The Outlook for Real Estate and the Economy in 2018
The Outlook for Real Estate and the Economy presented by Ted C Jones, Chief Economist,
Last week we attended the “By the Numbers – A 2018 Real Estate and Economic Outlook” meeting presented by Chief economist, Dr. Ted C. Jones. He provided us with a close look at the trends that will impact the real estate market.
The most popular topic at this event was obviously what will happen to the housing market and economy post Hurricane Harvey. Well, I have great news to report! He said that the housing market will boom this year and there will be no post Hurricane Harvey recession. The reason he suggests this is because 8 out of the 9 last hurricanes, this is exactly what happened to the market.
About 10% of homes in the Houston area were damaged by the hurricane and many of these home owners will likely decide to fix their homes then sell, be part of the buyout program, or simply sell as is. These homeowners will then need to purchase a new home which is why the market will skyrocket.
Besides the housing market booming, it turns out that the hotel industry will also boost in business. So if there was ever a time you wanted to get into the hotel industry now is the time as many hotels have job openings to keep up with the growing business.
Dr. Ted C. Jones mentioned there will also be an economic boom after insurance claims are paid out which is already starting to happen, but by March we will see it begin to soar.
Here are some of the important statistics Dr. Ted C. Jones pointed out that will play an important role in how our economy will stand strong:
- The current average pay rate per hour is $26.63 this is up 2.6% in the past 12 months
- We are up 2.73% in job growth rates in 12 months
- 84% of Americans will have more money in their pockets this year
- Texas is up 2.61% in real estate sells compared to the rest of the nation
- There is a corporate tax rate cut of 28% that will save companies tens of billions of dollars a year on their tax bills
- There are 48,400 new jobs in Houston, The Woodlands and Sugar Land. This is up 1.61% to prior year
Real Estate Facts:
- There is a 13.9% decrease in U.S. commercial real estate sales volume in the last 12 months
- Houston commercial real estate sales volume is up 35.5 % in the last 12 months
- Interest rates will be going up, so the quicker the better to buy or sale
- 22% value reduction in flooded homes
- The Montgomery County SFR sales & median prices have gone up to about $250,000
- Single family home sales in Montgomery County have gone up 9.2% from 2016 to 2017
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Townhouse – Condo sales in Montgomery County have gone up 11.3% from 2016 to 2017
2018 Real Estate Forecast:
- Existing home sales will be up 2%
- Existing home price will be up 3.6%
- New home sales will be up 9.2%
- New home price will be up 4.1%
- 30-year residential rates will be 4.7% to 5.3%
- Refinance volume dropping from 35% to 25%
- Commercial real estate sales will be down 15%
Dr. Ted C. Jones provided these “MEGA THEMES FOR 2018”:
- More jobs than ever in history
- Tax reform implications MID SALT
- Entry level homebuyers are strong
- Rising interest rates
- Commercial sales cooling – End of cycle
- Strong economy potential!
Texas and Florida (hurricanes) and California-Idaho-Washington (fires) housing markets should boom in 2018 assuming no new exogenous shocks as markets post-disaster typically out-perform. This is great news for not only realtors but any business owner. Cheers to a great year ahead!
