texas housing market 2016

Dr. James P. Gaines Chief Economist

February 12, 2016 · Federal Reserve Bank of Dallas

Macro Housing Issues • Demographics: growing, shifting • Affordability: workforce priced out of

ownership • Capital: more equity • Infrastructure: transportation, education,

utilities • Development: Design, Density, Resources and

Processes • Regulatory: lending; environmental; land use

• Federal • State • Local Growth Controls/Initiatives

National Housing Market

3

2016 National Housing Market • Mortgage Rates: up ~0.5% over the year (4% 4.5%) • Household Formations: ~1.25 million • Rental Market: tight, low vacancies, higher rents • Owner Market: sales volume and prices up ~5%

• Increased first-timers, millennials more active • Single-family Rental: organized SF rental market

with institutional owners • Home Construction: builders focused on design,

density, resources and processes • Affordability: prices and rents increasing faster than

incomes – eventual constraint on market

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000Ja

n-00

Jul-0

0Ja

n-01

Jul-0

1Ja

n-02

Jul-0

2Ja

n-03

Jul-0

3Ja

n-04

Jul-0

4Ja

n-05

Jul-0

5Ja

n-06

Jul-0

6Ja

n-07

Jul-0

7Ja

n-08

Jul-0

8Ja

n-09

Jul-0

9Ja

n-10

Jul-1

0Ja

n-11

Jul-1

1Ja

n-12

Jul-1

2Ja

n-13

Jul-1

3Ja

n-14

Jul-1

4Ja

n-15

Jul-1

5Ja

n-16

Sources: US Census Bureau , NAR, SAAR

Existing SF Home Sales

New SF Home Sales

Hom

e Sa

les

000s

Hom

e Sa

les

000s

New and Existing SF Home Sales U.S.

NAHB HMI & SF Starts

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

0

10

20

30

40

50

60

70

80

90

100Ja

n-90

Jul-9

0Ja

n-91

Jul-9

1Ja

n-92

Jul-9

2Ja

n-93

Jul-9

3Ja

n-94

Jul-9

4Ja

n-95

Jul-9

5Ja

n-96

Jul-9

6Ja

n-97

Jul-9

7Ja

n-98

Jul-9

8Ja

n-99

Jul-9

9Ja

n-00

Jul-0

0Ja

n-01

Jul-0

1Ja

n-02

Jul-0

2Ja

n-03

Jul-0

3Ja

n-04

Jul-0

4Ja

n-05

Jul-0

5Ja

n-06

Jul-0

6Ja

n-07

Jul-0

7Ja

n-08

Jul-0

8Ja

n-09

Jul-0

9Ja

n-10

Jul-1

0Ja

n-11

Jul-1

1Ja

n-12

Jul-1

2Ja

n-13

Jul-1

3Ja

n-14

Jul-1

4Ja

n-15

Jul-1

5Ja

n-16

Hous

ing

Star

ts, t

hous

ands

HMI

Housing Market Index Single-Family Starts

Source: NAHB, Real Estate Center at Texas A&M University

New SF Home Starts

1,012 970 964

779

844 899

811 813

1,151

1,309

1,132

888 892

1,162

1,451 1,433

1,194

852

705 663

1,067 1,084 1,072

1,179 1,146

1,081

1,003

895 840

1,030

1,126

1,198

1,076

1,161 1,134

1,271 1,303

1,231 1,273

1,359

1,499

1,610

1,716

1,465

1,046

622

445 471

431

535

618 648

726

935

200300400500600700800900

1,0001,1001,2001,3001,4001,5001,6001,7001,800

1963

1964

1965

1966

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

*2015 & 2016 NAHB projections Apr 2015 Source: US Census Bureau; NAHB; Real Estate Center at Texas A&M University

1963-2002 average per year (1.06 million)

(000s SAAR)

Mortgage and Federal Funds Rate

0.01.02.03.04.05.06.07.08.09.0

10.011.012.0

Jan-

90

Jan-

91

Jan-

92

Jan-

93

Jan-

94

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14

Jan-

15

Jan-

16

Inte

rest

Rat

e %

Fed Funds 30-YR FMR Mortgages

Source: Federal Reserve Board; FHLMC; Haver Analytics; Real Estate Center at Texas A&M University

Mortgage and 10-Year Treasury Rates

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0Ja

n-90

Jan-

91

Jan-

92

Jan-

93

Jan-

94

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14

Jan-

15

Jan-

16

Inte

rest

Rat

e %

10-Year Treasury 30-YR FMR Mortgages

Source: Federal Reserve Bank of St. Louis; FHLMC; Real Estate Center at Texas A&M University

Texas Housing Market

10

Mortgage & Tenure Status of Homes in Texas 2005 & 2014

2005 2014

Number of Homes

Percent of Total Units

Number of Homes

Percent of Total Units

Total Housing Units 9,026,011 10,426,760

Total Occupied Units 7,978,095 88.4% 9,227,197 89.0% Total Renter-Occupied Housing Units 2,815,491 35.3% 3,602,956 38.8% Total Owner-Occupied Housing Units 5,162,604 64.7% 5,674,241 61.2%

