Demographic Trends Favor the Texas Second Home Market

Renowned Economic Forecaster Harry Dent's new book, "The Great Depression Ahead - How to Prosper in the Crash Following the Greatest Boom in History", shows how Demographic trends are the greatest driver of our economy and how Texas is one of the few states that will thrive through difficult economic times.

Dent's conclusions are supported by actual data analysis collected by the TexasGulfCoastOnline.com network of top Brokers & Developers, forecasts by top economists at the highly regarded Texas A&M Real Estate Center and actual economic data compiled by leading Federal Government agencies.

Let's look at some of the conclusions:

Demographics are destiny and our economy is affected by the average age and size of its population.

The average household in the United States peaks in spending between the ages of 46 and 50.

Housing will fall in overvalued markets with decreasing immigration and increasing domestic out-migration rates. States in the mid-west faring the worst.

Housing will rise in:

undervalued markets with
increasing immigration and
increasing domestic migration.

Texas is one of the few states having all three.

Different sectors of real estate boom and peak as we age over our consumer life cycle. The Vacation/Retirement Home Cycle peaks with age groups in the late 40s and mid 60s.

Vacation home buying is typically around 10% of the total market and is growing with our rising affluent aging baby boomers.
The first, broader round of vacation home buying is among households that have seen their kids starting to leave the nest but may still be funding college educations and have less to spend. The second round is about the “ultimate dream home away from home.”
We are in the beginning of the Baby Boomers second round of vacation home spending and Baby Boomers are migrating in the greatest numbers to Texas.
Immigration is also coming in the greatest numbers to Texas supporting the starter home market necessary for the "chain of home purchasing and selling" that Texas' in-state vacation home/retirement home buyers need to obtain their "ultimate dream home."

A massive stimulus plan will bolster the economy somewhat in 2009.

Dent predicts a Vacation/Retirement Home boom from 2011/2012 through 2025.

“The Great Depression Ahead shows you how to position your retirement savings and other investments to take advantage of predictable market trends that could otherwise cause you to lose your savings just at the time you will be relying on them most for your future financial security. Harry Dent is a master at understanding these demographics and shows you how to have your money in the right place at the right time and when to make critical changes.” —Ed Slott, CPA, author, IRA expert, founder of Ed Slott’s Elite IRA Advisor Group

More evidence for the Lone Star State's bright housing market future

The Office of Federal Housing Enterprise Oversight (OFHEO) reports the Texas Housing market showed appreciation for the 4th QTR 2008.

The TexasGulfCoastOnline.com network of leading brokers and developers have over 9000 active leads seeking to purchase real estate on the Texas Coast. "Most are in a waiting mode trying to time the bottom of the market and determine the best time to buy. This represents a huge pent-up demand and once it starts to come into the market in force, exceeds the supply of existing and planned real estate inventory." - says Mike Stuart, CEO TexasGulfCoastOnline.com

"A good move would be to get ahead of this large pent-up demand (and Dent's forecast), and get-in on our best deals while they last." "Knowing what and where the best deals are is the only challenge." says Stuart, "The leading brokers in our network can point you in the right direction."

The chief economist for the Real Estate Center at Texas A&M University, Dr. Mark Dotzour, says the Texas housing market should thrive in 2009 thanks to affordable housing and steady job growth.

"Despite the negative news surrounding the real estate industry, now continues to be a great time to buy a home in Texas", says Dr. Mark Dotzour.

click here to read excerpts from a Texas Housing Market presentation by Dr Jim Gaines, Texas Real Estate Center

PMI’s U.S. Market Risk Index uses economic, housing and mortgage market factors (including home price appreciation, employment, affordability, excess housing supply, interest rates and foreclosure activity) to determine the probability of lower home prices in the future.

According to PMI, TEXAS HOME PRICES ARE AT THE LEAST RISK IN THE NATION. Four of Texas’ MSAs claimed spots in PMI Group’s list of top ten annual house price appreciation rate; and overall, Texas MSAs averaged a 2.8 percent increase in home prices between September 2007 and the same month in 2008.

Click here to see the PMI report

It really is the best time to buy real estate on the Texas Coast

Here are some more reasons why:

Improvements: The Texas Coast has spectacular new developments underway that are transforming our coastal areas into world class destination resorts. We also have a strong built-in buyer pool and rental demand from our nearby nation leading metros: Houston, Dallas, San Antonio and Austin.

Hurricanes Ike and Dolly severely slowed our sales after September 2008, but now our coastal markets are seeing billions of dollars coming in for new construction - and our rebuilding efforts are focusing on more sustainable communities. Also, our newer storm resistant homes and high-rises proved they can hold-up under the hurricanes.

