This just in from my Texas A and M Real Estate Center eNewsletter:
COLLEGE STATION— “It appears we are at the bottom of the housing market in most Texas cities,” said Real Estate Center Director Mark Dotzour after reviewing the state’s latest home sale numbers.
Dotzour mentioned two years ago that new home construction needed to fall dramatically to avoid the level of overbuilding that could damage Texas housing markets. He even picked summer 2009 as the bottom of the housing cycle because bankers would constrain credit to homebuilders and developers.
Apparently he was right on all counts. The Texas inventory of unsold new and existing homes is in good shape.
“I feel now is the time to buy a house in most Texas cities,” he said. “Housing affordability has never been higher, and I never thought I would see 5 percent mortgages in my lifetime. If you plan to live in the house for at least two or three years, now is the time to buy.
“If you are planning to build a home to retire to in the near future, now is a great time to do it. Contractors are plentiful, construction costs are lower and mortgage money is cheap,” he said.
Dotzour said mortgage rates should remain low as long as the federal government continues to purchase almost all residential mortgages. When they stop, rates will move up.
The Center’s chief economist is quick to note, however, that everything hinges on one crucial assumption — “that the federal government doesn’t cause further damage to the U.S. economy with higher levels of intervention in healthcare, taxation, cap and trade and rewriting accounting and legal standards.”
In Austin, we still see evidence of “two markets”. The well priced homes in desireable areas with good schools in the $200K +/- price range are suffering not. Upper end, $500K+ homes, and cheaper outskirt starter neighborhoods are still very sluggish.
Those how have been sitting on the sidelines waiting for doom must feel disappointed as the Austin market simply never cratered. I’ll be posting July market stats and year to date stats in the next day or do.
I agree with all said here and have made nearly identical forecasts. One thing I would add is that many people still CAN’T get loans even with good credit. Namely the self employed and just about anyone looking for something other than a sub-$200K FHA.
What’s next? Hard to say, but if and as the economy heats up, with all of the positive migration that Austin is seeing, and with new construction still slow due to lack of capital (nationally), we could be looking at a housing shortage here in the next couple of years… and if (when) inflation hits, all I can say is that I hope you own some hard assets (like real estate) with fixed-rate loans…
Phill
Hi Steve,
We are seeing the same thing here in our local market. I live in Northern Utah, and anything under $200,000 is moving pretty well. On the other hand, the market above that is a nightmare. The market is bloated, and the absorption rate is about 2 years out. Which isn’t anything a seller wants to see these days.
Great post, and it’s sad to see other markets in the same boat as we are.
-Lisa Udy