JOBS AND ECONOMY
Q: What do you think will happen with the U.S. economy over the next 12 months?
Robyn Jones, Robyn Jones Homes: In our area, I anticipate demand continuing to increase because the oil and gas companies are continuing to build new research and development facilities, new campuses. We’re still seeing new master plan communities being introduced to the area. It appears with all of our medical facilities and oil and gas and all the ancillary businesses, the next few years look promising.
Brian Martucci, First Mariner Mortgage: I think the best case is we go sideways and the worst case is we could be in for another large crash not unlike 2008.
Shad Bogany, ERA Bogany Properties: I think we’re going to see some inflation. I do predict that interest rates will go up a little bit, but I don’t know how much. Did you know the U.S. government has stopped buying mortgage-backed securities? I don’t think it’s going to get way out of hand, but I think we’re going to see a slow increase in that and because of inflation you’ll probably see the interest rate go up. I still believe that the drag on the economy is not the economy. It’s the politics that are not allowing the economy to grow and prosper.
Q: What do you see happening with the job market, and how will that affect housing?
Chaille Ralph, Houston Association of Realtors Chair: The greater Houston area added jobs at an incredible 4.4 percent increase in the latest 12 months, with a combined 122,900 net new jobs. When compared to the 1.93 percent job U.S. growth rate in the same period, it demonstrates just how hot the Houston economy and real estate market have become.
Jobs are everything to an economy and to the real estate market. The Houston Association of Realtors’ Multiple Listing Service (MLS) has averaged 6,880 closings per month in the past 12 months of single family, townhouse, condominium, loft, mid- and high-rise properties. This is an all-time record, driven by robust job growth. Needless to say, prices and rents have both been driven upwards by demand outstripping supply, with the 12-month moving average of median price up 9.4 percent in the past year.
In addition, Stewart Title Chief Economist and former HAR Chairman Ted C. Jones, Ph.D. is forecasting a change in 2015 as oil prices drop into the $60 to $70 dollar range per barrel. What does this mean for employment and housing? Based on past analyses, Dr. Jones predicts that job growth will likely halve – but that level would still exceed the national average. He expects 60,000 to 66,000 net new job creations in 2015 rather the 122,900 seen in the past 12-months. That level of drop in employment should correspond to an estimated 10 percent to 12 percent decline in home sales in the coming 12 months. Prices will likely increase in the 4.5 to 7 percent range.
Shad Bogany: I think one of the reasons Houston’s been doing so well in housing is because of the job market. I think we’re going to continue to see an increase in the job market here in Houston. Houston has become so diverse. I do worry a little bit about the oil prices. They have to stabilize, which is a good thing, but if OPEC or Iran or Iraq all of a sudden does something different or if Africa finally gets their stuff together to put out more oil, it could change. One of our biggest employers here is the oil and gas industry. I think there’s some light at the end of the tunnel if we can figure out how to get that liquid gas over to Europe, we may continue to grow. But I think a lot of the growth we had in oil and gas is due to new discoveries of it and I think as long as the job market is there, we’re going to have thousands of people needing a place to stay. I think the economy in Houston is much more diverse than it’s probably ever been. So yes, we’ve got oil and gas, but we also have the largest medical center in the world and people move here all the time just to be able to work in it.