January Newsletter
January Newsletter
While nothing is certain, much of the market sees the Fed increasing rates at .25% in December, down from .75% in November, as a sign that inflation is easing. Personally, I have seen an increase in activity in our local real estate market, with more buyers and sellers considering a move this spring. Next week’s federal reserve meeting will be yet another data point for us to use as we plan for 2023 (and beyond). Happy New Year!
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January Residential Market Insights: Please click on the logo to learn more.
Texas is the No. 1 state for growth, according to U-Haul – by Emily Marek January 19, 2023
According to U-Haul, Texas has ranked in the top spot yet again for one-way moves within the U.S. The moving and trucking company’s latest U-Haul Growth Index determined growth by analyzing the number of U-Hauls departing vs. arriving in states during 2022. The Lone Star State took the top spot on U-Haul’s list for the second year in a row and for the fifth time since 2016. The report also shows that one-way U-Haul arrivals actually increased in Texas from 2021 to 2022. Particularly, Missouri City, Richardson and Conroe were the hottest Texas cities on U-Haul’s list. “Texas is great because you have a low cost of living, no state income tax and deregulated energy costs,” said Robert Abidin, president of U-Haul Company of Northeast Houston. “Texas is also the energy capital of the U.S. We’re home to every major industry. Anything you’re looking for in Texas, you can find in Texas,” Other high-ranking states for growth include Florida and the Carolinas, while the states with the highest increases over their 2021 rankings were Virginia and Alabama. On the flip side, California and Illinois ranked last on the list, with far more U-Hauls leaving than arriving.
“The 2022 trends in migration followed very similar patterns to 2021 with Texas, Florida, the Carolinas and the Southwest continuing to see growth,” said U-Haul International president John Taylor. “We still have areas with strong demand for one-way rentals. While overall migration in 2021 was record-breaking, we continue to experience significant customer demand to move out of some geographic areas to destinations at the top of our growth list.” U-Haul’s Growth Index Report was compiled using over two million one-way truck transactions that occurred during 2022.
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January Residential Real Estate Highlights: Courtesy of HAR. Please click on the logo to learn more.
2022 Annual Market Comparison
The Houston real estate market began 2022 with strong momentum coming off the second year of the pandemic in record territory. However, conditions changed when the average price soared to a record high of $438,301 in May and the median price jumped to its own all-time high of $353,995 in June. Between that and a stubborn lack of inventory, many would-be homebuyers found themselves squeezed out of the market, especially as efforts by the Fed to stave off inflation drove mortgage rates from the three percent range in April to more than seven percent in November. Monthly sales volume tapered, falling in April and every month thereafter. This ultimately made 2022 the first year of declining sales since 2015.
On a positive note, an uptick in new listings eventually provided a measurable boost to inventory levels, pushing it past the 2.0-months supply level for the first time in two years. It reached a 2.0-months supply in June and by December was at a 2.7-months supply. Its highest level was 2.8 months in October and November. June had the year’s strongest sales volume with 9,844 single-family units sold.
By the time the books were closed on December transactions, 95,113 single-family homes had sold across greater Houston in 2022. That is a 10.9 percent decline from the 106,756 homes sold in 2021. On a year-to-date basis, the average price rose 10.0 percent to $413,657 while the median price increased 12.8 percent to $338,295. Total dollar volume for full-year 2022 fell 1.5 percent to $39.3 billion.
January Commercial Real Estate Highlights: Courtesy of BISNOW. Please click on the logo to learn more.
Development Is Coming To Small Cities Around Houston. Infrastructure Needs To Run To Catch Up
January 20, 2023 Maddy McCarty, Bisnow Houston
Major commercial development is coming for small cities surrounding Houston, whether the infrastructure is ready or not. The impact of fast growth hitting small towns came to the fore last month when the city of Magnolia placed a temporary moratorium on new development because there are simply no more water connections available using the city’s current infrastructure. But Magnolia is far from the only once-rural area feeling the strain, considering the continuous and rapid-fire growth of the Houston metro area. That has left small-town officials scrambling to prepare their infrastructure for what is coming, cope with what’s underway and figure out how to fund it all. As State Highway 99, or the Grand Parkway, continues to be built in a giant loop around Houston, formerly rural areas are becoming more accessible and attractive to developers. Cities that used to feel like sleepy small towns, many with populations under 5,000, are now seeing evidence of expansion on a daily basis. With that growth comes the requirement for wider roads, more water pipes, bigger classrooms and other infrastructure.
“The suburban fringe of the Houston area has reached them, or has passed them now,” Texas A&M Real Estate Research Center economist Adam Perdue said. The triple whammy of new development, migration to the suburbs and more people moving to Houston has made it tricky for small cities to prepare and fund their infrastructure.
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January Mortgage News & Education: Courtesy of Housing Wire. Please click on the logo to learn more.
Housing Market Tracker: Purchase apps jump 25% (But the context is important)
January 23, 2023, 12:07 pm By Logan Mohtashami
Here’s the housing market rundown for the last week:
- Purchase application data had a solid week-to-week gain of 25%. That’s a big jump, but context is critical.
- Housing inventory decreased by 566 units, which is not a significant decline.
