Study says economy, housing industries remains steady
By Luciano Battistini
Times Staff Writer
Metrostudy gave a positive outlook about the Houston economy and housing industry during the Katy Area Economic Development Council meeting Tuesday.
“While builder cutbacks and discounted pricing are having an effect on reducing the inventory of homes, the tightening of credit standards has removed a sizable number of formerly qualified buyers from the market,” said David Jarvis, Metrostudy director of the Houston region.
“Nevertheless, as these issues run their cycle, demographic trends keep marching forward, creating a pool of potential buyers who will express themselves in the market when credit normalcy and calmer consumer psychology return, setting the stage for a decade of strong housing demand in the United States.”
Houston’s job growth remains strong, but has shown some signs of slowing, Jarvis said.
Houston has added an average of more than 90,000 jobs each year for the past three years.
Last year, Houston added 54,100 jobs, for a 2.1 percent growth rate. Houston continues to lead the nation in job growth and employment, adding more jobs during the year ending in June than any other Metropolitan Statistical Area (MSA) in the U.S.
According to Jarvis, foreclosures remain elevated, possibly affecting homebuyers’ mindset by presenting another potential avenue for negotiating with homebuilders.
The months of supply of lots is below equilibrium in the lowest and highest price bands, while the supply of lots for housing priced between $100,000 and $300,000 is above the equilibrium range, Jarvis said.
But despite the current economic atmosphere, Houston’s fundamentals remain among the strongest in the nation.
Job growth, especially in energy-related industries, has protected Houston from some of the negative effects of the volatile credit markets, Jarvis said.
The weak dollar encourages exports, which should also continue to benefit Houston’s economy.
And Houston is attracting workers from other areas of the U.S. with high-paying jobs, an affordable cost of living and a diverse economy.
As potential homebuyers review various markets across the country in search of a bargain, Houston will be a perennial candidate.
These challenges will continue to affect home sales in the near-term, although strong local fundamentals will eventually be reflected by strong demand for new homes.
“The market for new homes in Houston faces considerable crosscurrents, with strong job growth and a strong economy challenged by mortgage constraints and competition from foreclosures and the resale market,” Jarvis said.
“Despite the short-term uncertainty, the positive aspects of Houston’s economy and new-home market will allow it to recover more quickly than other U.S. markets beset by affordability issues and weak job growth. When national credit issues subside, Houston’s new-home market will quickly rebound.”
