Overall, economists at Friday’s “Finding Shelter” conference at the Federal?? Reserve Bank of Dallas had good news for Texans, despite continuing concerns about declining oil prices.
During the conference’s economic outlook panel discussion, Real Estate Center Chief Economist Dr. Jim Gaines said one question he gets asked a lot is whether Texas is in a housing price bubble. His succinct response: “I don’t think so.”
Gaines said Dallas and Houston built more houses last year than 19 states, and 2015 was a record year for Texas home sales and prices. He said the state’s housing inventory remains “extremely low relative to market activity.”
In a related session, Dallas Fed Vice President and Associate Director of Research John Duca said he doesn’t think a Texas market housing bust is likely.
“The banking system is in much better shape and financial regulation is much sounder, so there’s less of a buildup of excess pressure because of that,” he said, noting that there’s also less construction recently, meaning there’s no supply overhang problem like there was in the early ’80s. “If anything, we have a shortage, not an excess supply.”
Another key factor is the state’s diversified economy, which he said will help keep the oil price collapse from hurting the demand for housing as much as it did previously.
Meanwhile, economist Keith R. Phillips, also with the Dallas Fed, said the state’s overall Texas office market is strong. He doesn’t expect this to change except in Houston, where layoffs in oil and gas jobs will take their toll.
“We’re going to see a rising vacancy rate in the Houston market,” he said. “The good news is that the Houston market had such a low vacancy rate to begin with that it can sustain some rises, so I don’t see a big problem occurring in terms of the office markets in general.”
Other notes from the panel discussion: