Longtime Texas Real Estate Research Center Chief Economist, Research Economist RetireLongtime Texas Real Estate Research Center Chief Economist, Research Economist Retire2021-01-12T06:00:00Z

​COLLEGE STATION, Tex. (Texas Real Estate Research Center) ​– Dr. James Gaines, chief economist and director of research at the Texas Real Estate Research Center, and Research Economist Dr. Ali Anari have retired.

During his 15 years at the Center, Gaines specialized in housing and land development issues. He was the author of more than 50 Center reports and articles and the organization’s principal speaker.

Previously, Gaines spent 16 years with KPMG and Arthur Andersen providing real estate consulting services. He also served five years as president of the Rice Center, an urban research center affiliated with Rice University.

His decades of experience included a broad array of professional activities, primarily in real estate research and education, urban economics, land-use analysis and development, and project risk assessment. Gaines worked extensively with major corporations, developers, investors, financial institutions, and government agencies across the country.

In 2019, Gaines was part of the Texas Realtors delegation representing the United States at the MIPIM 30th Engaging the Future conference in Cannes, France.

Dr. Ali Anari, who conducted research in econometric modeling, real estate economics, and macroeconomics, also retired. In 2003, he began writing the Center’s Monthly Review of the Texas Economy​. While at the Texas Real Estate Research Center, he authored 102 technical reports and articles.

Anari has presented papers on economic modeling at conferences around the world and published book chapters and articles in scholarly publications.

​Funded primarily by Texas real estate licensee fees, the Texas Real Estate Research Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public. The Center is part of Mays Business School at Texas A&M University.

2021 Texas Housing & Economic Outlook: Safety Expectations, Increasing Mortgage Delinquencies and Foreclosures Take Center Stage2021 Texas Housing & Economic Outlook: Safety Expectations, Increasing Mortgage Delinquencies and Foreclosures Take Center Stage2021-01-08T06:00:00Z

COLLEGE STATION – Economists at the Texas Real Estate Research Center have issued their 2021 outlook for housing and the state economy, a task made more difficult by unprecedented unknowns.

“The economy could look different coming out of the pandemic as some changes become permanent,” said Center Research Economist Dr. Luis Torres. “Because this recession was caused by a health catastrophe, the recovery path could be different than that of previous recessions. Consumer and business safety expectations will play an important role in the economy’s full reopening.”

Single-Family Housing

The 2021 housing market will be characterized by strong demand with low inventories accompanied by solid price growth. Inventories of homes priced under $300,000 will be especially low, affecting sales in that price range. Price growth will be positive because of stable demand. Low-skill/low-wage earners were hurt the most economically, and they are typically renters, not homebuyers.

Demographic trends, such as aging millennials and migration from out of state, will help drive Texas housing demand in 2021.

Homebuilders are trying to satisfy demand in the lower price cohorts by building homes in the suburbs or outer city borders where land costs are lower. This trend was prevalent before the pandemic but has accelerated during COVID-19.

Monetary policy implemented by the Federal Reserve, low inflation expectations, and slow economic growth are expected to keep mortgage rates low. Mortgage refinancing, however, will slow as lenders add more requisites and the pool of households able to refinance diminishes.

“According to the Mortgage Bankers Association, 2.7 million homeowners (5.5 percent of all home loans) were in forbearance as of Dec. 13, 2020,” said Torres. “The share of homeowners who will be able to make their mortgage payments once forbearance ends is unknown, but we expect delinquencies and foreclosures, which have so far been kept low by government policy, to increase during the year.”

Apartment Market

The fiscal stimulus bill passed in December alleviates some of the apartment market’s issues in 2021. It included direct payments of up to $600 for every adult and child, and it provided $25 billion in rental assistance to tenants with unpaid or overdue rent. It also extended a federal eviction prohibition through the end of January 2021. The incoming administration is expected to renew that prohibition.

The number of tenants who will be able to pay rent going forward is unknown because many renters are jobless, and the ability to pay rent depends on their earning wages or receiving unemployment benefits. This affects landlords’ ability to cover operating costs and make mortgage payments on properties. 

The apartment market outlook is worrisome due to the uncertainty surrounding the ending of the eviction moratorium and the dissipation of the fiscal stimulus. 

Commercial Real Estate

“Trends already prevalent before the pandemic, like working from home and purchasing goods and services online, accelerated in 2020. Remote working took a toll on office vacancy rates and rents even though not everyone could work from home and the amenities some offices provided could not be duplicated at home,” said Torres. “Also, relationship-building and networking are difficult when working from home. These elements contradict the idea that on-site office work will disappear in the foreseeable future.”

The pandemic accelerated the process of performing some high-tech jobs from home and of doing business online. It created an incentive for the building of more satellite offices in the suburbs or in other cities with lower density, resulting in fewer employees in central downtowns or other high-density areas.