O-O units with a mortgage 3,237,790 62.7%

3,307,196

58.3%

O-O units without a mortgage 1,924,814 37.3% 2,367,045

41.7%

Source: U.S. Census Bureau, 2006 American Community Survey Source: U.S. Census Bureau, 2005 & 2014 American Community Survey

Source: Real Estate Center at Texas A&M University

Annual Texas Home Sales

100,047 99,619 107,107

116,604 122,134

121,823

138,123 146,395

170,638

184,056 188,738

196,401 201,528

216,147

241,020

266,842

292,805

275,584

232,381

213,334 203,637 205,786

238,060

276,459 285,535

295,355

$50,000

$70,000

$90,000

$110,000

$130,000

$150,000

$170,000

$190,000

$210,000

$230,000

$250,000

$270,000

$290,000

$310,000

50,000

70,000

90,000

110,000

130,000

150,000

170,000

190,000

210,000

230,000

250,000

270,000

290,000

310,00019

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

15e

Sales Avg Price Md Price

2015 Record Year!!

Texas Monthly Home Sales & WTI Price/bl January 1986 to Present

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

28,000

30,000

32,000

34,000

$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120 $130 $140 $150

1986-19891990-19951996-19992000-20052006-20092010-2015

Source: EIA; Real Estate Center at Texas A&M University

WTI Spot Price FOB Cushing, OK

Dec. ’15 1st month < $40 since Feb ‘09

2015 Home Sales and Median Prices by Metro Areas

3.4%

9.1%

-2.5%

7.6%

10.7%

5.2%

3.8%

7.3%

7.1%

6.7%

9.8%

1.1%

11.3%

8.9%

-4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%

Texas

San Antonio

Houston

Fort Worth

El Paso

Dallas

Austin

Median Sales Price Sales Volume


Texas Months’ Inventory

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Apr

-01

Jul-0

1O

ct-0

1Ja

n-02

Apr

-02

Jul-0

2O

ct-0

2Ja

n-03

Apr

-03

Jul-0

3O

ct-0

3Ja

n-04

Apr

-04

Jul-0

4O

ct-0

4Ja

n-05

Apr

-05

Jul-0

5O

ct-0

5Ja

n-06

Apr

-06

Jul-0

6O

ct-0

6Ja

n-07

Apr

-07

Jul-0

7O

ct-0

7Ja

n-08

Apr

-08

Jul-0

8O

ct-0

8Ja

n-09

Apr

-09

Jul-0

9O

ct-0

9Ja

n-10

Apr

-10

Jul-1

0O

ct-1

0Ja

n-11

Apr

-11

Jul-1

1O

ct-1

1Ja

n-12

Apr

-12

Jul-1

2O

ct-1

2Ja

n-13

Apr

-13

Jul-1

3O

ct-1

3Ja

n-14

Apr

-14

Jul-1

4O

ct-1

4Ja

n-15

Apr

-15

Jul-1

5O

ct-1

5Ja

n-16

15 Source: Real Estate Center at Texas A&M

Inventory at extremely low level relative to market activity

Texas SF Building Permits

67,870 66,161

78,714

103,252

84,565

67,964 59,143

43,975 35,908 36,658 38,233

46,209

59,543

69,964 70,452 70,421

83,132 82,228

99,912 101,928 108,782 111,915

122,913

137,493

151,384

166,203 163,032

120,366

81,107

68,230 68,170

67,254

81,926

93,478

103,045 107,300

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,00019

8019

8119

8219

8319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

15e

Source: US Census Bureau, Real Estate Center at Texas A&M

2014 +10% 2015 +4%

1990-2014 average 94,693/year

Texas SF Permits & WTI Price/bl. Monthly January 1991 to Current

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,00011,00012,00013,00014,00015,00016,00017,00018,000

$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120 $130 $140 $150

1991-19951996-19992000-20042005-20092010-2015

Source: U.S. Census; EIA; Real Estate Center at Texas A&M University

Avg. Monthly WTI Spot Price FOB Cushing, Ok

Texas MF Building Permits

8,273 9,304 8,291

13,879

30,165 31,281 32,521

40,245

51,576

40,715

28,381

33,958 35,791

37,537

33,036

38,671

47,271

53,196

46,918

15,837

19,741

30,729

54,145 53,615

64,135 65,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,00019

90

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

e

Source: US Census Bureau, Real Estate Center at Texas A&M

2014 +20% 2015 +1%

1990-2014 average 34,368/year

Texas Residential Construction Indexes (Jan. 2000=100)

