THE SWEARINGEN REPORT VICTORIA MLS Current Observations: Victoria at a Crossroads -This month's comments are from The Texas A&M Real Estate Center article dated Sept 5, 218. More than a year after Hurricane Harvey, Victoria's housing market is still feeling the storm's effects. Despite the setback late last year, Victoria finished 217 strong with 816 home sales. The market had 82 sales in 216, and the annual average number of sales since the start of the decade has been 773. Like other Texas coastal metros, Victoria began 217 with positive first quarter and second quarter year-over-year sales before slumping in the third quarter and rebounding in the fourth. The city had a third quarter year-over-year sales drop of 9.4 percent and a fourth quarter spike of 1.8 percent. Even before the storm, Victoria was already at the end of a real estate cycle that began toward the beginning of the decade. Hurricane Harvey added additional short-term distortions that have created conflicting market indicators. Ultimately, before the housing market can substantially improve, the city's economy needs a kickstart. Don't Let Prices Confuse You Sales volume and prices alone suggest the housing market may be gaining ground. Overall prices had been in decline since 215 when the year-end median price was $174,9. By the end of 217, median price reached $165,; the previous year it was $169,9. But the year-to-date median price as of second quarter 218 reached $171,5. Median price per square foot was $15 in 215 but fell to $13 and $96 the following two years. Year-to-date median price per square foot as of June 218 was $11. The Federal Housing Finance Agency's home price index, a measure of individual home price appreciation, indicates a similar trend where metro prices rose continually year over year from 212 through 215. After that, the index displayed a lot of volatility until Hurricane Harvey. The index finally depressed in the final two quarters of 217 before climbing back up in 218. Because of the storm, it is still too early to tell if home prices have turned around. Major natural disasters often create noise" in a market as homes come on and off the market and get repaired and rebuilt. Conditions gradually return to market levels. This can cause a major shift in the mix of homes available to purchase, which can result in confusing areawide housing metrics. This appears to be happening in Victoria. One sign of market health is days on market. After bottoming out at a month and a half to sell in 214, the average market time to sell a home in 217 was almost three months. For more information, contact Lee Swearingen/President lees@ronbrown.com (361) 575-1446 Offices in Victoria, Rockport, Ingleside, Cuero, Wharton, and Columbus,Texas. Copyright 218
Another sign is active listing count, which had been on the rise since 214, the year before rig counts in the Eagle Ford Shale dropped dramatically. For the next two years, listing count generally stayed in the mid 2s, lower than the long-term annual average of nearly 3 (Figure 1). Listings peaked the month before Hurricane Harvey at 428 but fell to 259 by June 218. The sudden swing of listings also occurred in Houston and Beaumont during the same period. Inventory in Decline Without as much change in overall sales volume as Houston and Beaumont, Victoria's housing inventory levels fell. Since September 217, months inventory has been in double-digit, year-overyear decline and as of June 218 was 3.6 months (Figure 2). Storm effects and volatility in oil markets had a hand in reducing housing inventory. According to Federal Emergency Management Agency (FEMA) disaster records, almost 25, households both owners and renters registered for FEMA assistance after Hurricane Harvey. Of those registrants who were homeowners, less than two-thirds claimed to have homeowners insurance, and even fewer had flood insurance. Chances are, homes that would have been listed are still being repaired or waiting to be repaired. Homes that sold immediately in the two quarters after the storm may have sold at prices considerably less than what owners were originally asking for. During this period, the close-to-original-list-price ratio fell before recovering in second quarter 218 (Figure 3). Until the dust settles, pricing trends may continue to be volatile. Copyright 218
