This year will end as the second best year ever in Texas in terms of existing home sales, said a housing market expert with the Real Estate Center. “Last year was the second best year ever in the state of Texas for home sales volume,” said Center Research Economist Dr. Jim Gaines. “It was second only to 2006, which was at the height of the housing boom and all the easy financing. And 2013 wasn’t that far off from that. This is going to become the new second best year ever. We are having a really terrific year.” The latest Multiple Listing Service (MLS) data show that sales of existing single-family homes in Texas were 7 percent higher last month than in September 2013. About 24,640 homes were sold last month, over 1,600 more than the same month last year, but almost 2,800 less than in August. Gaines said the August-to-September downturn is the normal seasonal falloff.
So far this year, 217,690 homes have been sold, about 1 percent more than this time last year. “We’re getting exactly what we thought we were going to get, and that’s a slowdown in the rate of increase,” Gaines said. “Last year sales went up about 16 percent. It was a big, big jump. This year it’s a little jump. Home prices are doing a very similar kind of thing. There’s been a step-up in prices the last five years, and we’re still seeing that step up. But the rise of the step isn’t quite as high. “As our prices have been going up progressively here in Texas, incomes really haven’t been going up at the same pace percentage-wise. Home prices going up faster than income means that ultimately affordability and what people can afford to pay becomes an issue.” Gaines said homebuyers getting hit the hardest are those on the lower end of the home-price spectrum. “Very few homebuilders are building homes under $200,000 or $250,000 in most of our markets,” he said. “So there’s no increase in supply on that low-priced end.” In addition, credit tightness is affecting first-time buyers and first-time move-up buyers much harder than older buyers at higher income levels.
“The good news for Texas is that our prosperity is, in general, still continuing,” Gaines said. “On the horizon, it appears that it will continue. The only cloud on that horizon is what’s happening in the energy sector. In the last couple of weeks, the price of oil has dropped appreciably. When the trend is downward in the price of oil, you start looking ahead and saying ‘okay, just how far can this trend go before it really becomes a problem?’ Right now it doesn’t appear to be, but it’s one of those things we’ve got to keep our eye on.”
By Bryan Pope, Associate Editor, Real Estate Center at Texas A&M University
Oct. 24, 2014/Release No. 4-1014