40

60

80

100

120

140

160

180

Jan-

00Ju

l-00

Jan-

01Ju

l-01

Jan-

02Ju

l-02

Jan-

03Ju

l-03

Jan-

04Ju

l-04

Jan-

05Ju

l-05

Jan-

06Ju

l-06

Jan-

07Ju

l-07

Jan-

08Ju

l-08

Jan-

09Ju

l-09

Jan-

10Ju

l-10

Jan-

11Ju

l-11

Jan-

12Ju

l-12

Jan-

13Ju

l-13

Jan-

14Ju

l-14

Jan-

15Ju

l-15

Jan-

16

United States Coincident Index

Texas Coincident Index

Texas Leading Index

Source: Real Estate Center at Texas A&M

Texas Housing Affordability

Price vs. Income

Texas Monthly Median Home Price

$70,000

$90,000

$110,000

$130,000

$150,000

$170,000

$190,000

$210,000

$230,000

Jan-

95Ju

l-95

Jan-

96Ju

l-96

Jan-

97Ju

l-97

Jan-

98Ju

l-98

Jan-

99Ju

l-99

Jan-

00Ju

l-00

Jan-

01Ju

l-01

Jan-

02Ju

l-02

Jan-

03Ju

l-03

Jan-

04Ju

l-04

Jan-

05Ju

l-05

Jan-

06Ju

l-06

Jan-

07Ju

l-07

Jan-

08Ju

l-08

Jan-

09Ju

l-09

Jan-

10Ju

l-10

Jan-

11Ju

l-11

Jan-

12Ju

l-12

Jan-

13Ju

l-13

Jan-

14Ju

l-14

Jan-

15Ju

l-15

Jan-

16


Median Price on Trend

Texas Average & Median Home Prices 12-Month Moving Average

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

$200,000

$220,000

$240,000

$260,000

$280,000

$300,000Ja

n-99

Jul-9

9Ja

n-00

Jul-0

0Ja

n-01

Jul-0

1Ja

n-02

Jul-0

2Ja

n-03

Jul-0

3Ja

n-04

Jul-0

4Ja

n-05

Jul-0

5Ja

n-06

Jul-0

6Ja

n-07

Jul-0

7Ja

n-08

Jul-0

8Ja

n-09

Jul-0

9Ja

n-10

Jul-1

0Ja

n-11

Jul-1

1Ja

n-12

Jul-1

2Ja

n-13

Jul-1

3Ja

n-14

Jul-1

4Ja

n-15

Jul-1

5Ja

n-16

22 Source: Real Estate Center at Texas A&M University

Average Price

Median Price

Since Jan 2013, average price is up 20.9% & median price is up 26.0%

Texas Median HH Income & Median Home Price Indexed to 1989

8090100110120130140150160170180190200210220230240250260270280290300

8090

100110120130140150160170180190200210220230240250260270280290300

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

e

Source: U.S. Census Bureau; Real Estate Center at Texas A&M University

Real HH Income

Nominal HH Income

Median Home Price

Texas Households by Highest Affordable Price

1,682

858

689

644

576

526

893

645

1,007

602

538

450

0 500 1,000 1,500 2,000

<$70,000

$70,000-$99,999

$100,000-$124,999

$125,000-$149,999

$150,000-$174,999

$175,000-$199,999

$200,000-$249,999

$250,000-$299,999

$300,000-$399,999

$400,000-$499,999

$500,000-$749,999

>$750,000

Thousands of Households

Source: US Census Bureau 2013 American Community Survey; Real Estate Center at Texas A&M University

18.5%

9.4%

7.6%

7.1%

6.3%

5.8%

9.8%

7.1%

11.1%

6.6%

20% down; 4.15% interest; 35% qualifying ratio; and 5.5% taxes, insurance & utilities

5.9%

4.9%

~43% of Texas HHs cannot afford home priced > $150,000


1,802

494

1,117

671

577

538

886

636

996

519

432

443

0 500 1,000 1,500 2,000

<$70,000

$70,000-$99,999

$100,000-$124,999

$125,000-$149,999

$150,000-$174,999

$175,000-$199,999

$200,000-$249,999

$250,000-$299,999

$300,000-$399,999

$400,000-$499,999

$500,000-$749,999

>$750,000



19.8%

5.4%

12.3%

7.4%

6.3%

5.9%

9.7%

7.0%

10.9%

5.7%


4.7%

4.9%



1,885

927

730

678

589

530

867

660

956

465

385

438

0 500 1,000 1,500 2,000

<$70,000

$70,000-$99,999

$100,000-$124,999

$125,000-$149,999

$150,000-$174,999

$175,000-$199,999

$200,000-$249,999

$250,000-$299,999

$300,000-$399,999

$400,000-$499,999

$500,000-$749,999

>$750,000



19.8%

5.4%

12.3%

7.4%

6.3%

5.9%

9.7%

7.0%

10.9%

5.7%


4.7%

4.9%


December Closed Sales Texas MSAs Y/Y Percent Change

Source: MetroTex; Texas Realtor® Data Relevance Project, Real Estate Center at Texas A&M

University

Dec. Sales +6% YTD Sales +4%

December Average Sales Price/Sq.Ft. Y/Y Percent Change

Source: MetroTex; Texas Realtor® Data Relevance Project, Real Estate Center at Texas A&M

University

Dec. P/SF +4% YTD P/SF +6% Md. Pr. YTD +7%

Dr. James P. Gaines Chief Economist

February 12, 2016 · Federal Reserve Bank of Dallas