2021 Texas Housing Forecast Looks Great – Projecting 8% Growth

Its no surprise that 2020 was a strange year for Bryan-College Station real estate. We started out with a bright outlook, then COVID-19 reared its ugly head and real estate professionals prepared for a struggle amid shutdowns and coronavirus concerns.

But then in summer 2020, things surprisingly turned around. COVID-19’s shut down actually spurred on a lot of homebuyers who were reluctant to move because of their commute to make the leap. The nation-wide work-from-home experiment allowed a lot of people who otherwise preferred to stay close to the office to move away from dense urban areas and get more space.

All in all, 2020 ended up being a healthy year for Bryan-College Station real estate. You can see the 2020 annual housing stats if you want to see how the market performed.

What Does the Bryan College Station Market Outlook Look Like for 2021?

When talking about the 2021 housing outlook, we still need to understand how the COVID-19 pandemic has impacted 2020 real estate performance for several key areas:

  • Housing Supply
  • Housing Construction Jobs
  • Housing Permits
  • Housing Starts
  • Housing Demand

For the real estate metrics above, we don’t have data specific to Bryan-College Station area, so we’ll be looking at the Texas housing market as a whole.

2020’s Diminished Housing Supply

According the Texas Real Estate Research Center at Texas A&M University, the state’s housing supply is in recovery mode in 2021.

During 2020, the supply dropped due to a number of factors:

  • Construction wages and overall employment contracted in 2020 due to COVID, meaning that there were simply fewer workers in the construction industry to build homes
  • Coupled with subsequent economic shutdowns by the state government, single-family construction permits plateaued sometime in November, pushing back on new construction growth late in the year
  • Multi-family permits saw an 8% decline due to increased demand for single-family dwellings
  • Housing starts were down most of 2020, meaning that less construction was happening in Q3 and Q4 of 2020
  • Tariffs on lumber were at 20 points

When looked at a whole, all these factors combine to mean an overall reduction in housing supply. Fewer homes were being built, so there was less available inventory on the market, creating a seller’s market.

According to the Texas Real Estate Research Center: “A total MOI of around six months is considered a balanced housing market. Inventory for homes priced less than $300,000 was even more constrained, sliding to just 1.5 months. Even the MOI for luxury homes (homes priced more than $500,000) fell below 4.8 months compared with 7.6 months a year ago.

2021 Housing Demand

Work-from-home, low mortgage rates, and further growth of asset-based wealth sectors is continuing to drive housing demand for individuals and families that are in real estate buying income brackets.

Even with the remains of 2020’s diminished housing supply, demand is high, forcing up real estate prices and keeping inventory historically low.

From the buyer’s perspective, they have a lot of reasons to buy a house, despite the highly competitive market:

  • Low mortgage interest rates means that they’ll have a lower monthly payment and pay less over the life of their home load
  • Real estate asset prices are on the rise meaning that their investment will drive their individual wealth and be a good investment
  • High income earners are no longer tied being close to their office in more dense areas that have a higher cost per square foot, meaning they can move to a dwelling that gives them more space for the same price

Here’s the saving grace for the Texas housing market: housing supply is growing.

According to the Texas Real Estate Research Center, despite contractions in 2020, 2021 is showing signs that supply will increase.

2021 Housing Supply Plays Catch Up

Here’s the saving grace for the Texas housing market: housing supply is growing.

According to the Texas Real Estate Research Center, despite contractions in 2020, 2021 is showing signs that supply will increase.

  • Hiring in residential construction, however, has generally been positive since the initial decline in March and April
  • Residential Construction Leading Index decreased due to a fall in building permits and housing starts, normalizing after strong growth in the months when the economy first reopened
  • Despite a decline in 2020, Texas still exceeded its 2007 average in per capita single-family home permits
  • Although total Texas housing starts decreased 9.5 percent, activity was still on pace to surpass last year’s groundbreakings by about 10 percent
  • The Department of Commerce lowered lumber tariffs from 20 to 9 percent in December, which should help reduce homebuilder costs moving forward
  • Single-family private construction values mirrored starts as the metric declined 12.8 percent but continued to trend upward

Single Family Housing Forecasts 2019 - 2022

2019 (%) 2020 (%) 2021 (%) 2022 (%)
Housing Permits 3.0 20.3 15.2 6.6
Sales 4.7 8.8 8.4 4.7
Price per Sq. Ft. 4.2 6.6 8.3 4.5
Housing Permits 8.8 14.7 13.4 3.4
Sales 8.2 10.0 8.4 3.6
Price per Sq. Ft. 4.2 8.1 8.6 7.2
Housing Permits -1.1 21.5 13.8 2.9
Sales 3.2 9.8 7.3 5.2
Price per Sq. Ft. 3.1 6.1 7.8 5.1
Housing Permits -0.5 20.9 10.3 7.3
Sales 4.4 10.4 7.2 3.6
Price per Sq. Ft. 3.1 4.8 7.2 6.5
San Antonio
Housing Permits 12.9 16.0 14.4 5.4
Sales 7.6 13.0 9.4 4.6
Price per Sq. Ft. 5.1 6.8 7.7 6.2

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