Let’s do the numbers – Pre-Spring Break 2016

With the first months of 2016 in the books, I’m sure you’ll agree that quite a bit has happened. Between oil prices, job figures, interest rates, and the stock market, it sure feels like things are more than shaking up. Its impact has been felt, and here’s what we know so far.

Bottom Line On Top – We are optimistic about the market in our community, given not only the global or national economic indicators, but also the local ones. Texas in general is going through a very good spot in Real Estate, and while we’re not San Antonio, Austin or Frisco, our area continues to be one of the most coveted areas in the state. We should see a seasonal increase in activity come Spring Break – potentially larger than earlier years.

Now the details:

  • Interest Rates – Not long ago, all of us were concerned that the Fed would take actions that will ultimately raise the interest rates. For a moment, they were going up, but as Bankrate’s trending graph shows, rates are actually deeper into the 3’s. This is great news – while it lasts. Consider this: equity and commodity markets just ended last week on a high note, oil prices are darting up through 40-something territory, and jobs numbers are pointing towards a more stable labor market. While we are not financial advisors or can’t predict what will happen, I’m sure that you will agree that it won’t take much for rates (or anything we just mentioned) to adjust.
  • New construction – No matter which builder, every single one of them is sitting on inventory. And it’s costing them dearly, whether on loans, taxes, utilities, the works. While they have their typical “blow-out specials” towards the end of their fiscal year (ranging from September through December), we have seen inventories stick, forcing them to extend offers and specials just to get rid of them. This is creating fierce competition for resale homes, and saturating home inventories. For our home sellers, we’re already working individually with them to help us stand out to the competition. If you’re buying and you’re considering new construction, please let us know your plans, so you don’t leave a lot of money on the table.
  • Timing – Spring Break often signals the start of “the season,” with folks getting ready to move up, downsize, or simply get a different location or upgrade. This is mostly an “organic” flow of moves, and we believe that this year should be no different. In fact, because the number of people living in the area well exceeds 120,000, this organic flow should be much, much larger. The difference here – compared to prior years – is that the flow of people moving into the area for a given employer will be dramatically smaller than the last couple of years. They do continue to come in, don’t get me wrong, but I’m sure you’ll agree that all hospitals being built, when put together, will drive less workforce moving into the area than those we’ve seen the last few years. Combine this demand and our current supply level and you’ll get a Buyers’ Market, as you can see in the graph below.

 

  • Mobility – The Grand Parkway is making progress, and we can now say that Cypress, Katy and Sugar Land are more accessible. Take Fulshear, for example (see chart below). This is a community that is less mature than ours, and has seen explosive growth due to its location relative to the Energy Corridor and now the rest of town thanks to the Parkway. This written, these locations have effectively become our competition, as builders (see above) and resale become more aggressive.

 

We hope that this is helpful in understanding our current conditions. We encourage you to give us a call if you would like a personalized consultation into your own situation.

About Danny Sanchez

Joining Rianne's award-winning team after a successful career as a Program and Operations Manager for a global outsourcing firm (with Fortune 100 companies as his primary clients), Danny has seen The Woodlands grow to what it has become today since 2001. An advocate for innovation and perfecting the Best Possible Real Estate experience, he understands very well that clients always come first. In his own words, "success looks like clients feel that they don't have any needs - because you've more than anticipated them."