Home » Standard Home Loans » Texas » Texas Real Estate Stands Firm

Texas Real Estate Stands Firm

By Richard Barrington
Local Lender Columnist
Jun 3, 2008
Email to Friend Email to Friend | Print Format Print Format

According to a new study, several real estate markets in Texas may be a welcome exception to the housing woes facing the rest of the nation. An analysis by mortgage insurer PMI Group forecasts that four prominent Texas cities have the lowest chances of seeing price declines over the next two years.

There is a saying that all politics is local, and the same is true of real estate. While stories about the mortgage crisis and the collapse of housing prices dominate media coverage of the real estate market, the truth is that the worst of these problems are isolated to a few regions.

While tightening credit and a slowing economy will affect all markets to some degree, there are a number of factors which characterize the weakest real estate markets:
  • Some of these markets, such as Florida and Southern California saw an extraordinary housing bubble in recent years
  • Some of the markets are weak because of regional economic setbacks
  • Other markets were especially plagued by questionable lending practices
On the other hand, those problems are not characteristic of all the nation's real estate markets, and in particular, four Texas cities seem to be in especially good shape. Fort Worth, Dallas, San Antonio, and Houston were all rated among the five cities least likely to experience a decline in housing prices over the next 24 months.

Multiple Factors Point to Stable Housing

The PMI Group used a multi-factor model to forecast the likelihood of price declines. They assessed the strength of each housing market based on:
  • Price appreciation. In economics, what goes up doesn't always come down, but in many cases the real estate markets which gained the most now have the farthest to fall.
  • Economic growth. Even with moderate prices, a real estate market needs a solid economic base for support.
  • Affordability. By looking at housing prices relative to an area's average income, analysts can get a feel for how affordable housing is within that particular market.
Based on the combination of these factors, the PMI Group considers each of those four Texas cities as having less than a 1% chance of seeing overall housing prices decline over the next two years.

Lower Mortgage Rates: Something for Everyone

While new buyers in those Texas cities shouldn't hold their breath waiting for a big drop in prices, there is some good news for them as well, as mortgage rates have declined to levels last seen in 2005. Lower mortgage rates offer something for everybody, as they give buyers cheaper monthly payments, and sellers more support for the housing market in general.

Sources:

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.