News Release No. 21, June 2007
By Bryan Pope, Associate Editor
COLLEGE STATION (Real Estate Center) – According to recent figures from the Office of Federal Housing Enterprise Oversight, home prices in Texas increased 6.9 percent during first quarter 2007, well above the 4.3 percent national average.
“Despite the national slowdown, Texas is still strong,” said Dr. James Gaines, research economist with the Real Estate Center at Texas A&M University. “There’s no reason prices shouldn't continue to rise despite the increase in foreclosures and the slowdown in transactions, construction and new home starts.”
By comparison, home appreciation slowed to 1.2 percent in California and 3 percent in New York. Nevada price increases virtually disappeared at just .6 percent. Even rapidly growing Florida and Arizona reported value increases of 4.3 percent and 5.2 percent, respectively.
Within Texas, there is a wide variation in appreciation rates in the 25 metropolitan areas. Combined with low interest rates, strong job growth and limited supply on new housing in many markets, Gaines says some of the appreciation rates are astounding.
“Among the state’s large metro areas, Austin and San Antonio are seeing the strongest rate increases at more than 10 percent,” he said. “With low levels of inventory and building permits off by over 20 percent in each community, it’s easy to see why these two markets are humming.”
Meanwhile, the energy industry is fueling strong housing markets in some smaller metros. Home prices are up more than 21 percent in Midland and 16 percent in Odessa. Victoria prices are up 8.3 percent.
Gaines said some border communities are on fire as well, thanks to a surge in government hiring and business activity. Laredo is up 16.6 percent, while El Paso is up 11.2 percent.
While Texas seems to be bucking the national trends in home price appreciation, the Lone Star State shares the national phenomenon of increasing foreclosure rates.
“Texas is no longer making headlines as having the most foreclosures in the country,” Gaines said, “but rising foreclosures is still a source of concern for all industries related to the housing market.”
The Real Estate Center (recenter.tamu.edu) has been providing solutions through research for 35 years. Funded primarily by Texas real estate licensee fees, the Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers and the general public.
