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Economic Indicators and Houston Real Estate

Posted by 2M Realty on Tuesday, February 2nd, 2010 at 4:55pm.

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The U.S. economy posted surprising numbers in the final quarter of 2009. According to government results, the economy grew by 5.7 percent, which marked the fastest pace since the third quarter of 2003 and surpassed expectations of a 4.5 percent boost.

According to a recent article published by USA Today, national economic adviser Christina Romer referred to the fourth-quarter output as “truly extraordinary” and “the most positive news to date on the economy,” (“Economy grows at 5.7% pace …”).

What might this news mean for both national and Houston real estate markets? Only time will tell. But in the near term, it appears that the real estate industry will continue to battle uphill toward a recovery.

Verifiable economic growth normally suggests that commerce and the money supply are developing at a healthy rate – i.e. there is an adequate amount of money moving throughout the financial system. However, with the unemployment rate hovering around 10 percent and homeowners generally struggling to make sense of underwater mortgages, the fourth-quarter jump seems to have avoided the real estate industry.

New home sales, after all, dropped 7.6 percent nationwide in December. According to an article by The Huffington Post, “Last month’s results were the weakest since March and were only 4 percent above the bottom last January. The data showed the housing recovery remains limp despite newly expanded tax incentives to spur sales,” (“New Home Sales Drop 7.6% in December”).

After recording positive gains for three consecutive months, the Houston real estate market also suffered a slight setback in December 2009. According to data compiled by the Houston Association of Realtors, December volume of single-family homes dropped 2.1 percent year-over-year. The median single-family home sale price did, however, increase 5.2 percent from 2008 (www.har.com).

So what might a growing economy, high unemployment and a rocky home market mean for Houston real estate? No one can really say at this point.

If you are, however, considering selling or purchasing Houston real estate, keep an eye on the federal first-time homebuyer tax credit and mortgage lending rates. The first-time homebuyer tax credit is slated to expire on April 30, 2010, about the same time some believe interest rates may begin to rise again.

Should such timing prove accurate, homebuyers may continue to find themselves in a position of power for at least the near future.

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2M Realty is a unique brokerage firm providing agents both traditional and Internet services throughout the Greater Houston real estate market. With its' Treehouse virtual platform, participating agents experience the freedom of working from home and get to retain 100% of the commission. This platform is an end-to-end online solution giving agents personalized websites, lead management programs, marketing collateral tools, form libraries, transaction management, electronic signature functionality and more.