Why Texas real estate is booming again

By MIKE SCHAFFERAssociated PressTexas real estate has rebounded from a sharp drop in home values in the wake of a devastating flood, but a steep plunge in the value of homes and other assets could be driving the real estate recovery in other parts of the country.

Real estate investors have benefited from a boom in demand for homes and condos in places like New York, California, and Florida, which have seen record demand from new buyers.

Those buyers are looking to invest in homes and condo buildings, and those investments have helped boost prices and make them cheaper.

That’s likely to continue as demand for housing continues to rise and housing values continue to rise, said Andrew Linder, senior vice president of research at Zillow.

But Linder cautioned that Texas has yet to see the surge in demand that other parts have experienced, and the state’s economic fundamentals are unlikely to improve unless more homes are sold.

The surge in prices is fueled by an expanding number of people in Texas who are paying more for homes, said David Hargrove, an economist with the Urban Institute.

Hargroot said a number of factors are contributing to the rising price.

Hargroves said many people who bought their first home before the flood are buying again now because of the rising cost of housing.

But he said the flood could affect the long-term viability of existing home values.

Hospitals, schools, churches, and other non-profit organizations have had to slash operating budgets, and they are having to cut services to keep up with demand, said Hargreaves co-author and former economist Joe Schauberger.

Schauberger, who is now a senior fellow at the Urban Policy Institute, said the number of Americans who are unemployed has dropped sharply.

People who are jobless are more likely to move into higher-cost housing and those who are looking for work are less likely to take on debt, so those two factors are increasing the risk of having a financial crisis, Schauber said.

“This flood is going to make that worse, not better,” he said.

Still, it is not clear that all of the economic benefits are going to be shared equally among everyone in Texas, said Josh Loh, chief economist at the Dallas-based real estate research firm Equifax.

Some of the benefits will likely be shared more equally among higher-income households, he said, but some benefits will go to lower-income families.

In Houston, where more than 30 percent of residents are earning less than $75,000 a year, the economic situation is likely to be better than in the state as a whole, Loh said.

And it could be worse in other cities where lower- and middle-income people are not benefiting from rising home values and lower-class households are not as likely to own homes, he added.

Housing prices are up, but not as much as they were before the floods, said Loh.

In some areas, they have risen by double-digit percentages since the floods.