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| Houston, You Don’t Have a Problem |
| Written by Jonathan Smoke | |
| 02.08.2008 | |
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Discuss this article on the forums. (0 posts) Add Business Week to the chorus of big media outlets adding to the psyche of U.S. consumers that housing prices must fall by double digits. The cover of this week’s magazine informed us all that “the worst is yet to come.”  To be fair, Peter Coy did acknowledge that “prices won’t fall uniformly.” But the hypothesis presented is that housing is so bad in many markets that it will likely drag the U.S. economy into a severe recession, which will eventually bring down every market.I don’t buy that premise because the markets experiencing price declines are not the majority, but today I will refrain from debating that conclusion and will focus on one sizable exception—Houston, Texas. While Houston is one of the largest markets in the U.S., it gets short shrift in housing coverage that the media relies on for their sensational news stories on declining home prices. After all, Houston isn’t covered by S&P/Case-Shiller or Radar Logic’s price indices. Houston’s median existing home prices were up 2.6% year over year in January. The forecast calls for continuing appreciation well into the future as the blue line indicates below, while the average MSA is expected to be sideways for much of 2008. Hmm, just how many positive markets like Houston are excluded from these indices that supposedly represent housing across the U.S.? In our new special report Market Commentary on Houston, we conclude: "Houston has strong fundamentals that should produce a stable long-term economic environment for housing. The market has a local economy that has outperformed others in recent years and shows no signs of slowing down. Houston’s population growth produces a sizable annual demand for new homes. Employment, income growth and household growth are very healthy and should provide a foundation for consumer-driven economic health."
So, Houston, you don’t have a housing problem. And looking at our January Prospects Index, Houston only ranks 75th of all markets based on the five year prospects. If Houston looks good, there are at least 74 other MSAs that will likely perform even better. Even though I just gave away the conclusion, if you follow housing in Houston, please consider purchasing our new Market Commentary or Understanding New Home Demand in Houston, which are both available in our Special Reports. 
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