Houston housing market isn’t invincible

The tone was somber at last week’s luncheon on the Houston economy hosted by property research and appraisal firm O’Connor & Associates.

Americans have lost more than $10 trillion in home equity and in the stock market, and 3.6 million people have lost their jobs.

Last year was a relatively good one for Houston businesses, so many people felt that we were going to continue to weather the storm, said Barton Smith, director of the University of Houston’s Institute for Regional Forecasting.

“Houston is no longer going to be immune from this crisis,” he said.

Smith and Robert Gilmer, senior economist of the Houston branch of the Federal Reserve Bank of Dallas, presented facts and figures about Houston and the nation’s economic health to a group of real estate professionals at the InterContinental Hotel near the Galleria.

In 2008, the energy industry made up 70 percent of Houston’s economic growth. That’s what helped keep the local economy afloat while other markets were shrinking.

But what was once a good thing is now turning bad.

As world demand for oil declines, Houston-area jobs are expected to move into negative territory.

Smith forecasts 55,000 jobs will be lost over the next two years.

That doesn’t bode well for the housing market.

Home sales and construction have already weakened considerably.

And though the Houston area avoided huge run-ups in home prices, values have started to slip in some areas as homes sit on the market for months and builders slash asking prices on what’s left in their inventories.

They’re certainly not starting many new projects.

Single-family home permits are off 80 percent from their peak a few years ago.

“If you don’t think things are bad, you can just ask a home builder,” Gilmer said.

Source: Houston Chronicle