Tyler’s housing market ranks as one of the most improved in the country, a new report by Nationwide said. While some East Texas markets still are suffering the effects of low oil prices, Tyler’s economy has rebounded and the housing market shows it.
According to Nationwide, Tyler’s metropolitan statistical area (MSA) ranks No. 10 in the country as most improved.
Nationwide senior economist Ben Ayers explained the company started doing its Health of Housing Markets reports two years ago in an effort to not be caught by surprise by a downturn in the housing market, as happened in 2008.
“We generate this report to try to look for warning signs in local housing markets,” Ayers said in an interview last week. “A decade ago, when things were about to burst, these indicators would have given us a forewarning of what was to come. We would have seen the signs.”
And the signs were there, he added.
“Delinquencies were going up and people were getting behind on their mortgages,” he said. “We should have seen that home affordability wasn’t very good. We should have seen house prices well above normal, and after several years of that, we might have recognized the bubble.”
The report looks at a number of indicators.
“One side is the demand side,” Ayers said. “Do people have the income and the jobs? Are people coming into the area? The other side is the price side of things. Are the prices close to average for the area? Are they too low or too high? Finally, we look at housing affordability. Are people actually able to afford the homes or are they being priced out?”
A hot housing market can be an unhealthy one, even though sales are brisk, Ayers said.
Kyle Smith, president of the Greater Tyler Association of Realtors, said the report comports with what he sees.
“The market has been very active,” Smith said. “We’re seeing homes selling 24 to 48 hours after being put on the market. Texas is seeing great numbers, and we are on the leading edge of that.”
Smith agrees the industry must watch for signs of another housing bubble.
“As a realtor, I was watching all of that taking place in 2007 and 2008,” he said. “When I went to Las Vegas and Florida and some of the other markets that were really rapidly increasing in price, I saw a lot of construction being done on spec. People were buying a lot of homes, second and third homes, on speculation, and when the crash came, they were in trouble.”
The housing market health picture in Texas, as a whole, is varied, the report said. Some areas are in the bottom of the performance rankings - Longview is at 396 out of 400 MSAs, the report notes, and Victoria is even worse off, at 398.
Those rankings reflect problems stemming from low oil prices, Nationwide’s Ayers said.
“A lot of the problem is the energy sector,” Ayes said of Longview’s MSA, which includes Kilgore. “A lot of the MSAs have had issues with job growth and jobs falling in the past year, and that’s one of them.”
Tyler’s more diverse economy spared it the worst of the downturn in oil and gas, he added.
“Health care and higher education sectors continue to do great,” Ayers said. “You’re reaping the benefits of that diversification now, whereas Longview still is much more dependent on energy.”
The near future for the Tyler housing market is positive, he said.
“The indicators tell us that job growth continues to be good, the numbers of households formed will continue to grow,” Ayers explained. “That’s been pretty robust, and that’s helping to feed household demand. I think the housing sector should continue to grow, and that, in turn, contributes to the rest of the Tyler economy.”
“In general, Tyler doesn’t follow the larger swings the state is seeing - either in the good markets or bad markets,” Smith said. “Tyler tends to moderate those trends. In areas like Dallas and Austin, the market is overheated. They’re seeing 40 and 50 contracts proposed in the first 24 and 48 hours. That’s adding $30,000 and more to each contract. We aren’t there.”
Smith’s biggest concern is construction.
“It takes time for builders and developers to meet a demand,” he said. “So, I’d like to see more construction going on, because we know the demand is there and it’s only going to increase.”