HOUSTON – (By Ralph Bivins, Realty News Report) – The first quarter draws to a close. 2019 pours out of the hour glass even though it seems like New Year’s Day was only yesterday.
Nevertheless, the first quarter will be gone in about two weeks.
So it’s time for a few predictions for the remainder of the year.
PREDICTION ONE: 2019 is the Year of the Townhome. Find a parcel of infill land and buy it today. If it can hold four or more townhomes, you may have found a money-maker The National Association of Home Builders is predicting a 24 percent increase in townhome starts this year. The townhome offers a more affordable homebuying option – and affordability is a huge challenge. Expect townhomes to be strong in the suburbs, too.
PREDICTION TWO: Office vacancy keeps rising this year. Houston’s office market has improved after a couple of rough years. Total citywide vacancy is around 21 percent, according to NAI Partners. The Woodlands market is strong and the Energy Corridor shows improvement. But there’s 8 million SF of sublease space and more of it becomes officially vacant every month. New buildings are under construction. Tenants relocate, leaving vacant space behind. Job growth is positive, but’s it’s not positive enough. Rome wasn’t built in a day. Houston’s empty space wasn’t filled in a year.
PREDICTION THREE: Industrial is getting out over its skis a bit. Construction is way up. Some 15 million SF is under construction in Houston, a near-record. A February report by NAI said vacancy hit 6 percent, after being in the 5 percent range for several years. Avison Young’s Bob Berry, a grizzled veteran in the industrial market, has raised questions about Houston’s ability to absorb industrial space at the same amazing velocity. The warehouse industry is robust as e-commerce nudges the market to new highs, while the industrial activity around the Port also churns at high speed. No great crash is coming; just a more normalized industrial real estate market.
PREDICTION FOUR: Single-family home sales will be excellent in 2019. Houston Realtors just completed the best February ever. However, most of what’s been said about the Houston housing market since Thanksgiving has been quibbling about tiny bumps in the road. Houston housing is in great shape. The 30-year mortgage averaged 4.3 percent last week, the lowest in over a year, according to Freddie Mac. And the Federal Reserve seems to have relaxed its ridiculous quest for higher interest rates even when inflation is low.
PREDICTION FIVE– Energy exports will elevate the Texas economy. The Gulf Coast will be shipping out more and more oil, natural gas, liquified natural gas and plastics. Remember, it was OPEC’s Thanksgiving Day meeting in 2014 where decisions were made that knocked the tar out of the American energy business. It led to layoffs and high office vacancy in Houston. Well, the Permian Basin is flexing its muscles now. The exporting energy is going to have an impact on Texas real estate. This may be what it takes to absorb some of empty overhang that has plagued the Houston office market in recent years.
PREDICTION SIX– March Madness is here. Duke will win the NCAA basketball tournament. But the University of Houston will make it to the Elite Eight. Congrats to the Coogs for a great year.
PREDICTION SEVEN – The Houston Astros will be in the World Series this fall. Not sure if they will make the right personnel moves to win it all.
Commentary by Realty News Report Editor Ralph Bivins, Gold Award Winner for Best Column by National Association of Real Estate Editors.