The Houston area’s home prices and office and industrial rental rates will increase with continued growth in the current job market for the next several years, according to Ted C. Jones, Ph.D., chief economist for Stewart Title Guaranty Co.
Jones was bullish on Houston’s economic outlook, even noting uncertainty in the national and international economic picture in remarks at the biannual real estate and economic forecast, presented by the University of Houston Hobby Center for Public Policy’s Institute for Regional Forecasting.
Existing home sales will increase by 7.5% in 2012 and 8.1% in 2013, predicted Jones, while the median existing home price is expected to increase 2.9% in 2012 and 2.7% the next year. Average home prices should rise 2.0% in 2012 and 3.0% in 2013.
Jones predicted employment growth rates for the greater Houston area, forecasting the creation of 70,400 jobs in 2012, 72,400 jobs in 2013 and 74,400 jobs in 2014. He noted that the construction industry will see the largest increase in the next 12 months, resulting in both residential and commercial real estate growth. Overall rental rates will rise since the current level of new construction is not keeping up with demand, plus those having to renew leases in today’s market will see a much higher rate, he said.
Other prediction highlights from Jones’ economic forecast include:
- Retail sales will increase 6.6% this year and 7.0% in 2013, all due to the strong job growth
- Apartment vacancy rates will be 8.0% this year and 7.8% in 2013, as new construction projects get leased.
- Office vacancy rates will be 13.0% in 2012 but drop to 12.6% as limited new construction enters the market and gets leased.
- Retail vacancy is will rise from 9.8% this year to 10.3% in 2013 due to new retail space being completed