Employees who permanently work from home or move to lower-cost cities may face cost-of-living pay cuts, eliminating the financial gains from working from home or relocating.

Retail was hit the hardest as some businesses were unable to accommodate consumers’ sudden shift from brick-and-mortar shops to e-commerce. On the other hand, the industrial sector benefited from the shift to e-commerce and the accompanying need for additional distributive and warehousing centers closer to the consumer.

“Moving forward, companies will want to spread their risk geographically and minimize the impact of a local problem such as another pandemic outbreak,” Torres said. “Warehouse’s strong recent demand could lead to some overbuilding in the future, driven by increasing investor interest in the sector.”

During and after 2Q2021, commercial real estate will benefit from the federal government stimulus enacted during the final days of 2020 and the wide distribution of the vaccines. 

Based on these expectations, office occupancy will probably not improve significantly until the second half of 2021 when employees could start returning to the office safely. Only then will the effects of remote working be apparent to the office sector. Still, the office market has been exposed to some pervasive underlying changes in the work environment that are not yet fully evident. Given the longer-term nature of office leases, the pandemic’s full impact on the market may not be evident for a couple of years.

“Retail will probably continue to consolidate/contract in 2021. Retail that is more convenient, attractive, pleasing, engaging, or even entertaining may flourish,” said Torres.
Industrial will continue to benefit from e-commerce growth during 2021.

Oil and Gas

Oil and natural gas demand is expected to recover in 2021 as the global and U.S. economies rebound from the pandemic. Oil prices could be higher than $50 per barrel because of improvements in economic activity. However, prices in the $50-$60 range will not be enough to create significant employment gains or overall economic improvement. In addition, the incoming administration’s clean energy policy will be a major headwind for the industry.

As it did in the commercial sector, COVID-19 accelerated trends already prevalent in the energy sector and will affect future industry growth and employment. These trends include the rise in environmentally and socially responsible investing and consolidation in a low-price environment. 

Rural Land

In 2021, the Center expects:

  • overall land prices to increase by 5 percent or more;

  • the number of sales to increase by 10 percent;

  • total dollar sales volume to increase by 12 percent; and

  • small properties to sell well.

Due to stress in the oil and gas industry, Far West Texas markets might not be included in the expansion.

The 2021 Texas Housing & Economic Outlook, including tables from major Texas Metropolitan Statistical Areas, is online here.

Funded primarily by Texas real estate licensee fees, the Texas Real Estate Research Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public. The Center is part of Mays Business School at Texas A&M University.

Texas’ manufactured housing industry anticipates future growthTexas’ manufactured housing industry anticipates future growth2020-12-17T06:00:00Z

​COLLEGE STATION, Tex. (Real Estate Center) –  New orders and sales for Texas' manufactured housing industry declined for the second consecutive month in November, according to the latest Texas Manufactured Housing Survey (TMHS). Despite the slowdown, the industry planned for the future with a significant increase in capital expenditures.

"Manufacturers continue to have upstream issues getting the building products they need to deliver homes," according to Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association (TMHA). “But with the state's election outcomes now known and the positive news on COVID-19 vaccinations, companies are approving larger expenses to improve productivity and combat those bottlenecks."

COVID-19-related shutdowns and increased safety precautions have led to shortages in appliances and other manufactured-housing inputs. The prices paid for raw materials, however, contracted as lumber prices relaxed after several months of inflation. The U.S. Department of Commerce's recent reduction in tariff rates for Canadian softwood lumber should pressure prices downward in coming months. Prices for finished homes increased in November, but at a slower rate than in the second and third quarters.

On the labor front, manufacturers continued to expand payrolls and extend workweeks. These increases coincided with higher wages and earnings.

“Manufacturers are continuing their efforts to attract more labor as optimism about the future remains strong," said Dr. Harold Hunt, research economist at the Real Estate Center at Texas A&M University.

While December is typically a slower month for production, manufacturers maintained a favorable outlook for yearend and for the first half of 2021. Activity is expected to ramp up as the spring selling season approaches and supply-chain disruptions subside. But respondents noted higher levels of uncertainty in coming months.

The Real Estate Center at Texas A&M University and the TMHA have partnered to produce a monthly survey of business conditions and expectations surrounding the manufactured housing industry.

Housing, a bright spot in otherwise dismal Texas border economyHousing, a bright spot in otherwise dismal Texas border economy2020-12-03T06:00:00Z


COLLEGE STATION, Tex. (Real Estate Center) –  ​Housing remains one of the stronger components of local border economies, particularly in Brownsville and El Paso. Multiple Listing Service sales in those metros during September reached record highs, according to the latest Texas Border Economy report from the Real Estate Center at Texas A&M University.

