- The average price for single-family homes consistently above $400,000. Housing affordability concerns will continue to be a top concern in 2024.
- Housing industry optimists say falling interest rates, strong underlying demographic trends, and a market that is now less constrained by access to materials or shortages of new home inventory. All this will help sales in the second half of 2024 rebound from near-term declines.
- The market’s perception of the economy during the 2024 election year is expected to greatly influence home sales.
Texas Tops the List for Highest Number of Single-Family Permits in 2023
The ten states issuing the highest number of single-family permits combined accounted for 63.8% of the total single-family permits issued last year reports LBM Journal, serving lumberyards, building material distributors, wholesalers, manufacturers, and service providers. And Texas also boasts 21 of the Top 50 best selling neighborhoods last year.
LBM did a YTD analysis from November 2022 through November 2023. It notes that new home inventory of 451,000 new homes available for sale at the end of November. And that represents 9.2 months of supply, up from 7.8 months in Q4 2022. The housing supply improvement is largely a function of slower sales in the fourth quarter, says LBM.
While Texas was the state with the highest number of single-family permits issued in 2023. But it still saw a decline of 8.7% from the year before. However, Residential Strategies reports increased demand for homes as interest rates began to come down. Its data shows Texas builders increases starts dramatically in the final months of 2023. And this could improve the final 2023 permit data for Texas.
NAHB Chief Economist Robert Dietz isn’t quite as confident as LBM about an easing of supply chain issues. “As home building expands in 2024, the market will see growing supply-side challenges in the form of higher prices and/or shortages of lumber, lots and labor,” he warns.
Housing in Texas is a Critical Part of Rebuilding America’s Infrastructure
In Texas supply is not keeping up with the growth. We’ve experienced incredible year-to-year increases in rents and prices as a result. So the need to keep inventory levels sufficient to meet demand, and affordability challenges related to interest rates and home prices are all key items of concern.
Henry Cisneros, the former mayor of San Antonio and secretary of HUD co-authored a book in 2021 about the growing economic and political power of the Texas Triangle cites: Dallas, Fort Worth, Houston, San Antonio and Austin. Three years later, we’re now proving him right. Exploding population, relatively low cost of living and business-friendly climate put the megaregion on track to make it a global superpower in the next decade.
Cisneros warns in an interview with TheRealDeal that we must take action to remove barriers that can block our cities’ path to prosperity. As he sees it, the government, and the private sector both have roles to play to make sure the Texas Triangle isn’t strangled as cities face a pressing need for more housing. He wants to get involved in rebuilding America’s infrastructure by bringing together public and private entities. And Cisneros’s infrastructure investment management firm, American Triple I, counts housing stock as a critical part of necessary infrastructure.
He sees much of his firm’s growth and the profits to come from it, running through Texas. Specifically, Cisneros is excited about the region from north of Austin to south of San Antonio. It presently has a population of 5.2 million people. But by 2050, he and other investors say it will grow into an internationally significant megaregion. With projected growth of more 3 million population over the next couple of decades, it could surpass the Houston and Dallas-Fort Worth MSAs.
Supreme Court’s Ruling on Texas Landowner Claims Could Broaden the Fifth Amendment’s Interpretation
Landowners east of Houston are seeking compensation from the state after a highway project led to flooding on their farm properties that continues after completion of the project, causing substantial loss to the landowners. One landowner sued the State of Texas in 2020 and has joined with several other neighboring owners in the case. now being heard in the U.S. Supreme Court to determine whether the plaintiff can seek federal relief.
Under the U.S. Fifth Amendment, governments have the right to take private property, but they must pay just compensation for it. The plaintiff argues that the flooding, which stemmed from actions taken by the state, constitutes a form of government taking private property. The state has argued it should not need to pay because it did not intend to take the property. Initial arguments focused on whether federal or state courts were the right venue for the case.
If the Supreme Court finds in favor of the landowners, the ruling could redefine what it means for a state to take someone’s property and set a standard for how it should compensate a property owner. If it rules in favor of the state, the court might broaden states’ ability to retract, restrict or eliminate remedies for landowners whose property is taken.