Houston is called the "Bayou City," but with the strongest construction market in the city, it should also be called the "Construction City."
By Peter Ricci
Houston is known as the “Bayou City,” but if housing construction data from the Census Bureau for 2011 is any indicator, it should also be called the “Construction City.”
Cheesy? Maybe. True? Well, according to the Census Bureau, more than 31,000 construction permits were issued in Houston in 2011, by far the most in the country (Dallas, which came in at number two, had 18,686). Also, in terms of construction activity, Houston had the fourth-busiest housing market in 2011, with its 13.55 construction permits per 1,000 housing units ranking only behind Raleigh, Austin and El Paso.
Houston Construction Activity Testament to Strong Local Economy
In a post for Atlantic Cities, Jed Kolko, Trulia’s chief economist, explained that two primary factors have contributed to the huge increases in construction activity in Houston and other areas:
- First, Kolko wrote that areas with high construction have long-term employment growth, which is, in his words, “the best guide to future housing demand.” And as any agent in Houston knows, Houston has one of the strongest job markets in the country, with an unemployment rate of just 5.8 percent.
- And second, metros like Houston were not as impacted by the housing boom; thus, overbuilding did not occur, prices did not suffer and the housing markets are ready to absorb new inventory; and anybody who has been following our coverage of the Houston housing market knows how strong sales have recently been.
Jeff Burke, the founder of real estate tech firm NuHabitat and a former homebuilder in Houston, said that the Bayou City’s strong economy, which has grown increasingly diverse since the late ’80s, has contributed enormously to its strong housing market.
“Houston’s economy at one time was dependent on the energy sector,” Burke said. “Now, we have a much broader spectrum of industry.”
New Home Construction a “Bet on Future Growth”
Perhaps the most promising aspect of all in Houston’s surging construction activity is what it signifies for the future of the housing market. As Kolko explained, builders are not going to build just anywhere.
“Construction activity is a bet on future growth, he said. “Developers will build only in areas where they expect housing demand in the future.”
I was recently in Houston for 2 months planning to relocate there from Southern CA. I’d lived in Houston for 10 years during the 90’s and 00’s. Although there is an enormous amount of construction and job opportunities seem to exist, the construction has caused the City and surrounding suburbs to experience catastophic failure of the roads. The roads have always been “bad” in Houston but now they are horrific. To that, add the enormous traffic increase caused by overbuilding in the Upper Kirby District, Montrose area, and Hyde Park areas, and the situation is disasterous. You cannot build apartment complexes on all four corners of an intersection with thousands of units and expect no to have a traffic disaster. Unable to find meaningful work, I returned to SoCal on Christmas day 2012. They even passed a Bond measure specifically for road construction while I was there – add that construction to an already crumbling city and that spells enormous disaster. I think Houston needs about 10 years to level-out, repair the roads, and become normal again.
I think “T” is over generalizing here when he says Houston’s road system has failed. There are different areas that experience more congestion than others, but I suspect it’s that way for almost every major metro area in the country. Most of the suburbs making up the greater Houston area are very well planned out when it comes to traffic and road systems, The Woodlands could probably serve as a model for the rest of the country when it comes to road systems and walkability. I’m sorry T couldn’t find “meaningful” work here in Houston, but if he can’t find it here I don’t know where else he’s going to find it.