Jan. 2006
Whether it's the job market, interest rates, or affordable housing, the country's economic indicators are far more heartening than they have been recently. And Texas is one of the few states that's looking better, economically, than most.
Consider that the national economy has grown at least 3% or better in the last 10 consecutive quarters — and that hasn't happened since the economic boom of
the 1990s.
As far as the housing market, those Texans dreaming of buying a home in 2006 are in luck. Experts say that the state's economic outlook is looking up, up, up — starting 2006 off on a very positive note.
"I think we'll do a little better" than the country overall, said Waco economist Ray Perryman in a recent article. "We lagged in job growth for a while, but now we've caught up."
With 2% growth in jobs last year, a 1.4% to 1.6% growth rate forecast for 2006, and a still-low 5% unemployment rate (the same as last year), the job outlook for Texans is positive. That means growth will come in other areas, like housing, which is also expected to do much better here than in other states across the country.
Recent statistics have found that U.S. single-family building permits were growing at a rate of 13% at the start of 2005, but by October had slowed to 1% or 2%. In Texas, we started the year at 16% and were still growing at 10% by October, according to the Real Estate Center at Texas A&M University.
There's even good news for Texas in terms of new housing construction: national housing construction is expected to drop about 5% in the new year, but Texas is only expected to slow down by about 2.5%.
Even mortgage rates remain extremely low, and it seems that the imaginary housing bubble that many pundits expected to pop just isn't going to happen anytime soon. According to the Mortgage Bankers Association of America, the average 30-year home loan was 6.21% as of December 28, and the week before, it was 6.22. Experts think rates will rise to perhaps 6.6% during 2006, but that's still a very competitive rate for those who want to buy a home this year.
If there is any bad news when it comes to the economy and how that will affect consumers, it's that short-term interest rates are expected to rise — meaning that the interest we pay on our credit card debt, car loans, and other short-term financial obligations will also rise, making it more challenging for some to get out
of debt.
The average household carries more than $9,000 in credit card debt, and most people don't have a strategy to manage that debt, paradoxically driving them even deeper in debt. For those Texans carrying debt who also want to buy a home in 2006, experts suggest taking a methodical approach.
Understand the fees and other hidden charges that are often associated with unsecured loans, and work on chipping away at debt by paying off higher interest rate debt first. It will take time, but you'll eventually see a light at the end of the proverbial tunnel.
If you're ready to buy now, don't make any large purchases — like a car or boat or big-screen television. Get pre-approved for a home loan first, and wait on the big-ticket items until you know exactly what it will cost you to not only move into the house, but to live there, too. Your Texas REALTOR® can advise you.
If a new home is on your 2006 wish list, I encourage you to start looking for a Texas REALTOR® now. Texas REALTORS® are a wealth of information and advice, and can help you navigate the choppy waters of making a big purchase like a house.
With such a positive economic future for Texas, there's no better time to buy.
