New Year - New Real Estate Trends

Posted by TM5 Properties Agent on Tuesday, January 12th, 2016 at 1:15pm

Happy New Year! 2016 is already proving to be an amazing year, with a ton of changes happening here in Aggieland (and we’re not even talking about TAMU Athletics!). This year we’ve been told that the US will return to an economic normalcy – employment will trend upwards, people will have more money to spend, and of course, the dreaded interest rates will rise. In fact, it is estimated that the 30-year fixed-rate mortgage will likely end 2016 about 60 basis points higher than today’s level*. As such, we will begin to see growth at a slower pace around the country… but will we see the same trend here in the Brazos Valley?

As I peer into my crystal ball, I will share my forecast for the Brazos Valley future of real estate:

1 - Everyone wants a deal, and throughout the volatile years of past, many buyers were able to take advantage of the economic downturn; however, in this area short sales/ distress sales will diminish significantly. It is still very much a ‘Seller’s Market’ in the Brazos Valley as our supply has not yet met our demand

2 - Which leads to our New Construction homes and housing prices remaining extremely vibrant. While the rest of the country is returning to more traditional levels, here in the Brazos Valley, we’re still experiencing pent up housing demands for buyers at all levels and price ranges.

3 - As you are aware, the Brazos Valley is home to Texas A&M University and as such, has a high rate of young people within the community. Rents in the Brazos Valley are extremely high, with most apartment complexes running at a 93% occupancy rate or greater. With $400k-$500k Ag-Shacks (student rentals) being built around the area, rooms are now renting for over $800/room ($3200/mo for a 4-bed/4-bath). Furthermore, rents are accelerating at a more rapid pace than home prices and for some individuals, rent payments exceed 30% of the income of renting households (although here in Aggieland it is more difficult to qualify as many are students with parental support).

4 - As these individuals graduate and continue to reside in this wonderful area, they are emerging as a dominant force with improved financial means to join in the real estate search. In fact, Millennials and Gen Xers are the next wave to hit the market, one, gearing up for their first purchase, and the other selling their ‘first’ home and looking to move up as their families grow and need more space.

The Boomers have long been contenders in the real estate market and have recently created the need for more maintenance free lifestyle selections here in the Brazos Valley of which our community has been sorely lacking. Our market in the Brazos Valley is unlike most other areas as our Boomers pay heed to the pull of TAMU and seek to retire and/or have a second home here in Aggieland. Boomers and Millennials will more than likely continue in their struggles to search for the perfect, affordable home – of which seems to be increasingly difficult to find.

This generational shuffle, assuming households want to both buy and sell, will make 2016 the best year to sell, especially with supply remaining scarce and inventory moving rapidly. In fact, the trend is already here. The number of single family homes sold in the Brazos Valley increased over 7% from 2014-2015 and it is expected to remain stronger still.

 

2015

2014

2013

Year to Date Solds:

3340

3117

2855

Total $ Amount:

$         718,722,629

$         633,756,812

$         541,490,085

Total Average $ of Home Sales:

$                 215,186

$                 203,323

$                 189,664

     

 

As with all supply and demand, prices will fluctuate and experts believe that price appreciation will slow in 2016; however, in watching Aggieland’s housing struggle these past few years, our ‘slow down’ is anything but. The Brazos Valley has seen a steady increase in the purchase price of homes, increasing 7% from 2013-2014 and another 6% from 2014-2015. If these increases hold true for another two years, a purchase made in 2013 for $189,000 will be worth $75,000 more in 2018 – a mere 40% increase in value in five short years!

5 - More affordable NEW housing is long awaited and will continue to be. With New construction (homes, townhomes, patio homes) accounting for only 14% of the 2015 sales, Builders in the Brazos Valley continue to face higher land costs, limited labor, and higher-priced construction for new homes. Yet, even with the higher prices, NEW inventory remains extremely scarce – with most home buyers waiting on the construction of their road longer than it takes to build their new home. With high demand and high prices, Builders grew in 2015 by following this move-up and luxury strategy. Growth potential is still very strong and will continue to be, especially if Builders come back to serving the entry level buyer.

As I gaze into the future via my crystal ball – 2016 is already proving to be a great year – for both buyers and sellers. The increase in students, faculty, staff workers, and additional employees both at Texas A&M University and all around the area continue to show promise that the Brazos Valley real estate market will remain extremely strong in 2016.

*-http://realtormag.realtor.org/daily-news/2015/12/22/5-real-estate-trends-will-dominate-2016

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