3 Reasons Houston Real Estate Will Avoid the Fiscal Cliff

by Houston Agent


With its strong economic fundamentals, Houston's real estate market may very well be unaffected by the fiscal cliff.

By Peter Ricci

The last month, we’ve been devoting quite a bit of coverage to the fiscal cliff, analyzing its implications for the housing market and specific pieces of housing policy, most notably the mortgage interest tax deduction.

A new report from RealtyPin.com, though, supported by analysis from economists in the Texas A&M Real Estate Center, argues that real estate professionals in Houston may not have too much to worry about when it comes to fiscal cliff.

Houston Real Estate and the Fiscal Cliff – Nothing to Worry About?

As reported by the Houston Chronicle, the Texas A&M economists highlighted three reasons why Houston’s housing market could withstand the fiscal cliff:

  1. Smart Building – Houston’s homebuilders, unlike the builders in, say, Southern California, Chicago and South Florida, did not overbuild during the housing boom years, and as a result, Houston’s housing inventory is in much better shape than many of the housing markets in similarly-sized housing markets. As Amy Bernstein, the president of Bernstein Realty, put it, “Houston never really needed a recovery period … we’ve had a slow and steady growth over the years, so we never really hit a low point.” Look for more of her thoughts in Monday’s Viewpoints!
  2. Strong Economy – The energy industry is, as the Chronicle puts it, fairly “recession-proof,” and thankfully for Houston, the city and its surrounding suburbs are awash with jobs in the thriving industry; and wherever there is strong job growth, home sales are surely to follow.
  3. Healthy Housing Inventory – And finally, Houston’s housing inventory is extremely healthy, and devoid of the lingering foreclosures that have plagued other metropolitan markets. One reason for this is Houston’s strong job market, which has kept its residents employed and who have, in turn, continued making their mortgage payments; another is that with demand for Houston homes as high as it is, inventory has been in short supply, and when supply is low, chances are rare that unqualified homebuyers will be able to make a purchase.

In the end, it all comes down to fundamentals, and Houston’s market, given the economic distress it’s already withstood, seems to be in a good position to weather the fiscal cliff storm.

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