 Every year the research staff of the Real Estate Center at Texas A&M University looks back at real estate events and trends of the year just ended and forward to what might happen in the year ahead.
The looking back part is easy. Hindsight is 20-20. The outlook is another story. There are so many variables – such as a looming war with Iraq – that could significantly influence the economy and real estate. Still, here is what the researchers say you should look for in the year to come.
Overall economy. Slow recovery ahead. Sluggish economy means tighter mortgage credit, more delinquencies, more foreclosures.
War. Boost for military spending. Higher security costs. Reduced consumer spending. Higher oil prices. Higher inflation.
State revenues. Looking under the sofa cushions for extra coins. Budget cutbacks. Tax increases. Scaling back.
Mexico. Our neighbor’s problems are our problems, too. Entrenched problems continue. Loss of manufacturing jobs to China. Impending tax on foreign firms.
Interest rates. Higher rates mean end of refinancing boom and fewer homebuyers. Higher rates mean homeowners unable to derive additional income by refinancing.
Federal Reserve. Not likely to cut rates more. Rates go up if recovery begins.
Housing. Fewer sales in 2003 but still at historically high level. Hot building pace continues to restock inventory.
Home prices. Higher. Cost of owning a home, i.e. property taxes and insurance, also up. No bursting home-price bubble.
Homeowners insurance. Still hard to come by. Housing affordability hit hard. |
Commercial. Waiting for the economy to turn around. Occupancies and rents out of kilter. Availability and cost of commercial property insurance may delay recovery.
Apartment market. Higher interest rates keep renters renting. Apartment building construction down, rents up. Fewer investors interested in multifamily projects. Retail markets. Glut of space. Demand soft. Growth still a ways off.
Industrial markets. Company expansion plans on hold. Last to recover when recovery sets in.
Manufactured housing. Industry struggling. Large number of repossessed units and site-built homes more attractive. State legislature to consider reforms in 2003.
Office markets. Who needs space when business is slow?
Water. Cutbacks in well-drilling permits in high-demand areas. More regulation of subdivisions by county governments. New plan for water pollution emissions possible. More lawsuits from environmental groups.
Air. Other Texas cities (in addition to Dallas-Fort Worth, Houston) face loss of federal highway funds unless air is cleaned up. Tighter restrictions on industry, automobile emissions.
Rural areas. Less population. Losing key middle-class necessary to viable economy. Affluent retirees on ranches, country estates. Fewer low-income jobs.
Investment. If stocks regain popularity, money flowing into real estate slows, higher interest rates result.
Employment. Critical to housing. Unemployed renters don’t become homeowners.
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