Value: Our area has not seen the dramatic drop in values that some areas have experienced. Although the number of sales is down, the median prices have increased slightly in many areas. This means you might be able purchase most homes at values from two or three years ago or less. Another good thing about us not being affected like other areas is that we will be the first to benefit as the market increases. Even with the occasional slow markets we have experienced, real estate has historically gone up in value and is one of the basic necessities of life that will always be in demand.

Mortgage rates: Fixed-rate mortgages are already lower than they have been in more than 30 years and might even go lower. Every drop in interest also increases the price of the home you qualify for. Contrary to some reports, mortgage money is available and on very good terms.

Variety: Since sales have been slow, you now have a larger variety of homes in a large variety of sizes, ages, prices and locations. As the market improves, your choices might become more limited.

Investment: Real estate has always been a solid investment, one that has been proven over and over again in all economic climates. Real estate is a long-term investment and should never be expected to make short-term gains, although under certain circumstances it will do that too.

The beauty of real estate as an investment is that it can be used while it's gaining value, and in many cases even generate an income. If you compare it to alternative investments, such as the stock market, it is a safe and attractive investment.

By Mike Stuart
TexasGulfCoastOnline.com

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By Matt Woolsey Forbes @ Sunday, February 01, 2009

Forbes Names San Antonio Texas among America's Best Long-Term Real Estate Bets

Forbes chose 10 markets are the least likely to overheat and bust and the most likely to have vibrant economies moving forward.

Number 3. San Antonio, Texas

Job-growth projections 2008-2017: 2.0%
San Antonio's job-growth figures have been among national leaders.

By Austin Business Journal @ Sunday, February 01, 2009

TEXAS ATTRACTS INTERNATIONAL INVESTORS

Despite increasing global real estate turmoil, Texas remains an attractive play for foreign investors looking for opportunities in the United States, a report shows.

The Association of Foreign Investors in Real Estate ranks members’ top cities for U.S. and global investment in 2009. Houston ranked fifth, while Austin ranked 11th.

The United States ranked first among nations in terms of opportunities for capital appreciation.
Conducted in fourth quarter 2008, the survey polled the association’s members who collectively hold about $1 trillion in real estate worldwide.

By Broderick Perkins @ Sunday, February 01, 2009

It is a Good Time To Buy A Vacation Home

Lower prices and less competition are the tip of the iceberg-sized list of factors that make it a good time to consider a vacation home buy.

A host of market conditions have converged to make buying a second home a smart move right about now.

Stock market woes have always pushed people to look for alternate investments, and real estate is a consistent stronghold.

Freddie Mac's Primary Mortgage Market Survey revealed 30-year fixed-rate mortgages hadn't been lower since Freddie Mac started the survey in 1971.

The pressure of bidding wars is off.
and
Vacation rental demand is on.
Economic pressures on travel budgets are forcing those who once traveled abroad to stick closer to home. To further save travel dollars, domestic travelers want the most bang for their getaway bucks.

A vacation home can pay for itself.
When your monthly mortgage payment is less than or equal to one peak week rental, twelve weeks of rental will cover your mortgage payments for the entire year.

By Texas Association of Realtors @ Thursday, February 05, 2009

The facts about Texas real estate

Texas home sales prices

* Median sales price (half of all homes sold are priced higher and half are priced lower) in December 2008: $140,900, down 4% from December 2007
* Median sales price for 2008 (full year): $146,900, unchanged compared to 2007
* Average sales price in December 2008: $183,600, down 6% from December 2007
* Average sales price for 2008 (full year): $191,700, unchanged from 2007
Source: Real Estate Center at Texas A&M University

Sales prices in states that had rapid rises and drops in values

* California median sales price in November 2008: $285,680, down 41.8% from November 2007
* Arizona average sales price in December 2008: $192,908, down from $313,000 in December 2007
Sources: California Association of REALTORS®, Arizona Regional MLS

Home prices appreciation

* The average home sales price in Texas has increased $15,600 from December 2004 to December 2008

Texas home sales

* Total sales in 2008: 231,556, down 16% from 2007
* Months of inventory (how long it would take at the current rate to sell all homes on the market) in December 2008: 6.3 months
* Months of inventory in December 2007: 5.6 months
Source: Real Estate Center at Texas A&M University

Mortgage rates

* 30-year fixed-rate mortgages for the week ending Jan. 16, 2009: 5.22%
* 15-year fixed-rate mortgages 4.99%
Source: Mortgage Bankers Association

