San Angelo and Texas Housing Market Strong in 2015 Despite Oil Bust

Last week, the Texas Association of Realtors released their 2015 Texas Annual Housing Report of the Texas housing market. This report provides a comprehensive recap of all Texas real estate research reports released by TAR in 2015. According to the report, Texas real estate has made a strong showing in all segments of the housing market in 2015 due to continued growth in the state’s economy, jobs and population.

This growth is also looking good in San Angelo.

“The Texas real estate market has been firing on all cylinders in 2015,” said Scott Kesner, chairman of the Texas Association of Realtors. “People are relocating to Texas from far and wide; homes in all price classes are in high demand and the number of available properties is slowly rising."

The 2015 editions of the Texas Quarterly Housing Report noted that Texas real estate is on pace to have a record year and statewide housing inventory has reached a two-year high. Additionally, the report shows that Texas is outpacing the nation in home sales because median incomes for Texans rose 5.9 percent over the years.

Max Puello, president of the San Angelo Association of Realtors said, “It’s been a good year for real estate.”

Puello stated many people in San Angelo related the increase in sales to the oilfield and jobs coming in as a result. He said that can have an impact, but with the oilfield prices being low, and some companies laying off and people moving away, the economy has still been really good.

“It lends to the economic diversity we have here in San Angelo,” Puello said. “We’re not just an oil field town, so I think we have that going for us.”

He did say, however, that there are more occupancies with rentals than what there has been, which he attributed to oilfield-related jobs. People who came in with those jobs weren’t buying houses because of their volatile positions, so they chose renting. Therefore, rent prices went up because there was such a high demand for rentals. Those rentals fueled home sales.

“We had a lot of investors buying properties so they could turn around and rent them, and we had a lot of first-time home owners buying homes so that they could get out of paying an increase every time their lease was up,” Puello explained.  

He also said there’s been more stabilization going on and there’s more availability in the rental market than previously.   

“I think we’re in a good place because of our economic diversity,” Puello continued. “The Chamber of Commerce and the city are working harder at advocating for San Angelo to attract business, and they’re doing really well with that and getting the word out.”

Puello also predicted that years down the road, the expansion project of Interstate 27 from Lubbock and Amarillo will be positive.

“I think the economic impact from that will be phenomenal,” stated Puello.

He said that project is obviously years a way, but there are global-level economic powers at play having an impact on the economy, especially with the oil field. Although the city is at a bit of a low because production has stopped, and people think something bad is happening, Puello said he feels this is the calm before the storm.

“Locally, I think San Angelo is in a great position of growth for a good long time,” Puello said. “I think we’re just going to keep growing. Builders are building houses, and they’re selling like crazy.”

Puello claimed he has sold more new construction homes this year than several years combined previously. Also, with companies like Wal-Mart, a company that spends millions of dollars in research, adding additional stores and businesses in San Angelo says a lot.

“They wouldn’t do so if they didn’t think we were in a position to grow,” Puello said.

He also said the average price of a home is in the $160K range, where a few years ago, it was in the $120K range.

“Our market has definitely gone up,” Puello said.

Puello added that people today also have more disposable income because of lower gas prices. People are spending on average $20 less to fill up at the tank. As a result, people have about a $200 raise per household, so they’re able to spend money by going out to eat and buying real estate, which is a good thing.

“They have more purchasing power because they have more disposable income,” he said.

Puello stated one question he always gets being in the real estate business is, “When’s a good time to buy a house?” His said his response is always the same.

“The best time is when you’re ready because there’s always going to be good deals irregardless of the economy, and there’s always going to be people taking advantage of that,” the realtor noted.

With the access to more disposable income, people can start the process of buying a home to put themselves in a better position. Puello said some people believe they need a large down payment, and although that’s not a bad thing, it will not have a major impact on a payment. The insurance has more of an impact on the payment than the down payment in most situations.

Puello also said many people feel new construction is the way to go, but sometimes that’s not the best option.

“I’ve learned that people think that by buying a new home they’re not going to have to worry about maintenance issues, but that’s not the truth,” Puello explained. “You can buy a brand new car and get a flat tire. You can buy a new house, and a week later, the plumbing backed up in the house.”

He said, new construction also requires more materials, and on average, the price of a new home is about $125 per square foot. If people look for new homes in the "upper end areas," those new homes are going to be closer to $150 per square foot.

“So in my personal opinion, I think there’s a lot of value in the older homes,” Puello proclaimed. “Because of the new construction going up, it’s increased the value of the older homes. It will be cheaper to buy one than construct one.”

People who buy a home that’s between 10 to 30 years old, they will get more house for the money because they will pay $90 to $100 per square foot, Puello stated.

For the people who believe they don’t have a lot of money to put down on a house, Puello added that the National Association of Realtors found a third of people paying rent are actually qualified to buy a home and they just don’t know it.

“It’s a matter of getting the word out,” he said.

For the San Angelo citizens who want to find out if they’re qualified to buy a house, Puello said they want to do two things: find a good realtor who knows what’s going on, and two, find a lender to see about getting pre-qualified.

“You may be ready and not even know, or a lender may be able to get you where you need to be to qualify for home,” the realtor said.

He said buying a house is different than buying a new car or furniture where people go out, find what they want and then deal with financing.

“A house is the complete opposite. You really want to get your ducks in a row,” Puello said. “You want to get with a lender, get qualified and then start looking for a home.”

If people fail to do this, they’re setting themselves for disappointment, and they risk settling for a house when they could have gotten something better.

“There’s so many different layers, so getting the lending part done first is important,” Puello noted. “The lender will look at income and debt to income ratio to see where you’re at. If you’re not ready today, that’s okay; but that doesn’t mean you won’t be. The American dream has been and continues to be home ownership.”