Texas Business reports: COLLEGE STATION--More indicators support theconclusion that the Texas housing market has recovered. One of those is the annual dollar volume of home sales.
In 2011, reports to the Real Estate Center at Texas A&M University put total statewide home sales at nearly $40 billion. That is about the same amount reported in 2004.
“Sales volume has stabilized around $40 billion for the past three years,” said Center Chief Economist Dr. Mark Dotzour. “Indications are that 2012 will show a substantial increase.”
The inventory of Texas homes for sale is another indication the residential market has stabilized.
“If there’s an excess of homes for sale, prices trend downward,” said Dotzour. “When inventory is smaller, prices rise.”
The number of homes for sale depends on the time of year. More homes are for sale in the spring and summer.
The Texas housing inventory peaked at 31,431 listings in June 2006. Five years later, the total was 21,771 — down 31 percent.
“Month’s inventory” is a third way to measure housing inventory.
“If you have ten homes on the market, and you sell two each month, you have five months of inventory,” explained Dotzour. “Previous Center research has determined a balanced market is about 6.5 months.”
When the inventory is less than 6.5 months, prices rise more quickly. When inventory exceeds 6.5 months, prices begin to moderate.
“The danger of falling prices comes into play when inventory gets into the nine to 11-month range,” said Dotzour.
Texas’ housing inventory was less than 6.5 months for the first eight years of the 21stcentury. At the same time, housing prices were rising.
In May 2008, Texas’ housing inventory rose to more than 6.5 months; it stayed there through November 2011. Since then, the inventory has hovered around six months.
“This is a clear sign of relative strength in the price of Texas homes,” said Dotzour. “Remember that home prices can vary dramatically from city to city. In fact, prices can vary widely in neighborhoods of the same city.”
Dotzour said “it is possible that prices could continue to be soft in pockets around the state, but the economic foundation of a recovery in residential real estate is being laid.”