Summary
As one of the largest states in the country, Texas is widely known for its diverse demographics and natural beauty. Texas is also home to some of the major economic boosters, such as the Oil and gas Industries, energy, leisure & hospitality services, and many more.
Texas Real Estate and Housing Crisis in 2023
Even though Texas's economy remained resilient in 2023, it still showed signs of decline in the Housing Market, Jobs, and other economic activity. This is because of the high-interest rates. Home sales declined amidst the high mortgage rates.
As per the market data from Redfin, 13.6% of the homes were sold above the list price in November 2023, down 1.8 points year over year. Only 29.1% of the homes had price drops, down from 31.0% in November 2022. There was a 97.2% sale-to-list price, up 0.02% points year over year.
Home prices were up 0.5% year-over-year in November 2023, selling for a median price of $336,400. At the same time, the number of homes sold fell by 4.9% (21,443 homes sold), compared to 22,559 homes sold in November 2022, and the number of homes for sale increased by 5.2%. The Median days on the market for a house to get sold was 46 days (up 4 points year-over-year). According to a research report from Texas A&M University, August 2023 was a productive month with 9.5% home sales. This shows that Texas’s real estate market isn’t coming down soon. As they say, everything is big in Texas, and so goes the Texas real estate market. It’s huge in the state and also in the country.
DATE | SALES | DOLLAR VOLUME | AVERAGE PRICE | MEDIAN PRICE | TOTAL LISTINGS | MONTHS INVENTORY |
|---|---|---|---|---|---|---|
Jan 2023 | 18,037 | 6,943,513,176 | 384,959 | 318,990 | 79,246 | 2.6 |
Feb 2023 | 23,516 | 9,176,396,151 | 390,219 | 325,117 | 76,519 | 2.6 |
Mar 2023 | 30,875 | 12,406,865,723 | 401,842 | 330,750 | 78,135 | 2.7 |
Apr 2023 | 28,530 | 11,829,434,852 | 414,631 | 337,000 | 78,254 | 2.7 |
May 2023 | 34,445 | 14,686,385,417 | 426,372 | 345,000 | 82,269 | 2.9 |
Jun 2023 | 34,306 | 14,784,556,375 | 430,961 | 347,950 | 89,539 | 3.1 |
Jul 2023 | 29,740 | 12,686,843,989 | 426,592 | 345,000 | 92,138 | 3.3 |
Aug 2023 | 31,414 | 13,199,520,673 | 420,180 | 340,000 | 96,133 | 3.4 |
Sep 2023 | 26,397 | 10,994,601,401 | 416,510 | 338,400 | 100,263 | 3.6 |
Oct 2023 | 24,653 | 10,074,836,148 | 408,666 | 330,000 | 103,082 | 3.7 |
Nov 2023 | 22,460 | 9,130,397,552 | 406,518 | 330,000 | 102,823 | 3.7 |
The bottom line is Texas Real Estate market seems to recover fast as the FED lowers the interest rates. In 2023, home prices in Texas have been relatively stable. According to the data above from the Texas A&M University Texas Real Estate Research Center, there were a total of 304,373 homes sold from January 2023 till November 2023. You can access the reports here for further details on Texas Real Estate. As of today, when I go out on a drive, I see lots of construction everywhere, whether it is residential or commercial properties; I see opportunities and progress around.
Employment Growth
Texas employment growth accelerated in May 2023 by adding 41,000 jobs, a 3.6 percent annual growth rate that exceeded the 2.6 percent nation's growth rate. Overall, Texas added 201,700 jobs year to date in 2023 (a 3.6% annual growth rate).
The above chart shows that the Texas Oil and gas sector employment expanded by a whopping 12.3 percent growth rate compared to the nation’s growth, while Manufacturing, Leisure, and Hospitality growth rates contracted.
Price Pressures
As supply chains normalized, firms started to clear out the backlogs, due to which price pressures declined in manufacturing faster than services. High input and labor costs are the predominant factors influencing price increases.
Is Wage Growth slowing down?
Despite flat production in 2023, manufacturing firms reported greater wage pressures than service-related firms. This is because of flexible work arrangements offered by the competition and other sectors. Manufaturing firms are very much concerned about the difficulty in finding qualified workers.
After unusual price increases during the COVID-19 era (2021-2022), In May 2023, 40 percent of the companies reported that they could not pass along costs to the customers, compared to the 36 percent of the companies who reported similarly in November 2022.
Lower Expectations for wage and Price growth in 2023
As per the reports from the Fed, Wage and Selling prices remain high compared to the pre-pandemic levels. Wages in 2023 rose to 5.3 percent. Input prices were 4.7 percent high, and Selling prices were 3.8 percent high. The wage growth was expected to moderate from 2022 levels; the revised wage growth was noticeably smaller between December and May 2023.
Conclusion
To sum up, Texas's economy seems resilient even during high-interest rates. From the meeting minutes released by the Federal Reserve Officials on the first Wednesday of Jan 2024, the interest rates were likely at their peak in 2023, and almost all predicted lower interest rates by the end of 2024. However, there wasn't a discussion of exactly when the rates will begin to lower, and the participants mentioned raising the interest rates if the inflation were to heat up again. No matter what happens in 2024, let's hope for the best and prepare to experience whatever comes and learn and grow. I wish you all a Happy and Prosperous New Year 2024.
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