Demand for homes in Houston and an expected increase in prices will be among the key drivers for the local real estate industry in 2017, according to a Texas economist.
Jim Gaines of the Real Estate Center at Texas A&M University said that the market remains solid and demand for homes is still high, although unlike before when homes for sale did not last for more than two days in the market.
Data from the Houston Association of Realtors showed that sales of single-family properties rose to 76,449 homes, up 3% year over year and 1.3% compared to 75,470 houses in 2014. Overall real estate sales in 2016 also increased 2.2% year over year to 91,520 transactions.
The outlook for the city’s housing market also bodes well coming into 2017 based on pending sales of single-family units in December 2016, which was 11.7% higher than the same month in 2015. On the other hand, total active listings also increase 7.7% year over year.
The growth in the city’s residential market happened despite a downturn in the energy sector.
Gaines noted that since Houston and other parts of Texas rely heavily on the energy sector, it would take two to three years before a sluggish pace in that market negatively affects the economy and other industries.
Other factors that could Houston’s property market include increasing borrowing costs, which could be problematic if mortgage rates increase to more than 5%. However, Gaines believes that a lack of supply in residential properties will uplift home prices.
He also said that a strong U.S. economy will help in reversing a downward trend in Texas’ energy industry, as “everything is in a state of flux.”