Housing market also a draw as Houston prepares for the Big Game
For the second time since 2004, pro football fans will invade Houston. Indeed, some are already there.
It’s easy enough to find predictions on who – the Patriots or Falcons – will come home with the Vince Lombardi trophy on Feb. 5. But insights into the city’s housing market are harder to come by. So The Home Story continues its tradition of examining real estate and housing prices in cities hosting the Big Game.
Home Field Advantage
This year’s championship game will take place in NRG Stadium. It is part of NRG Park, an entertainment hub that includes the 70,000-seat stadium as well as a convention center and arena. The historic Houston Astrodome is also on the site.
The venue is a large employer in the area. And that benefits Houston’s local economy and housing market, which have had to contend with global economic forces in recent years. According to Fannie Mae’s most recent Metro Outlook covering Houston, falling oil prices in 2015 and 2016 have had an adverse impact on the city’s job growth.
According to the U.S. Bureau of Labor Statistics, employment in the Houston area grew at a sub-par 0.4 percent in October 2016. This marked the 12th straight month of employment increases below 1.0 percent. Leisure and hospitality led job growth – at 4.4 percent. At the other end of the spectrum, employment in mining and logging fell 8.9 percent.
For Houston’s rental market, these headwinds have translated into higher vacancy rates than the national average, coupled with declining growth in rents.
Clearly, the decline in the oil and gas industry has presented a significant challenge. But Fannie Mae’s multifamily economics team believes the area’s job growth should return as the oil price shock fades and its population continues to grow. The Houston area experienced the largest population growth of any metropolitan area in the U.S. between July 2014 and July 2015.
As for home purchases, the Federal Housing Finance Agency’s HFA’s house price index indicates that – since the first quarter of 2010 – home prices in the Houston area have not languished as much as they have nationally. And they have recovered more strongly from the housing crisis.
Local home prices have been rising since 2010, the index shows. The index for the third quarter of 2016 shows home prices in Houston at 52.7 percent above their 2007 level, when housing was in a downturn. That’s compared to 6.26 percent nationally. And even though local home prices have made a recovery, according to Zillow, the area’s estimated home price of $176,000 is 8.6 percent below the national average – a competitive advantage.
Zillow’s inventory data show that Houston’s number of homes for sale peaked at nearly 50,000 units in mid-2011. The inventory has fallen off significantly since then. It now is averaging about 25,000 units quarterly.
As football fans visit Houston, they will find a city in transition – one edging away from its energy-based roots. Should they decide to stay and take a look, they will also find ample opportunities for buying or renting an affordably priced home.