Six things to watch for in Texas real estate this weekSix things to watch for in Texas real estate this weekBryan PopePope

​The Real Estate Center’s research staff held its monthly roundtable meeting earlier this week, focusing largely on employment and housing. Here are six takeaways.

  • The job growth rate is rapidly increasing in Texas’ micropolitan cities (those with populations between 10,000 and 50,000 and that are outside a Metropolitan Statistical Area). In August, 8.6 percent of total Texas jobs were in micropolitans.

  • Texas’ nonfarm job growth currently derives largely from mining and logging, construction, professional and business services, and other services.

  • Our economists project a 4.1 percent growth rate for the state’s GDP for 2018, assuming oil prices don’t drop significantly.

  • Home prices in Texas are still lower than those in many markets outside the state. However, relative to itself, Texas has gotten more expensive.

  • On the other hand, home-price growth in the state’s major metros is slowing down.

  • According to the Center’s research of Texas home prices, low-tier homes are generally appreciating at a higher rate than mid-tier and high-tier homes in Houston, Dallas-Fort Worth, and Austin.

For more on the state’s housing market, visit the "Housing Activity​" page of our website.

Free land (data)Free land (data)Hayley RiederRieder

​​Rural land chart over photos of Mississippi, Alabama, Louisiana landYou may know that the Real Estate Center has rural land price and tract size data for Texas. But if you live in some of our neighboring states, you might be having trouble finding the data you need.

Well, Southerners rejoice! The Center now has rural land price data for Alabama, Louisiana, and Mississippi. 

Data of this kind can be found nowhere else. 

Users can access analyses of prices and tract sizes regionally and statewide going back to fourth quarter 2005. Land market trend analyses are also available.

Many other publicly available land data use responses from surveys and are often unable to capture the entire market and may be biased. 

On the contrary, our unique data aggregate actual market data, truly representing the local markets. 

The information can be used by potential buyers and sellers of land to get an idea of market trends taking place on either a regional or statewide basis.

These data are in addition to rural land data for Texas, its regions, and its land market areas going back to fourth quarter 1971. 

The reports indicate past general conditions in these markets and do not represent prices or values of any particular farm or ranch. They do provide a general guide to land market price levels and size trends.

The best part of this new tool? It's free, easy to use, and can be found exclusively on the Center's website. No signup required. 

Not clickbait: Center social media presence blossoms Not clickbait: Center social media presence blossoms Hayley RiederRieder
2018-09-06T05:00:00ZCenter News

​​​​Social media is a great way for the Real Estate Center to effectively market its research to its constituents across Texas. Whether you're a broker from Laredo looking for home price stats or an Amarillo homebuilder searching for permit data, we can get the information to you through social media.

Last year, we began a massive push toward digital marketing and saw huge success. But this year, we stepped up our game.

Across our four most loved platforms—Facebook, Twitter, LinkedIn, and Instagram—we collectively posted over 2,000 times from August 2017 to August 2018. And y'all seemed to like them, interacting with the posts nearly 21,500 times.

We've gained more than 5,500 followers across all our platforms. LinkedIn gained the highest percentage of followers, growing 77.9 percent since August 2017.   

We “live-Tweeted" our Texas Land Conference in April for the second year in a row, posting commentary while the event took place. This year, our Tweets were viewed more than 11,700 times over the course of the two-day conference. Last year, they were viewed less than 9,000 times.

We also streamed live on Facebook three times during the conference, and around 600 people tuned in from the comfort of their own homes (or offices).

We also like to have some fun, so we celebrated many world events with our own REC twist. On social media, we commemorated the World Series, National Dollar Day, and even World Emoji Day. Thanks for celebrating with us.

This was a successful year for the Center's social media. We took what we learned last year and used it to give our followers what they want and need quickly and efficiently.

But we couldn't have done it without you. So thank you for following us and making this year our best yet. We can't wait to see what the next 12 months bring.

Don't forget to connect with us on Facebook, Twitter, Instagram, and LinkedIn. You'll get the best of the Real Estate Center every day.​

Real Estate Center Social Media Infographic

Houston housing: A year after HarveyHouston housing: A year after HarveyLuis TorresTorres

​A year ago, Hurricane Harvey poured 40-plus inches of rain across Houston, paralyzing economic activity for nearly a week. The Federal Emergency Management Agency reported more than 161,000 homes damaged in the Houston Metropolitan Statistical Area. Of those, 24 percent were uninhabitable for at least 30 days. Despite the severity of this multibillion-dollar storm, Houston's housing market has rebounded completely and continues to expand.

As discussed in the article “Imperfect Storm​," while flooding stretched across Houston, the destruction was unevenly distributed.

