Despite rising inflation and a previous year of record high apartment prices, the housing market is expected to be back on track in the Greater Houston area this year, according to market experts.
The state of the housing market was presented at the May 24 Greater Houston Builders Association mid-year forecast luncheon.
Moderated by Ted Jones, chief economist at Stewart Title Co., the event featured a panel comprised of David O'Reilly, chief executive officer of real estate development company Howard Hughes Corporation; Allan Merrill, president and CEO of housing construction company Beazer Homes; and Jim Jenkins, vice president of master planned communities for home building company Toll Brothers.
Both in the United States and Texas, more jobs are being added as businesses start to recover from the pandemic, according to the panel.
From April 2020 to April 2021, the U.S. went from 130 million jobs to almost 150 million, according to presentation figures. For the month of April, Houston added almost 30,000 more jobs, which is still lower than pre pandemic levels.
“This recession is different because people aren't losing their jobs,” Jones said. “This recession is about the rising gross domestic product.”
Along with rising apartment prices in the U.S., the median price of homes also rose in the first quarter of 2022 due to inflation, coming in at an average of $450,000. When looking at the housing market in Texas, the median price hovered at around $350,000, according to presentation information.
Similarly, presentation figures showed the average price of rent for a one bedroom apartment in the U.S. came in at almost $1,700, while the cost in Texas remained at just under $1,350.
With regard to new homes, presentation data showed healthy growth so far in 2022.
From January to March, 15,000 single family building permits were filed in Houston resulting in about a 16.8% growth year over year.
“For the first time, Houston did not overbuild,” Jones said.
In the future, Jones said he expects 30 year mortgage rates to increase in the 6%+ range. Additionally, all three panelists agreed affordability and attainability are the most important factors when it comes to keeping the housing market afloat.
“Affordability is dramatically better in the city of Houston compared to the rest of the country,” Merrill said.
Regarding coming housing market trends, Jenkins said Houston will see more quadplexes and three story homes, while O’Reilly expects more small subdivisions with multiple homes that share one backyard due to families wanting to be closer after the COVID-19 pandemic.
