National and Local Economy Update
At the recent 2019 Economic & Real Estate Forecast event sponsored by Allegiance Bank, Scott Davis delivered a presentation highlighting local economy, business, energy and housing trends. With 20 years in the real estate business, Scott is the President of Location Strategy, LLC, a firm dedicated to real estate strategy and consulting.
Here are some of the key takeaways from the event.
High-level national economic trends
- Household debt is up, but not significantly.
- The real median household income is increasing.
- There has been a recent unusual increase in productivity growth.
- The state of the Federal Budget poses substantial risk.
How national economic trends are affecting Houston
- In 2018-2019, the U.S. economy remains a positive factor for Houston, in addition to a positive shift toward oil.
- Houston ranks number eight nationally in top net office square footage delivered, and number 11 in office square footage absorbed; that imbalance keeps Houston’s rent growth to about one percent.
- Notably, Houston ranks third in top net industrial deliveries, with nearly 16 million in square footage.
- For industrial space under construction, Houston ranks fifth, with 14.4 million square feet.
- Still a top acquisition market, Houston ranks seventh in multifamily sales volume, by market.
- Houston ranks number one in single-family building permits.
High-level Houston economic trends
- Nationally, Houston ranks third in population growth.
- Due to recovery from and population gains after Hurricane Harvey, along with expansion in the Energy Sector despite lower oil prices, Houston ranks number three in job growth.
- Increased vacancy has not slowed rent increases; at 91 percent, Houston has the lowest occupancy of the top 70 major markets.
- Houston job growth forecast is moderate as oil prices stabilize or improve.
- Home price indices suggest more growth ahead.
Sources: University of Houston Institute for Regional Forecasting, Bureau of Economic Analysis, Federal Reserve Bank of New York, Census Bureau, Bureau of Labor Statistics, Office of Management and Budget, CoStar, Real Estate Center at Texas A&M, Texas Population Projections Program, Federal Reserve Bank of Dallas