Economic Influences on Texas Housing Market
It is a new year and there is plenty of movement associated with the economy and the housing market. While we are still in the month of January, the past few weeks have seen a great amount of change.
As a quick recap, 2014 was a good year. The nation’s economy grew by almost 5% instead of the steady 2% we have felt for the past six years. Job growth is gaining momentum and we are seeing an increase in wages. Business investment is up nearly 9% and consumer confidence continues to rise with it.
For Texas, the drop in oil prices has a positive effect on consumers yet has a negative impact on business and local economy. While the nation’s economy will experience the benefits of lower oil prices (it cost less to fill your tank so you have more money to spend on other things) Texas is an oil/energy state and many jobs are dependent on the price of a barrel of oil. During the recession, Texas – Austin in particular - has been one of the leading cities nationally in economic recovery and job growth adding 421,900 jobs within a 12-month period. That quick progression may change if oil prices continue to decline.
Oil makes up about 12% of our state’s economy. With lower prices, economists predict that Texas job growth will slow in 2015. The Federal Reserve is now predicting a 3.5% overall growth and a 3% employment growth rate instead of the 3.5% we experienced in 2014. However, even with a slightly slower pace, Texas is still a very healthy economic state to live. Texas is diversified when it comes to business so we will become more reliant on other industries.
What does that mean for the housing market? In most areas of Austin, we still find that there is a greater demand for housing than there is supply. 2014 resulted in approximately 400 more sales than in 2013. Median prices were up 8% in 2014 and sales volume saw an increase of 19%. New home construction is still on the rise while the increased demand and lower inventory is resulting in higher prices. 2013 was the best historical year for housing resale and while the numbers aren’t yet finalized, 2014 is expected to outpace those numbers.
Mortgage rates are the lowest since the recession. Now is a very good time to purchase a home. You have more buying power. You get more home for your money and with increased employment and lower energy costs, you have more money to spend. Additionally, lending requirements are a bit more lax then they have been since the recession. Get pre-qualified. If you have been thinking of purchasing your first home, moving to a larger home or changing neighborhoods, now is a good time to do so. If you would like to relocate in Austin, we can help.
2014 was a very good year and we expect good things to come in 2015 – both in housing, employment and economic growth. If you are considering buying or selling a home – now is a good time to do so. If you would like to learn more about current trends or market availability, please contact us – we would be happy to discuss options that make sense for you and your family in 2015.
As an update, we just read an article in the Community Impact Newspaper that also spotlights the economics of our area in 2015. Lakeway, Steiner Ranch, Lake Travis, River Ridge, Bee Caves - all expected to keep growing with favorable economic standing. To learn more, click here.