I read a great article by HBJ on; “Why falling oil prices won’t bring down the price of your custom home” last week. There were a few points made in that article as well as a few more that I’d like to add – that I think we as Houstonians may need to focus on in this New Year.
Interest Rates – Interest Rates even a few years later are still at all-time lows historically than the norm. While you hear different things depending on your source of information, we all know that the interest rates will not stay low forever.
- The 10-year Treasury Rate & 30-year Mortgage comparisons: The 10-year treasury rate is still low (2.16%) and when you compare that the 30-year mortgage rate the correlation is typically just over 1%. I am not an Economist, but our local real estate economist Dr. Mark Dotzuour uses this and not one year or other factors. If you check todays rates they are still under 4%. *Even a simple $100 per month on a 30 year note will save you $36,000.00 over the lifetime of your mortgage.
Job Cuts & Oil Pricing – While we see various companies laying of workings here and around the globe a lot of those are not the mid to higher paying jobs, such as engineers and others we see here in Houston. Sure, they may not being hiring those same jobs at the same rate – but it may not be as direct as first thought. Absolutely its terrible and hard for those who it has and will effect, but if you look historically those are the first places companies start to make cuts.
- Oil Pricing: Oil is still currently low – but for the rest of the country that is great news and reason to expand even more and they are. But if you listen closely from the Economist, Heads of varying Fortune 500 companies to even the POTUS is saying that we should expect oil to stay this low and should see a strong rebound soon. We can all argue on why its drop, rising or other – but the fact is we know that it will go back up, the question will be how fast it will rise. This then puts that good feeling back in our local economies.
Home Pricing – Houston’s prices increased dramatically in 2014, but didn’t top out as some people predicted. This was most due for two main reasons – lack of quality lots (land) and shortage in skilled labor force. Some outlets such as Forbes/Market Monitor – said that Houston is the 3rd most undervalued market in 2015. While anything can be debated, we all know that prices and goods have and always will keep rising overtime. Not being a native Houstonian, I know how affordable most of Houston can be – but I believe its due to its diverse and strong economy, sprawling land and workforce. But some of those things are starting to shrink. Local and National indicators forecast a 5% – 7% rise in home prices this year alone.
- Rental Pricing – I wrote a few weeks ago about renting vs buying; see our blog. But the long and short of it is, rent is still rising and will as long as our city is growing. And they’re projecting Houston to almost double in size & population in the next 10+ years. I like to keep things simple and its not too often that I say I wish I would have waited more on such items, it’s typically been I wished I’d done it sooner.
Buying Power, Now is the Time to Buy – I believe now is a great time to buy. With Historically low interest rates, still very affordable housing along with a still strong economy, those are all great indicators. There are many builders that will work with buyers to make home buying a reality for not only the first time buyers, move up or semi and custom builds. Though there is still a lower than normal homes on market comparative to what we expect for normal times – there are many builders who’ll help work with you through this process, you may be surprised what type of finds are out there.
These are just a few notable things that have been in the forefront of our local market. IF you are looking to buying a New Home in Houston this year or even to Build on Your Lot in or in the surrounding Houston areas – its still a great time to do so.