Giving Back Extraordinary, Stratospheric, Dramatic Growth
The Austin American Statesman on Texas. “For the fifth straight year, Austin-area home sales set a record in 2015, the Austin Board of Realtors said. And for the fourth year in a row, the area’s median home sales price hit a new high, rising to $263,900. ‘House prices have increased a lot in recent years, and our own indicators (including house-price-to-income ratios) imply that the market is becoming overpriced,’ said Ed Friedman, a director with Moody’s Analytics who follows the Texas economy.”
“Amy Bernhard, an agent with Realty Austin, said she thinks the housing market ‘will be the same, or even a little better, than last year.’ ‘Everything has appreciated very organically,” Bernhard said. ‘I don’t think we’re in any sort of bubble.’”
“Local real estate agent George Vance McGee, however, said he thinks ‘prices are just a little too high.’ ‘Buyers are not paying these pie-in-the-sky prices,’ McGee said. ‘Some of my sellers are giving me a dreamy price and hoping I may be able to perform a miracle, and I have not been performing miracles lately.’”
From WOAI News. “Hundreds of Realtors were told at the annual San Antonio Board of Realtors Housing Forecast that the price of homes and the hot housing market should continue in San Antonio through 2016, News Rdio 1200 WOAI reports. But that doesn’t mean that Real Estate Economist Dr. Mark Dotzour doesn’t see problems on the horizon, and one is what has become known as the ‘San Francisco-ization’ of Texas. ‘The average Texan is having a hard time finding a home to buy any more,’ he said. ‘Land prices are getting bid up so high that homebuilders can’t afford to build moderately priced homes any more, it is getting very hard to find a new home prices under $200,000.’”
The Dallas Morning News. “The apartment building boom will lose some steam in 2016. In 2014, nationwide apartment starts rose 14 percent, and they were up 12 percent last year. ‘2016, I think, will be only about 5 percent above 2015,’ said David Crowe, chief economist with the National Association of Home Builders. ‘I am seeing a bit of tempering in these raging increases.’ Apartment building across the country has more than tripled in the last six years. ‘We have had a very fiery return of the multifamily market’ since the recession, Crowe said.”
“Greg Willett, vice president at Carrollton-based apartment analyst MPF Research, agrees with forecasts of slower growth in apartment construction this year. ‘It’s appropriate to slow the growth in starts, given the volume of product already on the way that will need to be digested,’ he said. Apartment analysts at Axiometrics Inc. are even more cautious in their outlook. ‘I think this slowing in new supply in 2017 or slowing in construction starts in 2016 is giving a chance for demand to catch up in some markets,’ said K.C. Sanjay, senior real estate economist.”
The Odessa American. “Odessa home sales in December fell 18 percent from the same month of 2014 while prices increased, according to the Odessa Board of Realtors. Board officials describe a market feeling the effects of an oil bust, but so far without the pain felt in the oil and gas industry. Abigail Montgomery, a 26-year-old former elementary school teacher, became one of those new homeowners when she bought a home for about $192,000.”
“Montgomery said she probably couldn’t have afforded the home on her teacher’s salary. But she left the Ector County ISD in summer 2015 to work as an office assistant at her father’s company, BCM and Associates, which plugs wells in the Permian Basin oilfield. ‘We are in the oil industry, and things are pretty scary right now,’ Montgomery said. ‘But we are stable and we are still doing OK. I had enough savings where I am OK if anything happens.’”
“In the end, the price Montgomery said she paid for the home was about $8,000 below the asking price. To buy it, Montgomery said she took out a conventional loan with about a 5 percent down payment. ‘The way I look at it, is if you have the means and the stability, then this is a big asset,’ Montgomery said. ‘And yes, it’s not the greatest market of all time, but if you’ve been around in the 80s you know it will pick back up at some point.’ As it happens, Montgomery said her parents have struggled to sell their home listed in the $400,000-plus bracket in the Chimney Hollow area, after moving this summer to a new home.”
The Midland Reporter Telegraph. “As the foundation of the Midland-Odessa economy — the oil and gas industry — crumbles, the overall economy continues to slip. The petroleum index has been falling by 10 points or more per month, fueled by the plunge in commodity prices and resulting decline in oil field activity, said Karr Ingham, the Amarillo economist who prepares the index. The decline has been increasingly reverberating through the overall economy, Ingham said. ‘When we peaked with the index in January 2015, the first several months were fairly immodest declines and not all that steep. That contraction has been gaining momentum and losing ground in larger chunks,’ he said. There is little doubt ‘we’ll see deep year-over-year declines in each component,’ he said.”
“If there is any consolation in that fact, it’s that those declines are from very high levels, Ingham said.”
“‘Right now we’re giving back — we’re running out of words to describe it — extraordinary, stratospheric, dramatic growth. We’re giving back that growth at this point. It may feel scarier this time but we can’t forget the fact that economic growth has been so extraordinary in recent years, it won’t come close to being undone,’ Ingham said. ‘That doesn’t change the fact that the economic contraction will be one that is deep, that is accelerating and will cause turmoil at the household level and at the business level.’”
“That contraction is also increasingly being seen in the housing market, Ingham said. ‘The housing numbers are very interesting. They started out with not much of a decline but that is beginning to accelerate,’ he said. ‘I say this with a caveat but the decline in Midland-Odessa housing prices is not a bad thing. The caveat is, unless you purchased a home at the top of the market and it’s losing value and you’re under water.’”
The Wall Street Journal. “Home sellers are slashing prices and offering incentives to keep buyers from walking away from contracts as an 18-month oil slump buffets this city’s once-booming housing market. Builders are hustling to reverse declining sales and rising cancellation rates by beefing up incentives. KB Home in October advertised homes in several of its Houston developments with price cuts of up to $31,000 and commissions available to buyers’ agents of $2,000 to $10,000.”
“Overall, the area’s average single-family home price was down about 7.5% to just over $280,200 in December from its June record high, according to the Houston Association of Realtors. Even the high end is hurting: The average sale price for luxury homes, defined as the top 5% of the market, fell 5% to $1.3 million in the fourth quarter from the same period a year earlier, according to real-estate brokerage Redfin. Michele Marano, a Houston real-estate agent who specializes in oil-and-gas clients, said ‘my buyers have completely backed off.’ She added, ‘I have an enormous number of buyers but they’re sitting.’”
“Few neighborhoods illustrate Houston’s slowdown as dramatically as the communities that sprouted since 2011 around the site of Exxon Mobil Corp. ’s 385-acre campus just north of Houston. Developers readied thousands of lots for upscale houses in anticipation of a flood of oil executives moving to the area. Now, unsold homes sit near the Exxon Mobil campus, with the supply of so-called speculative houses there exceeding the metropolitan area’s average since the second quarter of 2014, according to Metrostudy.”
“Gary Sova and his wife were able to negotiate a roughly $140,000 discount on a home in the $1 million range in the Woodlands, near the Exxon campus. He said many buyers were selling because they had lost jobs or were relocating. Agents started to say ‘just make me an offer.’ That never happened at the beginning of their house hunt, he said. ‘I think this oil thing has spooked people a little bit,’ he said.”
