The Texas housing market continues to grow, even with negative factors such as weather, higher mortgage rates, shortage of properties for sale and tight lending practices.
Still, the outlook for 2014 is good for residential real estate on the Texas coast. Vacation rentals are strong across the region, and sales are strong in the center Corpus Christi area driven by the Eagle Ford Shale energy boom and the new Schiltterbahn water park resort on Upper Padre Island (formerly North Padre).
Regarding residential properties, experts predict smaller price increases this year.
- Their best guess is that prices will be up but not as much as last year. Some surveys show consumers expect to pay 3 percent more each year for the next ten years.
- In other words, home prices will likely increase less than mortgage rates, indicating that the consumption motive to purchase a house is stronger than the investment one. Also, the futures markets have home price increases at 5 percent annually.
- Experts see a continued buyer preference for rentals in most cases, because household formation has been slowed by unemployment. Yet a few bright spots remain in Texas, such as Austin and Corpus Christi.
Real estate sector analysts have expressed concerns about the shortages in the supply of skilled labor to build.
- The shortage is said to have been caused by an older construction labor force, a movement to other industries, less immigration labor and a generational problem in training and recruiting young workers. In Corpus Christi, add the new demand for housing to operate Eagle Ford Shale.
As long as the economy continues generating slow job growth, the real estate sector will continue to grow at a slow pace. Job growth is needed to increase household formation as the hiring of new workers leads to greater demand for housing and commercial and office space. For the second home markets, stronger vacation home rental demand, creating the need for more inventory.
This has been the case for Texas where metropolitan areas, such as Houston and Austin (on the coast Corpus Christi) that continue to show the strongest performance in real estate markets versus other regions that lack energy and technology industries.