Residential real estate in Texas and other central states, which never rose too high or fell too far, is now benefiting from the region’s hot economy.
In some of the states, you could even say residential real estate is a well-oiled machine — energy production in the central U.S. has helped bolster the region, as seen in the states’ low jobless rates.
“The middle of the country, the spine, has done much better than the two coasts,” says Jim Gaines, a research economist at the Real Estate Center at Texas A&M University. “A common thread is energy, from Texas to the Dakotas — there has been a real boom time due to the exploration and drilling activity.”
People in the region, simply, are working.
Nebraska and the Dakotas were the only three states with average 2011 unemployment rates under 5 percent ; Texas, Kansas and Oklahoma were all at least a full percentage point below the national average of 8.9 percent.
For a number of these states, job strength is a long-term trend. Data from the Bureau of Labor Statistics show the Dakotas and Texas rank in the top 10 in job growth from 2001 to 2011.
In Texas, here’s how that translates into housing prices. Each of the state’s major metro areas — Houston, Dallas/Fort Worth, Austin and San Antonio — saw minimal declines in the bust and are essentially fully recovered.
Each metro area has its own economic strengths that build on energy’s support, whether it is high-tech and government in Austin or tourism and the military in San Antonio.
“The ability of all markets in Texas to weather the national economic storm was due in significant part to the strength of the energy industry,” says Joe Stewart, an Austin broker who's also chairman of the Texas Association of Realtors. “However, more important than that is the diversity of the Texas economy, which has helped drive job growth and demand for real estate.”
“Technology companies like Samsung are expanding in Austin, car manufacturers are bolstering the San Antonio market, and there are many other examples, most of which have been helped by incentives offered from Texas cities,” he says.
In Austin, prices in February were up 2.4 percent over year-ago levels and are up 8.5 percent from five years ago. Sales of higher-priced homes — $500,000 or more — have been up slightly in 2012 from the prior year. And there have been more than 60 permit applications for new-home construction, Stewart says, “which The Real Estate Center, which is funded by the state’s trade group and uses data from the Multiple Listing Service, showed a median sale price in February in Dallas of $157,200, or 0.3 percent above February 2011 levels; the median price in February 2007 was $153,500. Dallas Realtor Eloise Martin says the number of home sales in the first two months of 2012 has outpaced 2011, with homes in the median price range “selling very well.” There are, she says, “multiple offers on homes that are in excellent condition and priced well.”
In the Houston area, the February median price of $149,300 was 1 percent below the February 2011 level. The February 2007 price was $147,200.
“Houston has always been a steady market, not prone to big swings in price up or down, and this long-term trend bears that out,” says local broker Shad Bogany.
The city’s high-end market “has done extremely well,” pushing average prices up, but a luxury slowdown in February contributed to a small year-over-year decline in median price during the month. Bogany says the city’s hottest market is the $80,000-to-$250,000 range.
New-home construction in Houston “is pretty flat right now,” Bogany says, “because we had overbuilt previously and had a lot of new builders come into Houston, but very few of them are doing spec homes. Most are building to suit.”
San Antonio’s median price so far in 2012 is down about 2 percent from 2011, after a 1 percent gain last year, says Realtor Bob Leonard. “The past five years has been a mixed bag with flat pricing averaging plus or minus 1 to 2 percent,” he says. “San Antonio was fortunate to have had a strong but balanced market prior to the downturn so has not experienced the valleys associated with the peaks of other markets.”
Oklahoma has similarly benefited from the energy boom ; as you travel north through Kansas, to Nebraska, however, agriculture plays an increasingly larger role in the mix, with energy a little less so.
Joe Gehrki, the 2012 president of the Nebraska Realtors Association, says Omaha has benefited from a diversified economy with a number of Fortune 500 headquarters, such as ConAgra Foods Inc. and railroad company Union Pacific Corp.
“When one employer’s laying somebody off, there’s somebody else there to scoop them up.”
The number of homes sold in Omaha in February is up 13 percent from 2011 levels, with the average selling price up 3 percent, to $150,346.
The median sale price in February for new residential construction — as distinct from all homes, which includes re-sales — was $249,000, compared with $236,962 in February 2011.
Beyond Omaha, Gehrki says all the local Nebraska realtor board presidents on his group’s February conference call said activity was “really good” to start the year.
“With low interest rates and employment so high in Nebraska, we’re experiencing a full-blown recovery," he says
The Dakotas have the benefit of both agriculture — many crop prices have been at multi-year highs — and more energy production than in Nebraska. The result has been ultra-low unemployment rates and sustained support for housing prices.
Jill Beck, CEO of theNorth Dakota Association of Realtors, says pricing and activity in her state closely tracks the energy industry, which is more prevalent in the western portions of the state.
The statewide median house price jumped from $144,000 for all of 2010 to $164,000 in January 2012, a jump of 13.9 percent. (Prices have risen each year since 2005, around the peak of the national market.)
“From Bismarck and Minot, west to Williston and Dickinson, you’ll see a significant increase in sales prices and a shorter time on market," says Beck.