* 30-year fixed-rate mortgages in August 2008: 6.48%
* 30-year fixed-rate mortgages in October 1981: 18.45%
Source: Freddie Mac

Loan amount with an $800 payment on a 30-year 5.22% loan: $145,363
Loan amount with an $800 payment on a 30-year 6.48% loan: $126,832
Loan amount with an $800 payment on a 30-year 18.45% loan: $51,818

Foreclosures

* Texas was 24th on the list of foreclosure rates for 2008
* Nevada (highest foreclosure rate on the list) had a foreclosure rate seven times higher than in Texas
* Florida (2nd on the list) had a foreclosure rate four times higher than in Texas
* More than 40% of all foreclosure filings in the U.S. occurred in California and Florida
* The 2008 foreclosure rate in Texas was up 13.84% compared to 2007 and up 14.96% compared to 2006
* Arizona’s 2008 foreclosure rate was up 203% from 2007 and up 655% from 2006
Source: RealtyTrac

By Amy Hoak, MarketWatch @ Friday, February 06, 2009

Five reasons to buy a home this year
Affordability returns to housing, and buyers have loads of negotiating power

People are afraid to buy a home in times like these, with the economy tanking and home prices continuing to fall. But if you're brave enough to stray from the herd, you might be in for the home-buying opportunity of a lifetime.

1. Affordability is better than ever

2. You have a large inventory to choose from

3. Builders are offering big discounts and/or incentives

4. Mortgage rates are historically low

5. You can get a federal tax credit

By JAMES R. HAGERTY Wall Street Journal @ Monday, February 09, 2009

House prices in much of the U.S. will bottom out in this year's fourth quarter, Moody's Economy.com says in a new report.

In some of the hardest hit markets, however, prices won't reach a bottom until 2010 or 2011, the research firm says in a report written by its chief economist, Mark Zandi.

"Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that a bottom in the housing market is coming into view," the report says.

It cites signs that home sales are stabilizing as people snap up bargains on foreclosures, a decline in the supply of unsold homes in many areas and expectations of moves by the Obama administration "that will help place a floor under the housing downturn." Those measures could include lowering mortgage rates further, preventing more foreclosures and generating jobs through higher federal spending.

On average, house prices nationwide will hit bottom in this year's fourth quarter at a level 36% below the peak reached in the first quarter of 2006, the report says. The price measure is based on the Fiserv Case-Shiller index.

But some areas will be hit much harder. For instance, the Naples-Marco Island, Fla., area is expected to bottom out in the fourth quarter of 2010 with prices 70% below the peak. The report projects that peak-to-trough declines for metro areas will be 66% in Miami, Fla., 63% in Riverside-San Bernardino, Calif., 58% in Phoenix, 56% in Las Vegas, 53% in Los Angeles, 38% in Washington and 33% in New York. Within those metro areas, different neighborhoods are likely to show very divergent performances; the most desirable areas near good schools and jobs are faring much better than other places.

The peak-to-trough decline will exceed 10% in nearly 62% of the nation's 381 metro areas, the report says, and the drop will be above 20% in about 100 metro areas.

The report is based on a forecast that the recession will end late this year, followed by a "lackluster" recovery. "A number of uncertainties in both the housing and economic outlooks remain, and the risks tilt to the downside," Mr. Zandi says.

By Austin Business Journal @ Tuesday, April 07, 2009

A new report from online consumer resource group Relocation.com backs up recent Census data showing that Texas, and more specifically Austin, continue to see a population influx as people move from other parts of the country being more seriously affected by the recession.

The report, which analyzes interstate moves involving Texas from the beginning of 2007 through the first quarter of 2009, shows that 62 percent of such moves over the 27-month period were people moving to Texas, while just 38 percent were leaving. For 2008, Texas ranked fourth in the country for percentage of moves into the state.

On a per-capita basis, Austin was by far the most popular city in Texas to move to during the analyzed period. Sixty percent of moving requests involved people looking to move to Austin, while 40 percent were people looking to move out of the city.

San Antonio was next with 57 percent of inquiries trying to move to the Alamo City and 43 percent trying to move away. Dallas/Fort Worth’s percentages were narrower with 56 percent moving in, and 44 percent moving out. Houston had 54 percent moving in and 46 percent out.

The report shows that all major Texas cities have more people moving to the city than leaving, except for El Paso; of all moving requests involving El Paso, 55 percent were requests for moves leaving the city, while 45 percent were requests to move to the city.

“With many consumers moving to find better job opportunities or standard of living, we are seeing strong interest in Texas,” said Sharon Asher, chairman and founder of Relocation.com.

“Our analysis of the data over the last couple of years shows the state is continuing to move in a positive direction.”

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