“Shrinking inventory, however, pushed metro-level median sale prices up considerably, chipping away at gains in housing affordability from historically low mortgage interest rates," said Research Economist Dr. Luis Torres.

“On the bright side, single-family building permits increased for the fifth straight month, supporting a more optimistic housing supply outlook heading into 2021."

Both border home sales and single-family building permits surged 8.3 percent in September. An upward revision in August numbers brought quarterly growth to 39.2 percent.

“El Paso passed 1,000 sales for the first time ever as sales of homes priced between $100,000 and $400,000 increased by about one-fifth," said Torres. “Brownsville home sales reached an all-time high, climbing 7.9 percent as sales in the $200,000 to $300,000 price range doubled year to date."

Permits for single-family housing construction rose for the fifth consecutive month to their highest level since the Great Recession. Permit issuance rose all along the Texas border from 10 percent in El Paso and 8.4 percent in Brownsville to 6.5 percent in McAllen and 7.4 percent in Laredo.

Strong September sales and a dwindling supply of active listings sent the months of inventory to historic lows. The inventory of homes for sale hit 3.8 months in Brownsville and only 1.7 months in El Paso. McAllen recorded 3.4 months. A growing supply of active listings pushed Laredo's inventory to 5.6 months, still less than the six months the Real Estate Center considers a balanced market.

Home-price appreciation accelerated along the border, bolstered by shrinking inventories and record sales. Brownsville's median home price increased to $184,500, up 13.7 percent year over year.

Home prices in McAllen and El Paso posted solid gains to $177,900 and $182,800, respectively. Laredo was the border's exception with a median price dropping for the second consecutive month to $180,900, said Torres.

Historically low interest rates supported increased housing affordability in Texas' border metros during the third quarter, but elevated home prices slowed the upward climb established within the past year.

The report notes El Paso was the most affordable border locale with an index of 1.8, meaning a family earning the median income could afford a home costing 80 percent more than the median sale price. Laredo's metric inched up to 1.7, while the Rio Grande Valley recorded indexes of 1.6 in both Brownsville and McAllen.

 “The economic recovery along the Texas-Mexico border slowed in September as labor-market conditions backtracked," said Torres. “Employment declined in the metros except for in Laredo, where the increase was modest. Joblessness rose, the number of residents in the local labor forces decreased, and construction values fell behind the pace of activity set in the first three quarters of last year."

Mexican manufacturing and maquiladora employment posted gains in August as U.S. manufacturing production and border trade values stabilized after the United States-Mexico-Canada Agreement reaffirmed North American commerce, and the initial shock of the pandemic lessened.

“COVID-19 remains the greatest headwind to the border communities," said Torres, “as the recent surge of virus-related hospitalizations in El Paso has prompted another round of local shelter-in-place recommendations. These types of challenges are a persistent threat to public health and economic activity."

The Texas Border Economy gives an overall view of many economic indicators on both sides of the Texas-Mexico border.​

News Release 09-122009-1220
Despite pandemic, Texas homeownership hits all-time highDespite pandemic, Texas homeownership hits all-time high2020-11-17T06:00:00Z

​​COLLEGE STATION, Tex. (Real Estate Center) –  Texas' homeownership rate is at an all-time high of 70 percent, according to the latest Texas Housing Insight report from the Real Estate Center at Texas A&M University. The state rate exceeds the nation's 67.4 percent for the first time since 2012.

“Strong sales activity during the third quarter pushed the Texas homeownership rate to the unprecedented high," said Center Chief Economist Dr. Jim Gaines. “Nationally, homeownership fell across all races and every age group, except those 65 and older."

Austin registered the greatest homeownership rate in the Texas Urban Triangle for the first time in 12 years, rising almost 9 percentage points to 74.7 percent. Dallas-Fort Worth's rate hit 69 percent. San Antonio was relatively unchanged at 66.3 percent.

Houston recorded a drop in the proportion of owner-occupied units, falling from 67.9 to 65.5 percent.

“Homeownership could suffer in 2021," cautions Gaines, “as COVID-19 foreclosure-protection policies expire. Texas has a higher proportion of Federal Housing Administration and Veterans Administration loans."

Among other major Real Estate Center findings in this month's housing report:

  • Total Texas housing sales rebounded 6.3 percent in September, pushing third-quarter activity up more than one-third above depressed second quarter levels. New-home transactions increased more than 8 percent quarter over quarter.
  • Lot development slowed in the third quarter, but single-family building permits and construction values trended upward.
  • Texas' median home price increased 9.9 percent annually in September, threatening recent improvements in affordability. The Real Estate Center's Repeat Sales Home Price Index also accelerated, albeit at a more moderate pace.
  • The pandemic remains the greatest headwind to the Texas housing market as the Center projected a slowdown in October single-family sales amid a resurgence in COVID-19 cases.


Read the full report here.