Houston and Tomball Economic and. Housing Outlook. recenter.tamu.edu. Dr. James P. Gaines Research Economist

Similar documents
Dr. James P. Gaines Research Economist recenter.tamu.edu

Dr. James P. Gaines Research Economist. recenter.tamu.edu

2016 Texas Prosperity Conference The Barnhill Center Brenham, Texas August 26, Dr. James P. Gaines Chief Economist. recenter.tamu.

Partnerships with Purpose: Housing for Texans

recenter.tamu.edu Dr. James P. Gaines Research Economist Real Estate Center at Texas A&M University

Texas Economic Outlook: Recovery in 2010 Keith Phillips Federal Reserve Bank of Dallas San Antonio Office

President and Chief Executive Officer Federal Reserve Bank of New York Washington and Lee University H. Parker Willis Lecture in Political Economics

Economic and Real Estate Outlook

Economy On The Rebound

MBA Economic and Mortgage Finance Outlook

Real Estate and Economic Outlook

Your Texas Economy. Last updated: January 30, 2018

WORKFORCE LOCAL AREA EMPLOYMENT STATISTICS (LAUS)

Spring Time for Housing

Your Texas Economy. Current through: Tuesday, Nov 20, 2018

WORKFORCE LOCAL AREA EMPLOYMENT STATISTICS (LAUS)

Economic Outlook March Economic Policy Division

The Houston Economy Jesse Thompson Regional Business Economist The Federal Reserve Bank of Dallas, Houston Branch February 2017

Bob Costello Chief Economist & Vice President American Trucking Associations. Economic & Motor Carrier Industry Trends. September 10, 2013

MARKET AND CAPACITY UPDATE. Matthew Marsh September 2016

The U.S. Economy How Serious A Downturn? Nigel Gault Group Managing Director North American Macroeconomic Services

U.S. Oil & Gas Industry Chartbook

Southern California Economic Forecast & Industry Outlook

COMPARISON OF FIXED & VARIABLE RATES (25 YEARS) CHARTERED BANK ADMINISTERED INTEREST RATES - PRIME BUSINESS*

Zions Bank Economic Overview

Economic Update and Outlook

Canadian Teleconference: Can the Canadian Economy Survive the Turmoil in the United States?

Zions Bank Economic Overview

The Houston Economy Jesse Thompson Regional Business Economist The Federal Reserve Bank of Dallas, Houston Branch January 2017

Kevin Thorpe Financial Economist & Principal Cassidy Turley

Analyzing the Energy Economy Michael Plante Senior Research Economist

MUSTAFA MOHATAREM Chief Economist, General Motors

U.S. Economic and Apartment Market Overview and Outlook. July 15, 2014

RISI Housing Report An Update on the Housing Market

Will 2016 Be the Last Hurrah for Commercial Real Estate? Presented By: John Chang First Vice-President Marcus & Millichap Research Services

U.S. REITs have rebounded strongly Dow Jones Equity REIT Total Return Index

Texas Housing Markets: Metropolitan vs. Border Communities. September 22, 2014

Zions Bank Economic Overview

U.S Cement Outlook IEEE. Ed Sullivan Group VP, Chief Economist

Dr. Richard Wobbekind Executive Director, Business Research Division and Senior Associate Dean for Academic Programs University of Colorado Boulder

Economic Overview. Melissa K. Peralta Senior Economist April 27, 2017

Curves On The Road Ahead

10 County Conference. Richard Wobbekind. Executive Director Business Research Division & Senior Associate Dean Leeds School of Business

Zions Bank Economic Overview

2019 Economic Outlook: Will the Recovery Ever End?

U.S. Overview. Gathering Steam? Tuesday, October 1, 2013

Zions Bank Economic Overview

Friday, May 22, NAR Convention

The Global Economy: Sustaining Momentum

U.S. Oil & Gas Industry Chartbook

A comment on recent events, and...

Babson Capital/UNC Charlotte Economic Forecast. May 13, 2014

National and Regional Economic Outlook. Central Southern CAA Conference

2015 Economic Forecast & Industry Outlook. Robert A. Kleinhenz, Ph.D. Chief Economist, Kyser Center for Economic Research, LAEDC October 8, 2014

Riverside Rising Economic Outlook for the Region April 2015

U.S. and Colorado Economic Outlook National Association of Industrial and Office Parks. Business Research Division Leeds School of Business

THIS AIN T THE 80s! And Houston isn t going anywhere.