- Mortgage rates fell, but the bond market didn’t break what I see as a critical level, so for now, stabilization is more important.
Last week’s housing market data provided mixed news. Purchase application data had a solid week-to-week print of 25% growth, but the more valuable metric is that the year-over-year declines were the lowest in many months. Mortgage rates ended the week at 6.15%, but the 10-year yield didn’t break the critical level I was looking for and reversed higher on Friday. Weekly housing inventory fell, but not by much. I want to see total inventory back at the 2019 level — this would mean NAR data breaking above 1.52 million. In the last existing home sales report, we hit 970,000. I believe we can have a more functioning housing market if inventory rises to that level, but we still have a long way to go. We don’t want inventory to stall during this time of the year; it should grow into spring.
Last week we saw a big jump in purchase application data of 25% week over week. Normally this would be epic news because we rarely see 25% week-over-week growth. However, we need to remember that we just started the period of seasonal growth, which runs from the second week of January through the first week of May, so context is always critical. The more important data for me was that the year-over-year decline in purchase application data was the lowest in months. The key with application data is to read the internals, especially after a waterfall dive in demand, to see when a bottom is forming.
Since Nov. 9, this data has been improving, a fact that has quietly slipped past most people because so much of the focus was on falling home prices. The internal data was starting to show a bottom forming while mortgage rates were falling. This data line has not had a positive year-over-year print since May 19, 2021. COVID-19 has done a number on this data line, so a lot of adjustments need to be made to understand it better.
The year-over-year purchase application data is the most important because that is the new volume growth. Since we are working from the mother of all low bars, any change we might see this year needs context. However, considering mortgage rates haven’t cracked below 6% yet, it’s encouraging to see a stabilization forming with rates between 6.04% – 7%. We want to focus on this data from now until the first week of May. After May, total volumes always fall. Don’t forget that purchase application data looks out 30-90 days at minimum, so it will take time for the sales data to reflect what’s happening here. For now, consider this just stabilization.
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January Texas Farm & Ranch News and Information: Courtesy of the Texas A&M Agricultural Law Blog. Please click on the logo to learn more.
Egg Pricing Case Going Forward; Petition for Review at Texas Supreme Court
Posted on January 8, 2023 by tiffany.dowell
The State of Texas claims that Cal-Maine Foods illegally charged excessive prices for eggs during the Covid-19 pandemic. This is the first case to interpret the Texas Deceptive Trade Practices Act disaster price gouging provision. The trial court dismissed the case, but the First Court of Appeals in Houston reversed that decision. [Read Opinion here.] A Petition for Review is currently pending at the Texas Supreme Court with the State of Texas’ response due February 6, 2023.
Cal-Maine Foods is the largest producer of shell eggs in the United States. Cal-Maine maintains chicken flocks and produces most of the eggs it sells on its own farms. Cal-Maine processes shell eggs for sale to wholesale purchasers like grocery stores, club stores, and food-service distributors. Cal-Maine produces both specialty eggs and generic eggs, but this case involves only their generic egg business.
In March and April 2020, Texas Governor, Greg Abbott, issued a statewide disaster proclamation and shelter in place order due to the Covid-19 pandemic. Similar orders were issued across the country. This caused the demand for groceries to dramatically increase. This spike in demand was coupled with the Easter holiday, when egg prices are typically at the highest level of the year. Egg producers, who had shrunk chicken flocks in the months preceding March 2020, could not immediately respond to the increased demand given the time it takes to raise a hen to egg-laying age. The State claimed that the price increase was “squeezing consumers” and small and large businesses because the price of eggs sold in stores rose from $.94/dozen earlier in March 2020 to $3.01/dozen during the disaster proclamation. The State claimed that Cal-Maine’s prices exceeded the national trend. In April 2020, Cal-Maine sold generic eggs for $3.32/dozen for generic white eggs and $3.44/dozen for generic brown eggs. The FDA responded to increased demand for eggs by instituting a temporary policy in April 2020 that permitted shell eggs originally destined to be used in food service to be sold to retail customers instead. That policy helped meet increased demand for home consumption, which resulted in prices decreasing to and below the pre-Covid-19 levels.
The State alleged that because Cal-Maine is an integrated producer controlling the production process from raising chickens to selling eggs they could choose the price at which it sold eggs in the grocery store. Texas alleged that because there were no changes in production costs, supply chain issues, or contractual obligations that forced Cal-Maine to charge a specific price, “it should have and could have charged a lower price.” Cal-Maine moved to dismiss under Texas Rule of Civil Procedure 91a on grounds that the State’s claims “have no basis in law or fact.” Cal-Maine noted that the State admitted Cal-Maine merely charged market prices, which could not be excessive or exorbitant as a matter of law. With regard to the misrepresentation claims, Cal-Maine claimed those were truthful statements. Finally, Cal-Maine argued several affirmative defenses centered around a claim that the DTPA’s ban on excessive or exorbitant pricing during a declared disaster is unconstitutional for three reasons: (1) unconstitutionally vague; (2) violates the Dormant Commerce Clause; and (3) constitutes a regulatory taking.
The trial court granted Cal-Maine’s Motion to Dismiss, but did not articulate its reasoning for doing so. The State of Texas appealed.
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