While Texas is somewhat isolated from the storms in the national housing market, it is not completely immune, said Real Estate Center Chief Economist Dr. Mark Dotzour during a series of speaking engagements yesterday in the nation’s capital.
“The difficulties in the mortgage market are impacting buyers in all 50 states, including Texas,” said Dotzour, speaking at the Economic Policy Conference of the National Association of Business Economics. The economist was serving on a panel discussing the regional differences in the housing markets across the country.
Dotzour noted that home prices are still increasing in most Texas metro areas, foreclosure rates are much lower than the national trends, and the inventory of unsold homes in Texas is currently at 5.7 months, well below the national average of 10.1 months. However, he also noted that the most recent numbers from the Office of Federal Housing Enterprise Oversight show the rate of price increases in most Texas metros to be getting smaller.
Earlier that day, when asked by Bloomberg’s Kathleen Hays about the efficacy of further rate cuts by the Federal Reserve, Dotzour stated that he “wasn’t a big fan of government intervention, but since they are going to intervene in a big way they should do something that might actually help solve the problem.”
Dotzour said that the recent “helicopter drop” of $150 billion would not help the housing situation and would only exacerbate inflation.
“If they really want to help solve the housing problem more quickly, we need to see a tax credit for people to buy a home,” he said. “We’ve got excess inventory that needs to be soaked up.”
Dotzour also noted that the ten-year treasury rate is moving back down to the 3.5 percent range because of the continued fear of the credit markets. When the rate gets near 3.5 percent, a short window of opportunity opens for existing homeowners to refinance their homes.
“I thought that window had closed a few weeks ago as the ten-year moved back toward 4 percent,” Dotzour said. “But news of continued difficulties in the banking system has caused the rate to move lower again.”
Source: Real Estate Center