U.S. Oil & Gas Industry Chartbook

The Economic Outlook. Economic Policy Division

Muhlenkamp & Company. Webinar December 1, Ron Muhlenkamp, Portfolio Manager Jeff Muhlenkamp, Portfolio Manager Tony Muhlenkamp, President

Economic & Financial Market Outlook

Current Hawaii Economic Conditions. Eugene Tian

Cement & Construction Outlook

The Houston Economy Jesse Thompson Regional Business Economist The Federal Reserve Bank of Dallas, Houston Branch June 2016

Shifting International Trade Routes A National Economic Outlook. February 1, 2011

Future of Housing Trends and the Housing Market Demographic Waves in the Region and Future of Housing. Illinois Finance Forum January 25, 2019

Steel Market Outlook. AM/NS Calvert

ABA Commercial Real Estate Lending Committee

The Texas Gulf Coast Overview and Outlook

More of the Same; Or now for Something Completely Different?

Zions Bank Economic Overview

The US Economic Outlook

32 nd Annual CanaData Construction Forecasts Conference

The Economic Outlook. Economic Policy Division

Future Global Trade Trends - Risks & Opportunities. Pulse of the Ports: Peak Season Forecast March 21, 2013

Charting a Path to Lift Off? Understanding the Shifting Economic Winds

United Nations Conference on Trade and Development

The U.S. Economic Outlook

Economic Outlook: fear over fundamentals

The Changing Global Economy Impacts on Seaports and Trade Dr. Walter Kemmsies

Big Changes, Unknown Impacts


Zions Bank Municipal Conference Economic Overview August 13, 2015

Global economy maintaining solid growth momentum. Canada leading the pack

2009 California & Bay Area Real Estate Market Outlook

Alternative Measures of Economic Activity. Jan J. J. Groen, Officer Research and Statistics Group

WHERE ARE ARIZONA DEMOGRAPHICS TAKING US? HOW GROWING SLOWER, OLDER AND MORE DIVERSE AFFECTS REAL ESTATE

2018 Annual Economic Forecast Dragas Center for Economic Analysis and Policy

The U.S. & Global Economic Outlook Greg Ip, U.S. Economics Editor, The Economist Remarks to The American Sportfishing Association

2018 Annual Economic Forecast Dragas Center for Economic Analysis and Policy

DFW MULTIFAMILY TRENDS & OBSERVATIONS Q2 2017

U.S. AUTO INDUSTRY UPDATE Federal Reserve Bank of Chicago Automotive Outlook Symposium. Emily Kolinski Morris Chief Economist May 2015

From Recession to Recovery

The Herzliya Conference The Economic Dimension Prof. Rafi Melnick Provost, Interdisciplinary Center (IDC) Herzliya

Colorado Economic Update

The United States: Fiscal Facts and Fantasies. Presented by: Nigel Gault Chief U.S. Economist IHS Global Insight

Joseph Von Nessen, Ph.D. Research Economist November 16, 2018

Zions Bank Economic Overview

The U.S. Economic Recovery: Why so weak and what should be done? William J. Crowder Ph.D.

Economic Update and Prospects for 2019 Professor Robert M. McNab Dragas Center for Economic Analysis and Policy Strome College of Business

Transcription:

Houston and Tomball Economic and Dr. James P. Gaines Research Economist Housing Outlook recenter.tamu.edu

THE CURRENT SITUATION The Future Just Ain t What It Used to Be! Yogi Berra

National Economic Recovery still Going six years later! 3

1Q1980 1Q1981 1Q1982 1Q1983 1Q1984 1Q1985 1Q1986 1Q1987 1Q1988 1Q1989 1Q1990 1Q1991 1Q1992 1Q1993 1Q1994 1Q1995 1Q1996 1Q1997 1Q1998 1Q1999 1Q2000 1Q2001 1Q2002 1Q2003 1Q2004 1Q2005 1Q2006 1Q2007 1Q2008 1Q2009 1Q2010 1Q2011 1Q2012 1Q2013 1Q2014 Billions Household Net Worth Has Rebounded Well $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Source: Federal Reserve St. Louis

1Q1980 1Q1981 1Q1982 1Q1983 1Q1984 1Q1985 1Q1986 1Q1987 1Q1988 1Q1989 1Q1990 1Q1991 1Q1992 1Q1993 1Q1994 1Q1995 1Q1996 1Q1997 1Q1998 1Q1999 1Q2000 1Q2001 1Q2002 1Q2003 1Q2004 1Q2005 1Q2006 1Q2007 1Q2008 1Q2009 1Q2010 1Q2011 1Q2012 1Q2013 1Q2014 1Q2015 Percent of Disposable Income Debt Service Payments as a Percent of Disposable Personal Income Low 14.0 13.5 13.0 12.5 12.0 11.5 11.0 10.5 10.0 9.5 9.0 Source: Federal Reserve Board 5

