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By Riki Markowitz
At the end of April, Texas REALTORS released its annual Texas Homebuyers and Sellers Report. Statistics and trends were provided by the National Association of REALTORS’ 2018 Texas Profile of Homebuyers and Sellers, which analyzed data about Texas residents who purchased or sold a home between July 2017 and June 2018. While most of the findings from the Texas REALTORS’ report was more or less in-line with the previous year, there are a few standout stats that have made some local experts say, “hmm.”
Take student debt. When it comes to states with the highest debt, Texas is actually pretty middle of the road, according to the 2016 Institute for College Access & Success report. Just over half of individuals with student loan debt across the state are looking at owing roughly $26,500. But the amount of debt owed by Texans who have purchased a home is more like $39,800 —which is nearly 100 percent higher than the same population from the previous year (they only owed $20k). By contrast, U.S. student loan debt among homebuyers also increased in the 2019 report over the previous year, but it was a 40-point increase. While even that is considered a significant escalation, it’s still extraordinary that the median amount of student debt for Texas’ homebuyers was more than $11,000 higher than U.S. homebuyers with student loan debt.
There are a couple questions one can ask about this statistic. For instance, does it mean that buyers with a lot of student loan debt are also high earners and have more education? Tray Bates, Texas REALTORS 2019 chairman, says it’s possible, but not necessarily so. What is safe to assume is that this population is at the beginning of their career and still on the lower end of their income capacity. Bates’ takeaway is that because this population has cash flow and income challenges, many are putting off buying a new home until later in life.
Another striking difference was that in Texas, 29 percent of homebuyers purchased a new home and only 14 percent of U.S. buyers did the same. “Texas is seeing the greatest increase in new home construction in years,” says Bates. “This is data coming from other reports, but what we’re seeing is that Houston is number two in the country for new home permits, followed by Dallas-Fort Worth, Austin and San Antonio. It’s great that our metro areas are finally starting to get new home construction after the 2008 recession when a lot of homebuilders went out of business.”
The nearly 100 percent difference in Texas new homebuyers versus those buying resale has a few different driving motivations. A majority of homebuyers are “avoiding renovations or problems with plumbing or electricity,” and want “amenities of new home construction communities,” according to the Texas REALTORS survey. They’re also driven by the “ability to choose and customize design features.” Texans who purchased a previously owned home agreed that they were in the market for “better overall value,” as well as a house with “more charm and character.” Five percent of new homebuyers in the state claimed they found a lack of inventory of previous owned homes (which is true), of those who purchased a previously owned home, though, 8 percent said new home inventory was lacking.
As far as Texas sellers are concerned, the median age was 56 years and their median household income was just under $110k. For U.S. sellers, the median age was 55 years and their median income was $98.8k.
Texas also has a smaller percentage of first-time home sellers (26 percent versus 32 percent nationwide). The median selling price over purchase was $70k in Texas and just $55.5k in the U.S. — which are numbers that are not too surprising to Central Texas REALTORS. In Texas, a home will be on the market for about four weeks before it sells and just three weeks in the U.S. But remember, these numbers represent all home sales. According to Bates, there’s a sweet spot at $150k to $300k. In Central Texas — especially Austin metro — those homes can sell in a day or two. Homes that start at around $700k spend more time on the market.
Bates was also pleased to point out that nearly a third of homebuyers in the state are purchasing their first home. The median age of first-time buyers here was 32. The majority of first-time buyers in the state (59 percent) were between the ages of 25 to 34. Interestingly, only 23 percent of first-time homebuyers in the U.S. were between 35 to 44 years of age and in Texas, only 14 percent were in that age range. Compared to nationwide stats, Texas also has higher numbers of first-time buyers in the next three age categories over 44 years old, including 75 years and older.
Bates surmises that the reason Texas has a lower percentage of buyers over 50 might have something to do with the price of appreciation. “At this age, you may not need to move, and while you’ll profit from selling your home, you’ll have to use that earned amount on a replacement home.” Overall, says Bates, “the market in Texas is driven by younger buyers and multi-family.”
Some of the best news to come out of the report regards REALTOR satisfaction. Nearly 90 percent of Texas homebuyers and 85 percent of sellers “would definitely or probably recommend their agent to others or use their agent again.” In this age of computers and bots, it’s nice to see that people still love working with experienced agents. RL