The real estate market has been a popular topic of conversation for the past years. With prices increasing exponentially it seemed that the boom would be never-ending. By 2006, however, many markets throughout the nation experienced a downturn in which prices in some markets have been decreasing. Unfortunately home prices continued to fall in 2007. The Texas Gulf Coast on the other hand, has experienced a median price increase since last year. 

Price Stability

According to a Home Price Index study by First American Loan Performance, home prices fell in 21 states over the past year. Miami posted the largest decline among the 20 markets with prices down 12.4 percent in October compared with the same month last year. Tampa, Fla., was the second-worst performing city with declines of 11.8 percent. Despite current price drops, home prices remain much higher than those in the Texas coast.

Texas has defied the overall downward trend seen in other U.S. housing markets because recent rapid increases in home prices never occurred.

Prices have increased steadily and still remain the most affordable in the country. The Texas Gulf Coast has for the most part seen median prices climb steadily throughout 2007 yet still offers some of the most affordable waterfront property in the nation.

Due to rapid price increases in recent years, waterfront property on the eastern and western coasts has become unattainable to the average American.

[Second home buyers have found that they can still purchase a home in Texas near the water for as low as $150K.]

A strong state economy and population growth has helped maintain a stable real estate market in Texas.

Population Growth

Texas has three cities ranked among the largest in the nation: Houston, San Antonio, and Dallas-Fort Worth. Other metros that should also be considered are Austin, Corpus Christi and McAllen.

Large metro areas like these have supported a second home market on the Texas Coast. Houston and Dallas residents visit Galveston and the Bolivar Peninsula for weekend getaways, while residents in San Antonio and Austin prefer the closer drive to Port Aransas and Rockport.

Growing at an average rate of 400K people a year, Texas ranks among the top 10 fastest-growing states according to the US Census Bureau’s annual estimate of state population changes. Texas was the top state in the country for the number of inbound moves in 2007, according to the Atlas Van Lines migration study. That means Texas welcomed the highest number of new residents out of all the states in the country. This high population growth leads to a higher number of people looking for weekend family retreats causing an increase in rental demand as well as demands for second homes.

Strong Economy

The major and border metropolitan areas account for more than three-fourths of Texas' total employment. Each metro has a distinct set of industries, diversifying and strengthening Texas' economy. Texas’ large metro areas contain industry clusters that contribute to their economic performance.

An industry cluster is a geographically concentrated group of companies related by the technologies they use, the markets they serve, the goods and services they produce and the labor skills they require. Just about every area has an economic base of several dominant industries that exceed the nation in employment, output or earnings.

Houston is the nation's energy capitol and San Antonio has white collar industries such as financial and insurance while Austin and Dallas have the high-tech industry form a main part of their economies.

Houston's top industries contribute to the region's stronghold as an international business leader. From energy to biotech to health care and IT, the region offers a strong infrastructure to support these growing industries.

Additionally, the Houston region boasts a highly trained and skilled workforce to ensure that these industries remain leaders on the global stage. The oil and gas industry which has been growing in the last few years is nearly six times more concentrated in Texas than the US, and petrochemical production is nearly three times more concentrated.

San Antonio clusters include such white-collar industries as information and data processing services, management of companies and enterprises, and insurance carriers. In recent years, the health care industry has been growing rapidly as well.

Dallas–Fort Worth's share of computer and electronics manufacturing and information and data processing increased from 1998 to 2005. Austin bounced back from the technology bust, and its top local-export industry—computer and electronics manufacturing—maintained an employment concentration four times greater than the nation's.

Large Investments

Several major companies involved in the energy industry have announced their intention to invest in expansions and other plants in areas near the Gulf.

Motiva Enterprises Royal Dutch Shell and Saudi Aramco, for example will invest $7 billion to expand an existing refinery in Port Arthur located approximately an hour away from Houston, less than an hour away from Bolivar Peninsula. read more...

An additional 3.6 billion dollars is expected to be invested in three different plants, located near the Beaumont area, by Eastman Chemical and Valero Energy Corporation. read more...

The Beaumont Enterprise newspaper reports that over 20,000 new homes will be needed to accommodate incoming employment demand. Google trends reports Beaumont is the number one city searched for - regarding real estate - in the entire United States.

The rule of thumb for what translates into the local economies is six times the investment as the money churns around changing hands through purchases and real estate development. The changes we'll see in the north-east Texas Gulf Coast area from that kind of capital are going to be incredible.

Texas is fortunate to find the silver lining in high energy costs

The nation has seen an 86 percent increase in oil prices in 2007.

After the recent run-up to almost $100 per barrel, there has been some moderation but little expectation that a drop to even last year's level will occur any time soon.

In general, lower oil prices stimulate economic growth and higher prices hinder economic performance. However, the effects across regions and states can be considerably different.

Texas is fortunate to have an upside to the current high-oil-price environment.

The oil and gas related industries are high-wage, high-productivity jobs.

Energy remains an important industry, particularly in areas such as the Texas Gulf Coast.

Retirees flocking to Texas

Florida is well-known for its retirement population, but Texas in recent years has been coming in a close second for attracting the 65 and older crowd, according to newly released census data compiled by Thomas, Warren + Associates.

Phoenix-based Thomas, Warren + Associates determined the financial impacts of retirees on the South on behalf of the National Active Retirement Association in Charlotte, N.C.

In 2005, Texas gained 27,000 new residents to the state over the age of 65. And they brought with them $732 million worth of income to the economy.

Florida, in contrast, gained 68,000 residents over the age of 65 in 2005. Those new residents brought $1.9 billion in income to Florida.

Georgia came in third with 16,000 new 65 and older residents and $400 million in income to the state. Rounding out the top five are North Carolina and Tennessee with 14,000 and 11,000 residents, respectively, and $348.6 million and $273.7 million in income.

"Whether or not these new 65+ residents continue to work, they normally bring equity, savings, pensions and Social Security to their new home," says Dan Owens, director of the National Active Retirement Association.

"Whether their spending winds up in restaurants, health clinics, new homes and at the car dealer, these retirees take very little from their communities in schools and services, but have a huge economic impact," he says.

Business Facilities magazine named Texas #1 in economic development.

Based on a state-by-state survey of economic development deals over the last 12 months, Business Facilities magazine named Texas--with a total of $15.4 billion in investment and 9,335 jobs to be created from new projects--its State of the Year for 2007.

States were asked to submit information on their five largest economic development projects by both job creation and total investment over the last year.

Twenty-six states completed surveys and Texas was far and away the leader, according to Business Facilities.

The five projects Texas entered for expansion were Rackspace Managed Hosting with 5,000 jobs; Fidelity Investments, with 1,535 jobs; Maxim Integrated Products, with 1,000 jobs; Fluor Corp. (NYSE: FLR), with 1,000 jobs; and Dimensional Fund Advisors, with 800 jobs.

The top five Texas projects by investment were Motiva Enterprises, with $7 billion; NRG Energy Inc. (NYSE: NRG), with $5.4 billion; Eastman Chemical Co. (NYSE: EMN), with $1.6 billion; Microsoft Corp. (NASDAQ: MSFT), with $985 million; and CitiCorp, with $450 million.