Every market is different when it comes to housing inventory, demographic drivers, and industry influences
The housing industry is expanding in Atlanta, cresting in Seattle, and dropping in Houston.
John Burns Real Estate Consulting analyzed the housing cycles of the 20 largest new home volume markets. The markets are in different phases. Chicago is in Phase 1, where home prices are flat and investors can still find distressed opportunities. Las Vegas, Phoenix, and Tampa, are in Phase 2, where they are experiencing rising sales and prices, low construction, and good affordability. In Phase 3, Austin, Dallas, and the Bay Area have surging prices and volumes, and affordability is getting worse. Some buyers are cashing out.
Houston is all alone in the contraction/early downturn phase.
Oil’s move from $100+/barrel to just $45 has resulted in job growth falling from 100,000 jobs per year to less than 10,000. Construction activity has pulled back, particularly in apartments. Higher price point homes have felt the brunt of the downturn, while lower price points have held up remarkably well. We believe Houston will remain in Phase 4 through 2017 and will most likely avoid the full-fledged downturn/recession associated with Phase 5.