On net, increasing home sales numbers in the nation's housing bubble metros seem to represent good news for the apartment sector. While home sales momentum in California, Florida, Phoenix and Las Vegas does mean that a few apartment renters are leaving to make purchases, lots of the buys in those areas reportedly are being made by investors. Looking beyond who is snatching up today's bargain-priced homes, the housing sector simply has to get back on its feet in those locales for job growth to return in metros where real estate traditionally has played such a big role in the total economy. And, furthermore, rebounding home sales are helping to burn off excess inventories of housing that was intended to be for sale but that had ended up in the rental pool.
There are other spots, however, where increasing home sales translate to downside risk for the apartment market's performance, with the major metros in Texas most clearly falling into that category. Home sales activity in Houston, Dallas, Fort Worth, Austin and San Antonio isn't being stimulated by investors … many of those homes now moving through the pipeline are being purchased by former renters. And those sales don't have much impact on the size of the shadow market rental inventory, since the shadow market never was a particularly big deal across Texas.
At MPF Research's recent Texas/Southwest Apartment Markets Conference, experts in the property management roundtable discussion said they were seeing a notable jump in the loss of residents to purchase during the past few months. And Texas home sales stats corroborate those observations. Info released this week showed Dallas preowned home sales during the month of November up 31 percent from November 2008's count.
Digging into the home transaction figures that Texas A&M University's Real Estate Center compiles on a monthly basis from Multiple Listing Services across the state, sales volumes that had been running under year-earlier levels started to show some stability around mid-2009. And by October (the last month with info available statewide), sales were way up in year-over-year comparisons.
October 2009 sales in Houston, Dallas and Fort Worth topped October 2008 numbers by some 10 percent to 15 percent. More stunning were the jumps of 24 percent in San Antonio and 38 percent in Austin. Indeed, in data that goes all the way back to 1990, San Antonio and Austin only posted stronger home sales during the month of October in the 2005-2006 time frame.
A month or two of notably strong home sales doesn't change much of anything in the big picture, and there's certainly no guarantee of continued momentum. But recent figures in Texas do seem to dash the theory that there aren't more than a handful of renters out there who have the desire for purchase, have accumulated the down payment money required to buy, and can otherwise qualify for a mortgage in today's lending environment.
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Originally published on December 10, 2009, by Greg Willett at http://www.realpage.com/market-research/mpf/mkt_dynamics.asp.
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