The Best Oil and Gas Downturn Houston Has Ever Seen
By Ted C. Jones, Ph.D.
Chief Economist – Senior Vice President
Stewart Title Guaranty Company
Houston single family housing sales set an all-time record in 2016 despite sub-$50 oil prices. It’s all about jobs. In prior oil and gas downturns, Houston-The Woodlands-Sugar Land Metropolitan Statistical Area (MSA) lost up to almost 5 percent of all total net jobs. And this time? On a net basis, Houston finished up 2016 with an all-time record number of jobs at 3.016 million. That is a gain year-over-year of 14,400 net new jobs. While a miniscule growth percentage of 0.5 percent, it still was positive.
Jobs are everything to an economy. Period.
Despite an all-time record number of single family housing sales, not all price ranges performed equally in 2016 versus 2015:
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Single family sales made up 90.8 percent of all transactions in 2016 and were up 2.5 percent versus 2015. Townhouse-Condo sales were down 2.3 percent in 2016 and mid-to-high rise condominiums off 6.9 percent.
Unlike recent years when demand outpaced the supply of new residential construction, The Houston housing market saw 35,397 single family residential permits issued in 2016 along with 9,246 multiple family permits for a total 44,643 dwelling units. With 14,400 total net new jobs, the MSA adding more than three dwelling units per net new job. Markets are considered in balance when there are from 1.25 to 1.50 net-new-jobs per new dwelling unit.
As a result of the overbuilding, rents in Class A apartments have retracted. In 2016, more than 25,000 new apartment units were delivered to market, almost double that of 2015.
There may never been a more important time to utilize the skills and knowledge of the consummate real estate agent or broker for both home buyers and sellers. Local market knowledge is paramount in making the best informed decision.
As the Chief Economist-Senior Vice President for Stewart Title Guaranty Company, Jones conducts on-going research and supports economic and financial analysis for the company and its customers. Jones earned a PhD in finance with a minor in statistics and a master’s degree in land economics and real estate from Texas A&M University. He holds a Bachelor of Science degree from Colorado State University. An accomplished speaker, he typically gives more than 150 presentations on real estate and the economic outlook each year.
Ted C. Jones’ recognized specialty is applied real estate research. Jones has completed numerous mass-appraisal assignments including more than $3 billion of income producing property owned by the Federal Deposit Insurance Corporation, retail properties, hotels, motels, offices, commercial land, multifamily housing, residences and numerous other special use properties.
He is a past member of board of directors of the National, Texas and Houston Association of Realtors® and served as chairman of the board of the Houston Association in 2004. He also served as the first director of investor relations for Stewart Information Services Corporation NYSE-STC for 17 years ending March 2014.
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