I recently had the pleasure of attending a HAR event in which Dr. Ted C. Jones delivered a presentation on the Outlook of Real Estate and the Economy for 2016. Dr. Jones is the Chief Economist and Senior Vice President at Stewart Title Guaranty Company. He previously served as chief economist at Texas A&M University’s Real Estate Center. It’s always good to hear from a bright mind and simply take in all the knowledge and expertise they have to give. I’m excited to pass along to you a little of what I learned in this series of posts on his talk.

Dr. Jones’ talk was full of so many interesting and thought-provoking points, but I’d like to share with you just one final intriguing takeaway. Due to a few different factors, Dr. Jones explained that the entry level homebuyer is returning. When the new CFPB and TRID rules came out last October, there was widespread concern that it would negatively affect home buying. The return of the entry level homebuyer, however, suggests that this concern was overblown. The combination of high rental rates, affordable interest rates, and decreasing debt are all leading to a higher number of first time homebuyers.

Dr. Jones discussed how, with rents around the United States increasing, Millennials are beginning to take advantage of reasonably priced interest rates by purchasing homes. Houston is a great example of this trend. Living inside the Loop is becoming increasingly desirable, especially among Millennials. Rental rates have skyrocketed in sought-after Inner Loop locations though so purchasing a home has become a welcome alternative to renting. Dr. Jones did point out that, because too many Class A apartments have been built inside the Loop, prices are coming down a bit. That being said, he recognized that they are still high enough to drive Houstonians to buying entry level homes inside the Loop instead of renting.

This trend goes well beyond rental prices and interest rates though. A huge reason entry level homebuyers are returning is because they have less debt to pay off. Dr. Jones showed that in 2015, Americans were spending a lower percentage of their household disposable income on paying off debt than any time in the past 30 years! With less debt to worry about, Americans are much more inclined to buy their first home sooner. In Houston, if you are seeking out the lifestyle and amenities that come with living inside the Loop, you should give some serious thought to buying instead of renting.

Image Courtesy of Dr. Ted C. Jones

Looking to buy a home inside the Loop, or just have questions about the market? Always feel free to contact me at 713.829.3052 or cynthia@cynthiamullins.com.

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