Houston's continued economic gain is expected to make the area a top 10 market for housing growth in 2015, according to a new study from Realtor.com — with one reservation: falling oil prices.
In the report, released earlier this week Jonathan Smoke, the realty site's chief economist, said that the Houston-Woodlands area is expecting a 5 percent increase in home sales next year.
No surprise here: Houston, which has been a top housing market performer, is expected to remain on top in 2015. The energy industry that fuels the city’s economy continues to spur expansion and jobs. That’s because Texas’ most populous city is on pace to set a new employment record in 2014—and with predicted 4% employment growth in 2015, there’s no sign of a slowdown.
The market remains affordable. But due to recent price increases, housing prices are becoming a challenge—especially relative to other Texas cities. Even so, Houston is expected to see robust housing growth, largely due to its strong new construction sector."
While Smoke is bullish on Houston, he offers one caveat since the area conomy remains dependent on the energy industry, where oil prices are plunging.
According to Smoke, the Dallas market is forecasted to see a 3 percent employment growth in 2015, above the national average, while the next five years are primed for an 8 percent growth in both total households and home-owning households. “Dallas is a strong new construction market, which helps to contain supply pressures. We are forecasting 3 percent growth in home prices in 2015 and 7 percent growth in home sales,” he added.
That increased employment is driving Millenials to become a larger slice of the home-buying pie, accounting for nearly two-thirds of purchases nationwide.
Overall, national prices are expected to rise from 4 to 5 percent while affordability will drop anywhere from 5 to 10 percent. Smoke expects some of this to be offset by a rise in income, but high-priced markets such as San Francisco will continue to be difficult for first-time homebuyers.
National existing home sales are also expected to increase by 8 percent, with new home sales increasing by 25 percent. The report indicates that this year-to-year increase is similar to what was seen in 2012, but this time the amount of distressed properties will be minimal. Smoke also predicts mortgage rates to hit 5 percent by the end of 2015.
The eight other markets in the top 10, listed alphabetically, are Atlanta-Sandy Springs, Georgia; Denver-Aurora-Broomfield, Colorado; Des Moines-West Des Moines, Iowa; Los Angeles-Long Beach, California.; Minneapolis-St. Paul-Bloomington, Minnesota; Phoenix-Mesa-Glendale, Arizona; San Jose-Sunnyvale-Santa Clara, California; and Washington, D.C.
CultureMap editor-in-chief Clifford Pugh contributed to this article.