Why Texas is Different
With so many misperceptions created by the national news about the national real estate market, Texas consumers need to know what’s really going on in the TEXAS real estate market.
Why Texas is different
Strong, diverse economy: Texas is strong in industries that are still growing (such as education & health services, government and hospitality), according to the Texas Workforce Commission. In addition, the state’s four largest metros (Dallas-Fort Worth, Houston, Austin, and San Antonio) were recently ranked in the top 10 cities projected to recover from the economic recession nationwide (America’s Fastest Recovering Cities , by Francesca Levy, Forbes Magazine, Nov. 19, 2009).
- By August 2009, Texas’ unemployment rate had been less than the national rate for 33 consecutive months (since November 2006).
- According to economists, Texas employment is expected to rebound in the fourth quarter of 2009, while other states are slated for recovery well into 2010.
- According to a study by the Brookings Institution, San Antonio, Austin, Dallas-Fort Worth, Houston, and El Paso were among the strongest economies in the nation during the second quarter of 2009.
Sources: Texas Workforce Commission, U.S. Bureau of Labor Statistics, and Real Estate Center at Texas A&M University. Moody’s Economy.com, Dallas Morning News
Enduring home values: From 1999 to 2009, the median home price in Texas increased 45% while home sales increased 16% (Real Estate Center at Texas A&M University).
Top state to relocate: According to the Allied Van Lines 42nd Annual Magnet States Report, Texas is the No. 1 destination state for residential relocations in 2009 for the fifth year in a row.
Misperceptions created by national news
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What they hear … |
What they don’t hear … |
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Median sales prices are down as much as 41% |
That 41% number is from California (Nov. 2008 compared to Nov. 2007). Median sales price statewide is flat in Texas for the entire year 2008 compared to 2007*
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Average sales prices dropped $115,000 in one year |
That number is from Arizona. Average sales price in Texas is unchanged for the entire year 2008 compared to 2007*
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Home prices are the lowest in six years and it takes three quarters of a year to sell a house (Reuters, Jan. 2009) |
Over the last six years, home prices in Texas have increased 9% in value (median home prices from Dec. 2002 to Dec. 2008) and in that time have averaged less than 7 months, sometimes much less, to sell.
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*Source for Texas numbers: Real Estate Center at Texas A&M University
Statewide facts
Texas real estate remains a strong long-term investment. In five years, the average home sales price in Texas has increased 13% in value, or $21,300 (November 2004 to November 2009); over the same period, median sales prices (half of all homes sold are priced higher and half are priced lower) also increased 12% in value, or $15,100. Also, with the state’s population growth expected to rise 11 % by 2015, all those people will need a place to live. In fact, Texas home sales have been on a steady upswing, increasing 62% from January 2009 to November 2009. * Data from the Real Estate Center at Texas A&M
Texas homes have appreciated steadily. Appreciation refers to an increase in value of a property. It is a measure of the demand for the property. While home sales prices in places like California, Florida, Nevada, and Arizona have experienced rapid rises and drops in values, Texas prices have remained relatively steady. Home price appreciation in Texas has not fallen below zero in the last 16 years. At the end of September 2009, Texas ranked eighth in the nation for home appreciation according to the Federal Housing Finance Agency.
Texas homes are more affordable. Using a ratio of average family income to income required to qualify for a loan, the Housing Affordability Index indicates the proportion of the population that can afford to buy the average home sold during a certain time period. The higher the index, the more affordable the housing in that area. See the Housing Affordability Index Comparison chart below from the Real Estate Center at Texas A&M.
|
MLS Area |
2009Q3 |
2008 |
2007 |
2006 |
2005 |
2004 |
2003 |
2002 |
|
Texas |
1.84 |
1.59 |
1.45 |
1.52 |
1.68 |
1.77 |
1.81 |
1.68 |
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USA Total |
1.57 |
1.33 |
1.11 |
1.09 |
1.23 |
1.34 |
1.61 |
1.43 |
Most borrowers are approved. According to a report by the National Association of REALTORS®, 91% of buyers in Texas were not rejected by lenders in 2008.
Great rates are available. See chart below from the Mortgage Bankers Association and Freddie Mac from the week ending Jan. 8, 2010 on mortgage loan rates that are the lowest they have been in decades.
|
Type |
MBA Market Rates |
Freddie Mac Rates |
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30-Year Fixed Rate |
5.13% |
5.42% |
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15-Year Fixed Rate |
4.45% |
4.87% |
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1-Year ARM |
6.83% |
4.93% |
First-time buyer incentives. Qualified first-time homebuyers purchasing a principal residence can receive a tax credit of up to $8,000 until April 30, 2010. Existing homeowners may also qualify to receive a tax credit of up to $6,500 for purchasing a home between Nov. 6, 2009 and April 30, 2010.
Additional resources
- Your local association of REALTORS® and local MLS
- Real Estate Center at Texas A&M: www.recenter.tamu.edu
- TexasRealEstate.com (Inside the News):www.texasrealestate.com/web/3/31/
Source: TAR 2010 last updated 1/13/2010
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