Looking Ahead As more homes are put on the market, prices may drop again since Victoria remains in a down economy. Metrowide gross domestic product (GDP) peaked in 214 at $5.6 billion at the height of the Eagle Ford oil play, but it has declined every year since (Figure 4). Quarterly employment growth almost returned to positive territory before the storm but stayed negative and fell further after Harvey (Figure 5). Key industries such as transportation, manufacturing, and construction haven't bounced back yet. Other key housing market drivers also remain down, including household incomes and population growth. Alcoa s Point Comfort plant closure in 216 was a major blow to the region with close to 7 jobs lost, and work still needs to be done to clear storm sediment to restore local ports to full capacity. There is some good news. Formosa Plastics Corp. recently announced a $5 billion expansion of their facility in nearby Jackson County that is anticipated to provide about 34 jobs. At the same time, the Eagle Ford Shale is gradually showing signs of life again, which should help boost port activity. Slowly but surely, Victoria and the surrounding region is picking itself back up. The Take away Although Victoria is still feeling the effects of Hurricane Harvey, 217 was a good year for the city in terms of home sales. The local economy is down, but industrial growth and Eagle Ford activity could signal a turnaround. Source- Joshua G. Roberson (Sep 5, 218) Texas A&M Real Estate Center Copyright 218
THE SWEARINGEN REPORT VICTORIA MLS ALL CATEGORIES 12 Months Ending August, 217 12 Months Ending August, 218 PERCENT CHANGE Residential property sales* 912 978 7.2% Residential total dollar volume* $164,54,46 $177,96,358 8.4% Average residential sales price* $179,884 $181,98 1.1% Median residential sales price* $164,25 $165,.5% Total active listings end of month* 482 36-25.3% Months inventory* 6. 3.8-36.7% *This figure refers to the residential homes market. Residential Homes Update The average sales price for residential homes was $181,98 for the twelve months ending August, 218, up 1.1 percent versus the same period ending August, 217 when it was $179,884. The median price of residential homes for the twelve months ending August, 218 was $165,, up.5 percent versus the same period 217, when it was $164,25. Total sales of residential homes in Victoria MLS for the twelve months ending August, 218 was 978, 7.2 percent (66 homes) more than the same period in 217. The average Days on Market for residential homes for the twelve months ending August 218 was 118, 4.4 percent longer than the same period 217. Total building permits for Victoria city limits for the twelve months ending August 218 were 74, up 76.2 percent compared to the same period 217 when the number of permits was 427. Months inventory estimates the number of months it will take to deplete current active inventory based on the prior 3 months sales activity. This figure is representative of the single-family homes market. Six (6) months of inventory is considered a balanced market. Copyright 218
Victoria MLS Residential Sales 2 15 1 5 29 21 211 212 213 214 215 216 217 218 12 1 8 6 4 2 Median Price # of transactions Victoria MLS Residential Sales 2 15 1 5 29 21 211 212 213 214 215 216 217 218 Median Price Victoria MLS Residential Sales 12 1 8 6 4 2 673 744 775 844 877 92 912 846 912 978 29 21 211 212 213 214 215 216 217 218 # of transactions Copyright 218
Victoria MLS Residential Sales 14 12 1 8 6 4 2 129 112 117 113 118 98 1 99 87 87 29 21 211 212 213 214 215 216 217 218 Average Days On Market Victoria MLS Residential - Months Of Inventory 7 6 5 4 3 2 1 6. 4.9 3. 3.2 3.8 2.6 213 214 215 216 217 218 # of Months Inventory Victoria MLS Residential - August Inventory 6 5 4 3 2 1 482 413 36 26 27 243 213 214 215 216 217 218 MLS Active Inventory Copyright 218
Victoria MLS Sales Residential, 218 Market Summary (by Sold Price) Price Range Count Sum Price Average Price Median Price Average DOM $ - $49,999 54 $1,747,875 $32,368 $34,25 14 $5, - $99,999 126 $9,135,49 $72,5 $72,53 121 $1, - $149,999 223 $28,596,274 $128,234 $13, 99 $15, - $199,999 261 $45,252,382 $173,381 $172,9 16 $2, - $249,999 126 $28,52,947 $222,642 $221,13 129 $25, - $299,999 84 $23,4,342 $273,861 $274, 152 $3, - $349,999 36 $11,624,479 $322,92 $325, 131 $35, - $399,999 33 $12,215,35 $37,162 $367,9 144 $4, - $449,999 14 $6,1,21 $428,658 $428,122 25 $45, - $499,999 1 $4,637,4 $463,74 $458,75 112 $5, - $549,999 4 $2,15,5 $526,263 $525,25 286 $55, - $599,999 1 $575, $575, $575, 1 $6, - $649,999 3 $1,884, $628, $635, 114 $7, - $749,999 1 $7, $7, $7, 7 $75, - $799,999 1 $775, $775, $775, 82 $1,6, - $1,649,999 1 $1,6, $1,6, $1,6, 461 Totals: 978 $177,96,358 Averages: $181,98 $165, 118 Copyright 218