Geographically, the northeast suffered disproportionately, followed by the region south of downtown. The most concentrated destruction occurred in two contiguous ZIP codes (77078 and 77028), where around 70 percent of homes incurred damages. Both regions (which comprise East Houston, Houston Gardens, and Settagast) contain stretches of Halls Bayou, which flows into Greens Bayou on the eastern edge of 77078.

The next most damaged ZIP codes (77026 and 77044) were also in northeastern Houston or on Halls Bayou (77037), where about half of the housing stock was damaged.

After a year, how are home sales and prices doing in the five most damaged ZIP codes? The ZIP code (77044) with the highest number of sales and prices has registered increased sales and prices while the months of inventory remain low (see Figures 1, 2 and 3). The same is true for the 77037 ZIP code.

In contrast, the sales and prices of the most damaged ZIP code (77078) are below Harvey levels, but that area has three months of inventory. This sends mixed signals on how the market is doing, since sales are above and months of inventory are below their historical averages while prices have registered a steady decline since September 2017. This shows either some possible negative effects from Harvey or simply the particular characteristics of that housing market.

The other two ZIP codes had mixed results. One of them, 77028, has positive sales but negative price growth after Harvey. The other, 77026, has negative sales and positive price growth, but the months of inventory is rising, signaling that prices could start to decline, making it a market to watch.

The problem with four of the most damaged ZIP codes is that market activity is volatile because of low activity, making it difficult to distinguish clear trends. But the general net effect is that the market seems to be somewhat better off than or basically the same as a year ago.

Monthly home sales graph

Average price per square foot graph

Months of inventory graph

Houston ZIP code map

Buying a 'pad' in the '50sBuying a 'pad' in the '50sDavid JonesJones, D.


Sixty years from now, homebuyers likely will marvel at all the paperwork associated with buying a home in 2018. Perhaps Texans living in 2078 will have true paperless transactions.

I say “perhaps" because it seems real estate transactions have become more complicated over the last six decades.

While cleaning out the garage recently, I came across some old paperwork from when my parents-in-law bought their first home.

The year was 1958.

Upon writing a check for $424 earnest money ($400 principal and $24 interest), D.B. and Pearl Kiser got the ball rolling on the purchase of a ten-year-old, 1,200-square-foot home on 35th St. in Lubbock.

The paperwork was interesting. The absence of other documents reveals how times have changed.

Sales back then were “as is" because there was no formal inspection required. Because there was no inspection, the idea of an option period didn't come up either. There was no need for a lead-based paint disclosure because it would only have revealed what everyone knew. Houses were covered in lead-based paint.

There probably was a survey on file, but it wasn't part of the sale. And, of course, the buyer had to take the seller's word for the condition of the property; there was no such thing as a seller's disclosure in 1958.

The last sixty years have seen the creation of numerous other forms and disclosures dealing with homeowner association rules, water levels of nearby impoundments, home warranties, third-party financing, and so on.

Today's transactions state which improvements are part of the real property. Buyers and sellers agree that the plumbing comes with the house. In 1958, buyers were just glad the plumbing was indoors.

Don't be misled. The Kisers new purchase did come with deed restrictions. Paragraph eight prohibited construction of a “tourist camp" on the property. Paragraph ten says, “No hogs shall be kept on any portion of the said addition, and not more than two head of cattle shall be kept at each residence."

And that's just the evolution of the Texas sales transaction. Just imagine how things have changed in the last 60 years in California. 

International homebuying activity goes downInternational homebuying activity goes downLuis TorresTorres

​​The National Association of Realtors recently reported that the sales of U.S. residential real estate to foreigners fell from $153 billion in 2017 to $121 billion in 2018, registering a 21 percent decline (Figure 1). Media outlets nationwide reported that the decline was due to Chinese buyers purchasing fewer U.S. homes. This is a small part of the story since Chinese purchases fell 4 percent by dollar volume and 0.4 percent by number of homes.

The main reason foreign pu​rchases fell considerably was the decline in purchases by Canada, Mexico, and the United Kingdom (Figure 2).

Purchases by Mexican buyers registered the biggest decline (55 percent by dollar volume and 29 percent by number of homes), followed by Canadian buyers (45 percent, 19 percent), and United Kingdom buyers (23 percent, 30 percent). Even India registered a decline of 8 percent by dollar volume and 12 percent by number of home purchases.

These five countries represent the majority of foreign purchases. In 2018, their market share dropped below 50 percent by dollar volume of sales.

So what happened? Why such a big decline?

The exchange rate played a role as an accumulated effect of depreciation of each country’s currency starting in 2016, but overall the exchange rates of these five countries appreciated with respect to the U.S. dollar from April 2017 to March 2018 when the survey was estimated (Figure 3).

The shortage of homes priced below $300,000 affected Canadian and Mexican buyers. The median price of homes purchased by Canadian and Mexican buyers during that period was $292,000 and $189,100, respectively. The uncertainty and headwinds surrounding international trade and immigration policy created a disincentive for people to purchase a home in the U.S.

