Houston-Baytown-Sugar Land Area Local Market Report, First Quarter Median Price (Red Line) and One-year Price Growth 2016 Q1. Local Price Trends

Transcription

1 -Baytown-Sugar Land Area Local Market Report, First Quarter 2016 Today's Market $250,000 Median Price (Red Line) and One-year Price Growth 15% $200,000 10% $150,000 5% $100,000 0% $50,000-5% $ % Local Price Trends Price Activity Current Median Home Price (2016 ) $208,000 1-year (4-quarter) Appreciation (2016 ) 3.8% 3-year (12-quarter) Appreciation (2016 ) 27.1% 3-year (12-quarter) Housing Equity Gain* $44,300 7-year (28 quarters) Housing Equity Gain* $69,500 9-year (36 quarters) Housing Equity Gain* $60,800 *Note: Equity gain reflects price appreciation only $215, % 22.6% $39,833 $48,200 $1,667 Local Trend Prices are up from a year ago, but price growth is slowing Gains in the last 3 years have extended the trend of positive price growth after the recession Conforming Loan Limit** $417,000 $625,500 Most buyers in this market have access FHA Loan Limit $326,600 $625,500 to government-backed financing Local Median to Conforming Limit Ratio 50% not comparable Note: limits are current and include the changes made in November of 2012 and extended in November of 2013 Local NAR Leadership The -Baytown-Sugar Land market is part of region 10 in the NAR governance system, which includes all of Louisiana and Texas. The 2016 NAR Regional Vice President representing region 10 is Matthew Ritchie.

2 Benefits of Ownership: Total Equity Appreciation $120,000 Total Equity Accrued to Owner by Year and Quarter of Purchase $100,000 $80,000 $71,737 $60,000 $40,000 $20,000 $11,062 $ Total Equity Gained** through 2016 from quarter in which home was of purchased Price Activity 1-year (4-quarter) $11,062 $15,781 3-year (12-quarter)* $53,161 $49,356 5-year (20-quarter)* $70,871 $68,727 7-year (28 quarters)* $84,639 $59,758 9-year (36 quarters)* $79,484 $16,435 If purchase in 2005, the national price peak $94,152 $30,059 Local Trend Price appreciation and principle payments in the last 3 years have boosted total equity growth since the recession *Note: Equity gain reflects price and principle payments since purchase, prevailing 30-year fixed rate mortgage at time of purchase and a 10% downpayment. Downpayment is not included in total equity

3 Drivers of Local Supply and Demand Local Economic Outlook 12-month Job Change (Mar) 12-month Job Change (Feb) 36-month Job Change (Mar) Current Unemployment Rate (Mar) Year-ago Unemployment Rate 1-year (12 month) Job Growth Rate 7,400 8, , % 4.3% 0.2% Not Comparable Not Comparable Not Comparable 5.0% 5.5% 2.0% Employment growth has eased, but remains positive Unemployment has risen since the same period last year, but 's labor market has been more resilient than the national average Local employment growth is poor and needs to improve -Baytown-Sugar Land Area Share of Total Employment by Industry Natural Resour 9.4% Natural 5.0% Natural Natural Natural Resources/ Resources Governmen Resources/ Natural Resour 2.7% 90.5 Natural Governmen 0.5% Mining/Con and Mining t Mining/Con Natural t struct 0.5% Construction 12.0% 6.6% struct Resources 219 Constru Other 15.6% 0.5% 5.0% 9.4% and Mining Other Manufacturing Services 7.1% % Manufac8.5% Services 3.2% Constructio 3.9% Trade/Transpo 18.5% n Leisure Trade/T & 18.8% Leisure & Information 0.9% 31 Manufacturi 6.6% Hospitality Hospitality Informa1.9% ng 10.7% 9.5% Financial Act 4.6% % Financi 5.7% Prof. & Educ. Busin& 13.9% Profess14.0% Health Educ. & Heal 11.4% Educat 15.8% Services Trade/Trans Leisure 11.4% Educational & Ho 9.5% portation/uti Leisure10.7% & Health Other Service Prof. 3.2% & lities Other Services S3.9% Business 18.5% Professiona Government 12.0% Financial 15.8% Services % Govern15.6% 100.0% l & Activities Information #N/A 13.9% Business #N/A 4.6% 0.9% #N/A #N/A Services #N/A #N/A #N/A #N/A 14.0% 12-month Employment Change by Industry in the -Baytown-Sugar Land Area (Mar ) Goods Producing Natural Resources/Mining/Construction Natural Resources and Mining Construction Manufacturing NA -10,000-14,100 4,100-20,600 Information Financial Activities Prof. & Business Services Educ. & Health Services Leisure & Hospitality -1,000 2,100-10,200 14,500 18,900 Constructio n 0.5% Manufacturi ng 8.5% Trade/Tran sportation/ Utilities 18.8% Information 1.9% Financial Activities 5.7% Service Providing Excluding Government NA Other Services -200 Trade/Transportation/Utilities 5,900 Government 8,000 State Economic Activity Index Texas 12-month change ( Mar) 36-month change ( Mar) 2.5% 13.1% 3.1% 10.5% Texas's economy is growing, but decelerated from last month's 2.55% change and lags the rest of the nation

