According to a recent report by Metrostudy, a national housing data and consulting firm that maintains an extensive primary database on residential construction in the U.S. Housing market, Houston’s economy is showing signs of recovery.
The annual 2009 Census Household survey shows that Houston’s population is growing, which is a good thing for the housing market. The Census showed that the Houston-SugarLand-Baytown area added over 140,000 to its total population, a 2.5% increase over one year. “The continued arrival of people in Texas fuels demand for housing markets,” says David Jarvis, director of Metrostudy’s Houston division. “This coupled with a more optimistic employment outlook, signals continued stability in the Houston housing market.” For the 12 months ending in June 2010, the Houston region lost 17,100 jobs. As recently as December, the 12-month loss exceeded 100,000 jobs. By year’s end, year over year comparisons are expected to show moderate gains.
Stability in the Houston market has steadily increased. Home starts for the second quarter of 2010 were at 5,942, an increase over the first quarter of just over 12%. Metrostudy also reports that home closings have outpaced new supply, indicating a higher housing demand and reducing total inventories of homes. At current absorption rates, the level of housing supply stands at 6.1 months, which is just above the 6 month level of supply Metrostudy considers healthy market equilibrium.
Metrostudy does think, however, that the first-time homebuyer tax credit needs to be taken into consideration. “The increase in starts can be largely attributed to the New Home Buyer Tax Credit, so we saw numbers fall in May and June. We project home starts for 2010 to remain similar to or to trail 2009,” says Jarvis. “And while supplies are currently in equilibrium, the slowdown in closings post Tax Credit should cause small increases in the months of supply moving forward.”
“Another positive sign, though, is sales of existing housing, which points to a recovering sentiment,” says Jarvis. For the last 2 quarters, the number of existing houses for sale has increased, whereas for the last 2 years the market has seen depressed levels. “We view depressed levels as an indication that homeowners did not want to sell their homes in light of the bad economy. With the increase in listings, we believe owners are ready to test the market, an early sign of market confidence returning.”
For more information, visit metrostudyreport.com.