U.S. Outlook Expected GDP growth still modest: 2015 2.8%; personal consumption 2.5% FED and interest rates? When, not if Inflation not worrisome: 2015 1.5% - 2.0%, especially with lower gas prices Industrial production data generally positive Housing improving, adding to overall national economy Jobs expanding; unemployment rate under 5.5% Energy sector & oil prices major issue for the year 6

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Thousands of Jobs U.S. Jobs Finally Recovered 150,000 140,000 130,000 2013 + 1.7% 2014 +2.0% 1999-2014 +7.6%!! 126,157 132,019 132,074 134,005 130,628 130,318 131,749 129,240 137,936 137,170 136,398 131,233 131,842 130,275 134,104 136,393 139,042 122,951 120,000 117,407 119,836 114,398 110,000 110,935 109,527 108,427 108,802 100,000 90,000 Sources: BLS, Real Estate Center at Texas A&M University 7

Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Inflation Remains Relatively Low 16.0% 14.0% 12.0% Consumer Price Index for All Urban Consumers: All Items 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% Source: BLS, Y/Y % change in index 8

Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Consumer Confidence Index 140 130 120 110 100 90 80 70 60 50 40 30 20 10 Expansion Recession U.S. Texas Source: The Conference Board (1985=100); Haver Analytics 9

Oil Prices & Energy Prices may not have bottomed yet: Saudi Arabia continues to protect its market share Global oil production will increase before it decreases Global oil demand not rapidly increasing even with rapidly-falling prices. Expect significant cut back in upstream capital spending on E&P, i.e., fewer wells drilled The Texas rig count down >55%: 900 to 412 (10/14-4/15) Increased geo-political-military volatility among oil producing nations that need (require) $95-$100+ oil price 10

Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Active Rotary Rig Count & Price of WTI 2,100 2,000 1,900 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 900 800 700 600 500 Rigs down 53% from Sept. 14 (1930 to 905) Rigs (left) WTI $/bl (right) $160 $150 $140 $130 $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Source: Baker Hughes; EIA; Haver Analytics 11

Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 5.0 4.0 3.0 2.0 1.0 0.0-1.0-2.0-3.0-4.0-5.0-6.0 Annual Employment Growth Rates for US, Texas and Houston 6.0 Houston Texas US Source: BLS, Real Estate Center at Texas A&M University 12

Jan-81 Jul-81 Jan-82 Jul-82 Jan-83 Jul-83 Jan-84 Jul-84 Jan-85 Jul-85 Jan-86 Jul-86 Jan-87 Jul-87 Jan-88 Jul-88 Jan-89 Jul-89 Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Texas Leading Economic Index 140.0 130.0 120.0 110.0 100.0 90.0 80.0 Source: The Conference Board (1985=100); Haver Analytics 13

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Houston Annual Jobs 3,200,000 3,000,000 2,800,000 2,600,000 2012 +4.0%, 104,200 jobs 2013 +3.8%, 101,900 jobs 2014 +3.4%, 97,500 jobs Jan-May 2015-7,300 jobs since December 2,471,900 2,629,600 2,621,400 2,573,900 2,559,100 2,554,500 2,725,600 2,827,500 2,925,000 2,400,000 2,200,000 2,000,000 1,800,000 1,994,400 1,945,000 1,885,000 1,840,800 1,805,400 1,807,000 1,773,800 2,077,900 2,372,800 2,309,700 2,303,800 2,271,200 2,289,600 2,306,700 2,217,900 2,182,400 1,600,000 1,400,000 Sources: Texas Workforce Commission, Real Estate Center at Texas A&M University 14

Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Houston Employment & WTI Price/bl Monthly January 1995 to Current 3,100,000 3,000,000 2,900,000 Number of Jobs NSA WTI $/bl Correlation coefficient of 0.26 $140 $130 $120 2,800,000 2,700,000 2,600,000 2,500,000 2,400,000 2,300,000 2,200,000 2,100,000 2,000,000 1,900,000 1,800,000 Jun-14 105.79 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 1,700,000 $0 Source: Avg. Monthly WTI Spot Price FOB Cushing, OK; TWC; Real Estate Center at Texas A&M University

Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Millions, SAAR Total Public and Private Construction Put in Place $1,200,000 $1,000,000 Public Private $800,000 $600,000 $400,000 $200,000 $0 Source: Census Bureau, Haver Analytics

Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Millions, SAAR Total Residential and Nonresidential Construction Put in Place $800,000 $700,000 Nonresdiential Residential $600,000 $500,000 $400,000 $300,000 $200,000 Source: Census Bureau, Haver Analytics

Major Demographic Trends & Changing Housing Preferences Aging population Generational changes Lifestyle & life cycle: Gen Y vs. Boomers Increasing racial/ethnic diversity & cultural shifts Economic Shift: income & wealth gap Educated and less well educated Age Race & Ethnicity Urban Concentration - urban areas 18

Average Age of Major Life Events First Marriage, Males: 28.6 Years First Marriage, Females: 26.6 Years First Child: 26.0 Years Source: U.S. Department of Labor, U.S. Department of Commerce and Wells Fargo Securities, LLC 19

Overall Growth and Change in State Population 2010-2050 Texas D-FW Houston Austin San Antonio Population Population % of State Total Population % of State Total Population % of State Total Population % of State Total 2010 25,145,561 6,426,214 25.3% 5,920,416 23.5% 1,716,289 6.8% 2,142,508 8.5% 2020 30,541,978 7,920,671 25.8% 7,413,214 24.3% 2,306,857 7.6% 2,635,183 8.6% 2030 37,155,084 9,970,678 26.8% 9,278,789 25.0% 3,035,547 8.2% 3,182,644 8.6% 2040 44,955,896 12,728,992 28.4% 11,519,566 25.6% 3,960,317 8.9% 3,735,981 8.3% 2050 54,369,297 16,367,293 30.4% 14,221,267 26.1% 5,176,940 9.7% 4,294,232 7.7% Increase 29,223,736 9,941,079 34.6% 8,300,851 28.2% 3,460,651 12.0% 2,151,724 7.0% Total Percent Increase 116.2% 154.7% 140.2% 201.6% 100.4% 82% of total increase will go to the Major MSAs Sources: U. S. Census; Texas State Demographer 2014 Projections (2000-2010 Scenario) 20

Legend tl_2010_48_county10 F6 Projected Population Change, Texas Counties, 2010-2050 -6,200-0 1-2,000 2,001-10,000 10,001-100,000 100,001-1,000,000 1,000,001-3,480,000 Source: Texas State Data Center 2012 Population Projections. 2000-2010 Migration Scenario 21

Houston MSA Population Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery & Waller Counties 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2020 2030 2040 2050 15,500,000 13,500,000 11,500,000 9,500,000 7,500,000 5,500,000 1980 3,147,640 3,500,000 1970 2,201,849 170.1% increase since 1970 26.1% increase since 2000 1990 3,767,218 2000 4,715,407 2010 5,946,800 2020 7,700,000 2030 9,750,000 2040 11,519,566 2050 14,221,267 1,500,000 Source: U.S. Census Bureau, Texas Demographer s Office 2014 Projections, 2000-2010 scenario 22

Biggest Obstacles to Homeownership All adults 18-34 year-olds only Saving enough for a down payment 55% 58% Not having a stable job 36% 43% Having a poor credit history 35% 33% Qualifying for a mortgage 32% 29% Unable to pay off existing debt 26% 30% Rising home prices 22% 23% Rising mortgage rates 15% 18% Limited inventory 5% 5% Among renters who wish to buy a home right now. Respondents could choose multiple options. Survey conducted November 2013. Trulia Trends, December 2013.

In the next three years, do you expect to continue renting or purchase home? Source: FHLMC, Perceptions of Renting and Homeownership, Multifamily Research Perspectives, December 8, 2014

Gen Y Housing Outlook Gen Y Emerging Adults Plugged in Social Educated Outspoken More liberal Multicultural High performance High expectations Marry later buy later Fewer children, later Gen Y Housing Seen the housing collapse Currently 51% rent 80+% eventually want to buy First-time buyers mostly with financial constraints to buying Jobs and student debt = less savings for down payment First-time buyers <30% vs. historic 40% Gen Rent Sources: M. Leanne Lachman and Deborah L. Brett, Generation Y: America's New Housing Wave, Urban Land, February 2011, FNMA National Housing Survey; Pew Research Group; Real Estate Center at Texas A&M University 25

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Thousands Number of HHs by Age Group 11,500 11,000 30-34 25-29 10,500 10,000 9,500 9,000 8,500 8,000 Source: US Census HVS/Haver Analytics; Real Estate Center at Texas A&M University

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Thousands Number of HHs: Head of HH 35-44 24,500 24,000 23,500 23,000 22,500 22,000 21,500 21,000 20,500 20,000 Source: US Census HVS/Haver Analytics; Real Estate Center at Texas A&M University

Why Are They Called Gen-Y? People born before 1946 were called The Silent or Greatest generation. People born between 1946 and 1964 are called The Baby Boomers. People born between 1965 and 1979 are called Generation X. And people born between 1980 and 2010 are called Generation Y. Why do we call the last group Generation Y?

