The Real Estate Center at Texas A&M released its 2020 Texas Housing & Economic Outlook last week, projecting that the state will lead the nation in new home construction as it has in recent years. The report also indicates that the center expects 2020 to be a stronger year for new housing permits than 2019 has been.
The center’s chief economist, Jim Gaines, reflected on the Bryan-College Station housing market and other real estate trends in a phone interview Thursday.
Gaines said 2018 was a strong year for the local area in terms of housing, and that 2019 is likely to end up as a “flat” real estate year in terms of sales volume and number of homes bought and sold. He said a “flat” year is not necessarily a bad thing for a community that has experienced growth trends over several years.
“It gives the public sector and everybody a chance to catch their breath and catch up with each other after that accelerated growth we experienced a few years ago,” Gaines said.
“We are poised in the College Station-Bryan area, in general, for population and economic growth to continue,” he said. Gaines said that local business activity has been ticking up, a trend that he described as good news for the community.
Gaines said the rental market in the area has “just exploded” in the past five years, both in terms of supply and in pricing. He added that affordability for renting and buying is a challenge for some in the community.
“Affordability is still an issue. Prices have been going up,” Gaines said Thursday, though he said that local average home prices rose more slowly in 2019 than in previous years.
“Bryan-College Station is one of the higher rent areas outside of Houston or Dallas,” he said. Gaines said the area also has a higher transient population, both with students and younger professionals.
Due to low mortgage rates and steady employment growth, the Real Estate Center projects a statewide increase of 10.3% in single-family housing permits in comparison to an almost flat 1.9% increase in 2019.
“Both the Texas and U.S. economy will likely slow in 2020 yet still register solid growth,” said Luis Torres, Real Estate Center research economist, in the recent release of the center’s report. “With uncertainty around trade wars and the current crude oil trajectory, two of the strongest economic drivers for Texas will decrease economic momentum. In contrast, one of the star performers of the 2020 economy will be the housing market with double-digit growth in new home construction for the first time since 2017.”
In other real estate projections, the Real Estate Center expects a price increase of 0.5%, yet projects a 6% drop in sales and volume. Both Houston and Dallas markets are poised to build more new homes this year, according to the center. They expect Houston to see an 8.6% increase in permits in 2020, while Dallas will likely increase by 8.7%. San Antonio and Austin are expected to see increases of 10% next year.