Mike Inselmann, president of metrostudy gave his annual economic forecast at John Daugherty, Realtors’ Sales Meeting on Tuesday January 5th. Metrostudy is the nation’s leading provider of primary and secondary market information to the housing, retail and related industries nationwide. As in years past, Inselmann presented to a standing room only crowd.
Inselmann kicked things off on a positive note by saying that, “The housing recovery is going to come whether you believe it’s going to come or not.” He says that it is in the works, and although it may happen slower than we want it to happen, it will happen nonetheless.
According to Inselmann, almost everything is pointing towards an economic recovery. He says that the media focuses a lot on employment and jobs, which is important, but that employment numbers are lag indicators rather than leading indicators. He says that people are still slower to hire, even though things are starting to pick up a little bit, and that it is just going to take some time for the private sector to begin hiring again.
I think that most of us can related to Inselmann’s sentiments about living in Houston. He says, “I’d still rather be in Houston, Texas than anyplace else.” He says that we have held up surprisingly well in our market compared to just about anywhere else in the United States.
In our local market, says Inselmann, “our job figures are probably the key component for trying to gauge how quickly our housing market will really start to pick up.”
Inselmann calls Houston a city that is built on business and on jobs and on economic opportunity, which he says makes us a jobs-driven housing market as well.
Mike Inselmann
“We have had a lot of transactions, even in a down market,” says Inselmann. He says that the forecast for jobs in 2010 is for the recovery to begin sometime in midyear. He says that we’ve already started to see the month over month job losses narrow compared to the same months a year ago.
He says that we have learned a bitter lesson in our business and personal lives about how we achieve prosperity, and the fact that it can’t be done through debt. He thinks we will see a lot more innovation and more and more hard work needed to pull us out of the down cycle that we’ve been in.
As for Houston, he says that we are seeing some consolidation in the oil sector. As for the Houston relocation business, he says that this has been reasonably okay throughout the year. Then he hinted to a big announcement that is expected to come in the next few days about a big relocation deal that he says “will trigger a fairly big surge of relocation business into Houston.” Naturally, I will be watching and waiting for this announcement with baited breath!
With regards to foreclosures in the Houston area, Inselmann says that it’s not that we don’t have foreclosures, it’s just that the magnitude of the problem is not as bad as other U.S. real estate markets, which were hit really hard.
Inselmann says that, “The shrinkage of new supply combined with the steady growth of our economy and market means that we are going to have more sales and fewer new housing starts, leaving us with the currently inventory that there is in the market place. This will continue until the lending community gets repaired and new construction starts again. So as the supply begins to shrink and demand begins to pick up with the economy, you are going to see some recovery in home prices in our market place.”
In many ways, Inselmann says, we are “getting back to normal.” He says that the days on market for properties on MLS are averaging about 80-85, which is pretty good. We have been somewhat spoiled during the boom when properties sold during the first week on the market.
He says that you are going to see a number of people who could only survive during the boom times, get washed out of the real estate industry. He says that this is good news for us, because it leaves the real estate industry to the real professionals and long standing brands that have established themselves and have proven that they can survive and even thrive in the down markets as well as in boom markets.
We are faced with more difficulties now as a result of the mistakes we made during the boom times. For instance, says Inselmann, the loan approval process is more difficult; not everyone can get financing. He says that we were living in a time when people who had no business buying homes were getting financing. As a consequence, it is harder to convince people now that buying a home is a good idea. We just went through a time when we were told that buying a house is a smart move for everyone and now we are suffering the repercussions, says Inselmann.
We saw vast numbers of domestic migrantion into Texas in 2009. Inselmann said that for 2009, it is estimated that Texas gained 150,000 new residents. This is not surprising given the increased job opportunities and better economy compared to other parts of the country.
Inselmann closed by encouraging us to attend public hearings and forums as often as possible in order to educate ourselves on the kinds of proposals and things that are happening on a local level. He said that it is important to stay up-to-date about what is happening in Houston. I think he is right on target!