Why Are They Called Gen-Y? Some possible reasons: Y should I get a job? Y should I leave home and find my own place? Y should I get a car when I can borrow yours? Y should I clean my room? Y should I wash and iron my own clothes? Y should I buy any food? But one cartoonist explained it very eloquently...

Why Are They Called Gen-Y?

Housing 31

Macro Housing Issues Demographics: growing, shifting Affordability: workforce priced out of ownership Capital: more equity Infrastructure: transportation, education, utilities Development: Design, Density, Resources and Processes Regulatory: lending; environmental; land use Federal State Local Growth Controls/Initiatives

Design Issues

Urban Density Issues

Rural Density Issues

Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Interest Rate % Mortgage and 10-Year Treasury Rates 6.0 5.0 10-YR Treasury 30-YR FMR Mortgages 4.0 3.0 2.0 1.0 Source: Federal Reserve Bank of St. Louis; FHLMC; Real Estate Center at Texas A&M University

Jan-00 Jul-00 New and Existing SF Home Sales U.S. Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Existing Home Sales 000s 8,000 New Home Sales 000s 1,600 7,000 1,400 6,000 5,000 Existing SF Home Sales (left axis) 1,200 1,000 4,000 800 3,000 600 2,000 1,000 New Home Sales (right axis) 400 200 0 0 Sources: US Census Bureau, NAR, SAAR 37

1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 New SF Home Starts (000s SAAR) 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 900 800 700 600 500 400 300 200 1963-2002 average per year (1.06 million) 1,012 970964 779 844 899 811813 1,309 1,151 1,132 88 892 1,162 1,451 1,433 1,194 852 705 663 1,067 1,084 1,072 1,179 1,146 1,081 1,003 895 1,303 1,271 1,273 1,231 1,198 1,161 1,126 1,134 1,076 1,030 840 1,359 1,499 1,610 1,716 1,465 1,046 622 445 471 431 535 618 648 935 726 *2015 & 2016 NAHB projections Apr 2015 Source: US Census Bureau; NAHB; Real Estate Center at Texas A&M University

Household Formations and SF Starts 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 HH Formations^ SF Starts* 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ^ March-to-March Change CPS *NAHB projected 2015 Source: US Census Bureau; NAHB; Real Estate Center at Texas A&M University

Net Household Formations and SF Starts 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0-200 -400 HH Formations^ SF Starts* 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ^ US Census HVS/Haver Analytics *NAHB projected starts 2015 Source: US Census Bureau; NAHB; Real Estate Center at Texas A&M University

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Number of Texas Households Added Annually 250,000 Average number of households added annually = 126,500 200,000 150,000 100,000 209,633 196,204 139,779 131,160 117,262 112,024 137,000 162,000 116,063 105,718 108,000 98,000 145,886 142,000 139,000 140,000 134,468 93,985 79,278 156,086 68,150 187,242 178,227 131,293 134,634 210,726 139,894 120,589 111,706 105,689 171,438 50,000 32,833 52,105 44,952 0 Source: U.S. Census Bureau, Real Estate Center at Texas A&M 41

1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Annual Texas Home Sales 310,000 290,000 270,000 250,000 230,000 210,000 190,000 170,000 150,000 130,000 110,000 90,000 70,000 50,000 109,755 90,798 81,105 69,279 2014 up 5% Second best year ever! 107,107 89,405 100,047 99,619 86,287 82,867 92,370 91,340 87,218 89,848 122,134 121,823 116,604 146,395 138,123 201,528 196,401 188,738 184,056 170,638 216,147 241,020 266,842 292,805 275,584 232,381 213,334 203,637 205,786 238,060 284,479 276,361 Source: Real Estate Center at Texas A&M University 42