4 Local Fundamentals 12-month Sum of 1-unit Building Permits through Mar 2016 New Housing Construction 36,506 not comparable The current level of construction is 25.6% above the long-term average 8-year average for 12-month Sum of 1-Unit Building Permits 29,064 not comparable Production above trend for an extended period of time could cause prices to moderate as inventory is built Single-Family Housing Permits (Mar 2016) 12-month sum vs. a year ago -4.7% 11.3% Construction is down from last year, but appears to have bottomed. 60,000 Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line) 50,000 40,000 30,000 20,000 10,000 0 While new construction is the traditional driver of supply in real estate, foreclosures and short-sales now have a strong impact on inventories, particularly at the local level. Rising inventories, through construction or distressed sales, place downward pressure on the median home prices. 6.0% State Total Foreclosure Rate vs. U.S Average ( Average in Blue Dashed Line) 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Source: Mortgage Bankers' Association

5 Affordability Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, Average in Green) 30% 25% 20% 15% 10% 5% 0% Monthly Mortgage Payment to Income Ratio for 2015 Ratio for % 7.7% 15.6% 14.5% Historically strong and an improvement over the fourth quarter of 2015 Historical Average 9.3% 19.5% More affordable than most markets 12% Recent Trend - Local Mortgage Servicing Cost to Income (Historical Average Shown in Red Dashed Line) 10% 8% 6% 4% 2% 0% 2014 Q Q Q Q Median Home Price to Income Ratio for Ratio for Historical Average The price-to-income ratio eased, but could be better Affordable compared to most markets

6 Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, Average in Green) The Mortgage Market year Fixed Mortgage Rate and Treasury Bond Yield % 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Spread (left axis) 30-Year FRM (Right axis) 10-Year Treasury Bond (Right Axis) The first quarter of 2016 was marked by paroxysms in financial, energy, and commodity markets. The uncertainty in China and the emerging-market economies, the gathering doubt about the sustainability of the modern European project, and weakness in domestic growth were the issues of the early days of With regard to the mortgage market, the year began after the FED started its tightening cycle with the first rate hike this past December. However, since the start of the year mortgage rates have dropped as the FED held off on expected rate hikes. The 30-year fixed-rate mortgages eased from 3.9 percent in the 4th quarter of 2015 to 3.7 percent in the first quarter of The 10-year Treasury fell to 1.92 percent which is the lowest rate after Q Rates are likely to remain low through the spring as the market deals with international instability and mixed signals for the domestic economy. NAR is now forecasting fewer rate hikes by the FED in 2016 and as a result the 30-year fixed rate mortgage is now expected to average just 4.3 percent for 2016.

7 6.0% REALTOR Price Expectations for the Next 12 Months ( Average in Blue Dashed Line) 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Source: NAR REALTOR Price Expectations Texas Apr 3.7% 3.8% Prior 12 months 3.9% 3.9% REALTORS expect weaker price growth in Texas than in the in the next 12 months. Their price expectations for the local market are more modest than a year ago.

8 Geographic Coverage for this Report The area referred to in this report covers the geographic area of the -Baytown-Sugar Land metro area as officially defined by the Office of Management and Budget of the Government. The official coverage area includes the following counties: Austin County, Brazoria County, Chambers County, Fort Bend County, Galveston County, Harris County, Liberty County, Montgomery County, San Jacinto County, and Waller County More information on the OMB's geographic definitions can be found at