redistribute income, they redistribute people.” High taxes in California and Northeastern states are a big reason people relocate to states like Texas. They seek to escape environments of overspending, overregulation, and over taxation. That trend will continue to propel Texas as a top place to move and do business in the coming years. Here are some stats and trends to watch in 2022 and beyond: Consumer spending throughout Texas is 25.7% higher than it was before 2020. In Houston, it SPENDING was 31.8% higher. In the U.S., it is 24.2% higher. Since it’s been difficult to go on vacations, people have been spending more of their available income on consumer goods. EMPLOYMENT Help Wanted postings have been averaging 30%-50% above prepandemic postings. Texas unemployment rates are around 5%, which is still not a total rebound from where it was in January 2020, when it was around 3.5%. However, it’s still a very strong employment rate. Texas will continue to see job mismatches, significant shifts in employee preferences, and more companies catering to employees than we previously have. HOUSING AFFORDABILITY As more people move to Texas and buy houses and as builders are unable to keep up with demand (from a material and labor perspective), Texas will continue to have afford- ability challenges in the foreseeable future. That being said, Texas is still affordable relative to the rest of the U.S., but even more so from the perspective of buyers who are moving here from more expensive parts of the country. The bonus of no state income tax makes overall cost
of living in Texas appear much lower than it is where many buyers are migrating from. It’s all about the perspective of the buyer. INTEREST RATES Low interest rates have allowed our prices to float up at a rate that many buyers don’t notice because their monthly mortgage payments have still been low. But as interest rates rise in 2022, it may create some short-term slowing of housing price gains. Overall, we don’t forecast a reduc- tion in sales or housing prices in Texas regardless of interest rate changes due primarily to the contin- ued influx of new residents to Texas. A 1% increase in interest rate reduc- es buying power (purchase price) by 11%. But many of Texas’ new resi- dents are moving from other states where prices are 1.5 times to twice the prices in Texas, and they still feel like they are getting a bargain. INVENTORY AND BUILDING PERMITS We went from a high of 148,000 listings in 2008 to an all-time low of 49,340 listings at the end of 2021. Yet we have about the same number of building permits being issued today (170,000) as we did in 2005 (166,000). However, we had 416,488 sales in 2021 and only 277,649 sales in 2005. As a result, our inventory is only 1.2 months today versus 4.8 months in 2005, while our 40-year average in Texas has been around six months of inventory. Technology and forecasting can naturally bring the necessary amount of inventory down. But where it currently stands in Tex- as, there is not enough inventory to supply all the buyers’ needs. We likely won’t have substantially more inventory for many years to come. The immediate reason is supply chain issues that significantly slow
the building process. Labor short - ages also further complicate our ability to bring houses to the mar- ket. What that likely translates into is continued year-over-year price increases, in spite of increasing interest rates. INFLATION In real estate, we call inflation “appreciation.” Investing in houses is an excellent way to hedge against inflation. We are also seeing inflation in wages, which will help people afford houses as the prices continue to increase. We are bullish on the Texas markets in 2022 and beyond as many factors are actively set up for continued increases in sales and corresponding increases in sales prices. • Shenoah Grove is a fourth generation Texas real estate investor. She started investing in 2003 and became a full-time investor in 2004. Grove and her husband Phillip Grove have transacted more than 1,000 real estate deals. In addition, they have trained more than 87,000 real estate investors on how to complete creative real estate transactions that work in every part of the market cycle. Grove joined her local real estate investing association in Austin in 2003 and started to lead it in 2004. She formally purchased the association in 2008. In 2013 Grove created associations throughout Texas with monthly meetings in Austin, Dallas, Houston, and San Antonio, where attendees discuss trends in Texas real estate and how they impact investing. Every month hundreds of members, guests, and vendors attend. If you’d like to attend a meeting, visit www.TexasREIAS.com to get started with your investing. These associations uphold the tradition of “Texans teaching Texans how to invest in Texas using strategies and systems that work and make money in Texas.” This philosophy is the cornerstone of the association’s success and the success of the members. Grove is a licensed Texas realtor (#0518223) and broker (#0591721). Her undergraduate degree is from the University of Texas at Austin, and her master’s degree is from Rice University.
50 | think realty magazine :: march – april 2022
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