The other thing to consider is that April 2016 to March 2017 (the previous year) was a peak year in dollar volume sales to buyers from those countries, especially Canada and Mexico, and sales have reverted back to historical trends. Country-specific factors are regulations on capital outflows implemented by the Chinese government, United Kingdom's BREXIT uncertainty, Canada's and Mexico's economic uncertainty about the outcome of NAFTA negotiations, and the slowing down of India’s economy in 2017.

Texas is the third major destination of international homebuyers, even with the decline of Mexican foreign buyers. International buyers purchased 24,012 homes in Texas from April 2017 to May 2018, representing 7 percent of the total sales in the state, a drop from 10 percent the previous year, with a market value around $15 billion.

​​​​​​​Foreign Buyer Home Purchases and World GDP Growth

Dollar Volume of Sales to Foreign Buyers from Top Five Countries 

Foreign Exchange Rate to One U.S. Dollar from Top Five Countries

Real estate agent's role changing from information broker to trusted advisorReal estate agent's role changing from information broker to trusted advisorDavid JonesJones, D.


What's the number one reason homebuyers and sellers select a particular real estate firm? According to the J.D. Power 2018 Home Buyer/Seller Satisfaction Survey released yesterday, it's “reputation."

Reputation matters most for 44 percent of first-time sellers and 39 percent for first-time buyers. Apparently, reputation outweighs personal recommendations and past experience with agents or salespeople.

Among repeat sellers and buyers, however, it's a slightly different story. For that group, reputation is second. Experience with agents or salespeople is the main reason repeat buyers and sellers go with a particular firm.

“Real estate firms are recognizing that their value proposition has shifted from that of information broker to trusted advisor; as a result, we're seeing increases in customer satisfaction in each of the segments of homebuyers and sellers," said Craig Martin, senior director of financial services at J.D. Power. “The challenge for these companies is to consistently demonstrate and communicate the value to current and potential customers ."

If a buyer or seller merely wants information, they can find it many places. A significant majority (88%) of homebuyers begin their search for a new home before selecting an agent.

When it comes to finding an agent, social media plays a big role. Nearly half (47 percent) of buyers and 55 percent of sellers indicate using social media to find agents, with the majority in each case saying they were “delighted" after doing so. Some buyers, mainly first-timers, are using social media to find their new home, as well.

Strong customer satisfaction builds loyalty and advocacy. Across customer segments, high levels of overall satisfaction with the firm is directly correlated with likelihood to use the firm again for a future transaction and recommend the firm to others. More than 50 percent of recommendations a customer makes result in new business for real estate companies.

Real estate agents play critical role of guiding customers through the process. Among both buyers and sellers, overall satisfaction scores are notably higher when agents provide timely responses to questions, keep customers informed of key points in the transaction, and share comparable properties.

For more information, see the J.D. Power press release.​​​​

The yield curve's predictive powersThe yield curve's predictive powersLuis TorresTorres
​​​​​​​​​As the U.S. economic expansion continues into its tenth year, questions about its end have surfaced. One hot topic being discussed by the media is the yield curve.

Why is there such an infatuation with the yield curve?

Before each of t​he last seven recessions, short-term interest rates rose above long-term rates (see figure), producing what economists call an inverted yield curve (for more on this, read "Is There Still a Message in the Inverted Yield Curve?"). In the past, the yield curve has been a good indicator to ​​​​predict recessions in the U.S. economy with a one-year lead.

Last week, Charles Evans, president of the Federal Reserve Bank of Chicago, said in a speech, ”The question now is what about a flattening curve? . . . Long-term interest rates have been going down over a very long period of time. Inflation has been coming down. This is a global phenomenon. More capital has been coming to the U.S. in the sense that emerging-market economies—people around the world who are wealthier are looking for safe places to invest. . . With lower long-term interest rates, and in a rising short-term environment, you’re going to naturally get a flattening yield curve.”

This reminds me of something former Federal Reserve Chairman Ben Bernanke said in March 2006: “I would not interpret the currently very flat yield curve as indicating a significant economic slowdown to come.”

Do you see any similarities?

Was the yield curve signal noticed in 2006? Yes, but it was discounted. At that time, many studies cited reasons why the flat, then negative, yield curve did not necessarily signal a recession. Reasons included low levels of interest rates, reductions in the term premium, and positive signs from other indicators. The issue with the inverted yield curve is that its long lead time—about a year before a recession—often makes it inconsistent with other indicators. For example, while the yield curve is negative, employment is still growing.

​The good news is that the yield curve hasn’t inverted yet and the economy is still registering positive momentum going forward. Even with the arguments of foreign capital flowing into the U.S. and lower long-run inflation expectations explaining why the yield curve has been flattening, maybe this time is different. We'll be waiting to see if the yield curve turns negative.

Ten-year bond rate minus three-month bill rate image

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