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It was another record-setting year for Texas real estate, as home sale and home prices both hit all-time highs – for the second year in a row.
According to a new report from the Texas Association of Realtors, there were more homes sold in the Lone Star State in 2016 than in any other year, eclipsing the previous high, which stood for all of one year.
And one might think that a decrease in home prices drove the increase in home sales volume, but it was just the opposite.
The Texas Association of Realtors report also shows that home prices in Texas also reached a new all-time high in 2016, also surpassing 2015’s previous record total.
According to the report, home prices in Texas increased at a steady pace throughout 2016, with the median price rising 7.7% from the previous year, to $210,000.
At the same time, Texas also saw continued growth in home sales volume during the year, which climbed 4.6% to 324,924 homes sold in 2016.
“Strong gains in end-of-year home sales activity were a key factor in making 2016 another record year for Texas real estate,” said Vicki Fullerton, chairman of the Texas Association of Realtors. “Last year's record home sales activity was fueled by the momentum of multiple years' strong job and population growth across the state, despite the fact that Texas job and economic growth began to slow in 2016.”
But as the report notes, the forecast for Texas housing in 2017 is not quite as rosy as the previous years, thanks to decreasing inventory, as well as those rising prices, and the state’s rapidly rising property taxes, which are significantly impacting affordability in the state.
“Rising home prices and skyrocketing property taxes are driving up the cost of homeownership at an alarming rate,” Fullerton added.
“Growth in property values makes homeownership a strong investment, but must be balanced by lower tax rates so that Texans are not being forced out of their homes,” Fullerton continued. “The Texas Association of Realtors urges state legislators to pass legislation that ensures an honest and transparent conversation occurs at the local level if more tax revenue is needed and gives property owners the right to decide when their tax rates should be raised.”
As the report also notes, there is not a significant amount of available inventory on the market, which also impacts affordability.
According to the report, Texas’ low housing inventory level remained consistent with the prior year, ending at 3.3 months of inventory in December 2016.
Per the Real Estate Center at Texas A&M University, a market balanced between supply and demand has between 6 and 6.5 months of inventory.
“The 2017 Texas housing market is projected to keep pace with last year's strong levels, but it may be difficult to match 2016 levels due to current housing supply levels,” said Jim Gaines, chief economist with the Real Estate Center at Texas A&M University.
“Household incomes are rising at a disproportionally low rate than home prices, creating housing affordability challenges across the state,” Gaines concluded. “In housing development, labor shortages and regulatory barriers are slowing construction and in turn, driving up new home prices.”
