This recent article in the Houston Business Journal probably has a lot of people concerned about our local Houston Real Estate Market.
Arch Mortgage Insurance Co. released its winter 2016 housing and mortgage market report, which found that energy-dependent cities — like Houston — have a higher risk of experiencing lower home prices in the next two years.
This actually is not too surprising, but there is still no need to panic. Although, Houston has a diversified economic base and is no longer just an Oil and Gas city, the city still has deep roots in the Oil and Gas industry. We are at a historic low for oil prices and the drop in these prices has been dramatic in the last year. It is no surprise that our local Oil and Gas industry is impacted. This is clearly helping level off home prices. In truth, the real estate market has seen significant growth and inflation in the recent year — we’ve basically been in a high growth period since the lows of 2008. This leveling off and pause is normal and in many ways healthy for the overall market. Houston does not need the hyper inflation of real estate prices and then to see subsequent big crash as the market corrects. We are better off with steady growth and gentle market corrections than the unfortunate and damaging real estate bubbles witnessed in other part of the country. A pause is good and healthy.
The other note here is that there are macro-economic factors other than Oil and Gas at play. The interest rate is set to rise and this will have impact on some segments of the market and will impact buying decision and timing of transactions. In addition, Texas as a whole appears to be slowing down. Texas cities (Houston, Austin, Dallas, Ft. Worth, and San Antonio) dominate the top of this list with the first five slots nationally.
There is a silver lining in all of this. Depending on the home and location, this can be a great time to buy. Some parts of the Houston market are less likely to see this impact — highly desirable locations will continue to have demand regardless of the overall economic situation and certain price points will continue to have strong demand.
If you are interested in taking advantage of this pause, please feel free to contact me.