Vibrant Houston Market Will Lift Home Values, Economist Says

May 9--Area housing prices will rise this year amid a strong local economy and a limited supply, economist Ted C. Jones said Tuesday at an annual symposium on real estate and the economy.

Apartment rents could go up as much as 10 percent, which will encourage more people to become homeowners. The median price of a house will rise about 3 percent, Jones, chief economist for Stewart Title Guaranty Co., told an audience attending a luncheon of the Hobby Center for Public Policy's Institute for Regional Forecasting at the University of Houston.

"This market is back," he said. "It's vibrant."

Other recent reports on Houston-area real estate seem to support such optimism.

In the first quarter, home sales jumped 9 percent over the same period last year to 12,936, according to the Texas Quarterly Housing Report. The median price reached $150,900, a 4 percent increase.

While the housing market is still stressed in some neighborhoods, buyers are more active, said real estate broker Shad Bogany, who attended the luncheon. Sellers are getting multiple offers for some homes, and in some cases, investors and consumers are competing for low-priced foreclosures.

Jones said new jobs in Houston will continue to come from the energy, health care, manufacturing and transportation sectors, but he was conservative in his projection for 2012. He estimated that area employers will create 70,400 jobs this year and 72,400 in 2013.

"The good news is we could probably exceed that," he said.

The projections are below the gain of 79,300 jobs the Texas Workforce Commission reported for 2011, which Jones said reflected his concern that European distress could cut demand for oil.

Construction jobs, he said, will get a boost over the next couple of years as developers resume big commercial real estate projects they put on hold during the recession.

Jones projects more residential construction in the coming years, too.

Builders will get permits for 22,205 single-family homes this year and as many as 24,870 by 2014, according to Jones' projections. Multifamily construction permits will grow from 10,629 this year to 13,322 in two years.

Employment gains also will propel commercial real estate, where construction has fallen.

Rents will rise for industrial and office properties as occupancy rates tighten, Jones said. 

Posted by By Nancy Sarnoff, Houston Chronicle on May 9, 2012