
50,000
60,0001
98
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
Source: U. S. Census Bureau, Real Estate Center
Average since 1995 = 31,677
Houston Percent Change Home Sales by Zip Code, May 2016
Giddings
Source: HAR, Texas
Realtor® Data Relevance
Project Real Estate
Center at Texas A&M
University
Houston Percent Change Home Sales by Zip Code Inside the Beltway, May 2016
Giddings
Source: HAR, Texas
Realtor® Data Relevance
Project Real Estate
Center at Texas A&M
University
The Villages
West University
Pasadena
Kingwood
Missouri City
Houston
Jersey
Village
Heights
Bellaire
Jacinto City
Houston Months Inventory by Zip CodeMay 2016
Giddings
0 – 2 2 – 33 – 44 – 66 +
Hempstead
Galveston
Navasota
Dayton
Source: HAR, Texas
Realtor® Data Relevance
Project Real Estate
Center at Texas A&M
University
Rosenberg
Houston Months Inventory by Zip CodeInside the Beltway, May 2016
Giddings
0 – 2 2 – 33 – 44 – 66 +
Hempstead
Galveston
Navasota
Dayton
The Villages
West University
Pasadena
Kingwood
Missouri City
Houston
Jersey
Village
Source: HAR, Texas
Realtor® Data Relevance
Project Real Estate
Center at Texas A&M
University
Heights
Bellaire
Jacinto City
Average Price/sq.ft. Harris County by Zip CodesMay, 2016
Source: HAR, Texas Realtor® Data Relevance Project Real Estate Center at Texas A&M University
Pasadena
Jersey Village
Katy
Waller
HoustonChannel View
Humble
Houston Average Price/SF by Zip CodeInside the Beltway, May 2016
Giddings
Source: HAR, Texas
Realtor® Data Relevance
Project Real Estate
Center at Texas A&M
University
The Villages
West University
Pasadena
Kingwood
Missouri City
Houston
Jersey
Village
Heights
Bellaire
Jacinto City
Houston MF Building Permits
18,310
21,543
42,355
32,495
12,687
4,067
755 2841,041
2,2432,311
3,6673,3413,887
6,690
4,7834,499
11,265
20,189
10,150
7,6316,643
11,382
16,586
10,60210,468
15,733
20,312
14,165
4,7094,858
8,281
14,525
16,649
25,044
19,798
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,0001
98
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
2011 +70%
2012 +75%
2013 +15%
2014 +50%
2015 -21%
Source: U. S. Census Bureau, Real Estate Center
1997-2014 average 12,700
Houston MF Absorption vs. Total Completions
-15,000
-10,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
30,000
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
All Properties
Absorption Completions
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Class A Apartments
Absorption Completions
Source: O’Connor & Associates; Real Estate Center at Texas A&M University
Currently 25,053 under construction and another 8,598 proposed
Houston MF Rent & Occupancy
84.0%
85.0%
86.0%
87.0%
88.0%
89.0%
90.0%
91.0%
92.0%
93.0%
$0.70
$0.75
$0.80
$0.85
$0.90
$0.95
$1.00
$1.05
$1.10
$1.15
1Q
20
06
4Q
20
06
3Q
20
07
2Q
20
08
1Q
20
09
4Q
20
09
3Q
20
10
2Q
20
11
1Q
20
12
4Q
20
12
3Q
20
13
2Q
20
14
1Q
20
15
4Q
20
15
All Properties
Occupancy Rent
Source: O’Connor & Associates; Real Estate Center at Texas A&M University
Currently 25,053 under construction and another 8,598 proposed
84.00%
85.00%
86.00%
87.00%
88.00%
89.00%
90.00%
91.00%
92.00%
93.00%
94.00%
95.00%
96.00%
$0.90
$0.95
$1.00
$1.05
$1.10
$1.15
$1.20
$1.25
$1.30
$1.35
$1.40
1Q
20
06
4Q
20
06
3Q
20
07
2Q
20
08
1Q
20
09
4Q
20
09
3Q
20
10
2Q
20
11
1Q
20
12
4Q
20
12
3Q
20
13
2Q
20
14
1Q
20
15
4Q
20
15
Class A Apartments
Occupancy Rent
Dr. James P. GainesChief Economist
recenter.tamu.edu
June Luncheon
June 23, 2016
The Briar Club