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Texas Median Home Prices $200,000 $190,000 $180,000 $170,000 $160,000 $150,000 $140,000 $130,000 $120,000 $110,000 $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 78,200 80,00081,600 75,200 68,50068,100 71,200 100,900 96,200 90,600 86,400 112,100 130,100 127,700 124,500 119,400 136,800 147,300 146,900 147,600 148,800 143,100 145,800 158,000 172,300 183,700 Source: Real Estate Center at Texas A&M University 43

Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Texas Months Inventory 9.0 8.0 Inventory at extremely low level relative to market activity 7.0 6.0 5.0 4.0 3.0 2.0 Source: Real Estate Center at Texas A&M 44

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Texas SF Building Permits 180,000 160,000 140,000 1980-2014 average 86,000/year 151,384 137,493 166,203 163,032 2014 +10% 120,000 100,000 103,252 122,913 111,915 108,782 99,912 101,928 120,366 103,045 93,478 80,000 60,000 40,000 67,870 66,161 84,565 78,714 67,964 59,143 59,543 43,975 46,209 35,908 36,658 38,233 69,964 70,452 70,421 83,132 82,228 81,107 81,926 68,170 68,230 67,254 20,000 0 Source: US Census Bureau, Real Estate Center at Texas A&M

1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Houston Annual Home Sales 90,000 80,000 1998-2014 average 64,500 80,994 77,668 83,399 80,848 72,800 70,000 66,979 65,169 68,643 60,000 50,000 56,563 51,433 52,459 53,856 48,767 60,732 60,106 58,854 56,807 40,000 30,000 33,443 33,617 32,491 29,183 29,726 30,080 30,783 32,371 33,386 36,894 40,673 20,000 10,000 21,451 14,849 15,187 13,091 13,275 15,065 16,495 20,139 Source: Real Estate Center at Texas A&M

10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 105 110 115 120 125 130 135 140 145 Monthly Home Sales Houston Home Sales & WTI Oil Price Monthly January 1995 to Current 9,000 8,500 8,000 7,500 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 Correlation coefficient of 0.58 Monthly WTI Crude Price $/bl Source: Haver Analytics; Real Estate Center at Texas A&M 47

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Houston Median Home Prices 210,000 200,000 190,000 180,000 170,000 160,000 150,000 140,000 130,000 120,000 110,000 100,000 90,000 80,000 70,000 60,000 50,000 66,00065,800 72,400 94,700 88,900 78,400 79,900 83,000 78,20078,300 2012 up 6% 2013 up 10% 2014 up 9.5% 101,100 113,900 121,800 133,100 134,300 129,700 141,400 151,800 151,800 152,000 152,700 153,700 148,700 163,400 179,600 196,600 Source: Real Estate Center at Texas A&M University

Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Houston Months Inventory 9.0 8.0 Inventory at extremely low level relative to market activity 7.0 6.0 5.0 4.0 3.0 2.0 Source: Real Estate Center at Texas A&M 49

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Houston SF Building Permits 60,000 50,000 Average since 1995 = 31,677 45,092 51,202 55,159 40,000 34,685 42,040 42,217 34,543 38,319 30,000 20,000 10,000 21,160 25,763 30,563 30,303 17,820 8,886 7,803 7,514 8,093 9,894 10,963 15,159 15,661 15,762 15,873 13,535 19,463 20,854 25,414 25,617 28,169 30,490 28,188 22,328 22,369 22,887 28,624 0 Source: U. S. Census Bureau, Real Estate Center

Houston SF Permits & WTI Price/bl Monthly January 1995 to Current 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120 $130 $140 $150 Source: Avg. Monthly WTI Spot Price FOB Cushing, OK; Real Estate Center at Texas A&M University

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Houston MF Building Permits 45,000 40,000 35,000 30,000 42,355 32,495 2011 +70% 2012 +75% 2013 +15% 2014 +50% 1997-2014 average 12,700 25,000 20,000 15,000 10,000 5,000 0 18,310 21,543 12,687 4,067 3,667 3,887 3,341 2,2432,311 755 1,041 284 6,690 4,783 4,499 11,265 20,189 10,150 7,631 6,643 11,382 16,586 10,602 10,468 15,733 20,312 14,165 4,709 4,858 8,281 14,525 16,649 25,044 Source: U. S. Census Bureau, Real Estate Center

Tomball-249 Corridor Major Employers: Hewlett Packard Tomball Regional Medical Center Tomball ISD Lone Star College-Tomball Baker Hughes Exxon-Mobil 53

May Sales in Houston Local Market Areas (Y/Y Percent Change) Tomball Source: Texas Realtor Data Relevance Project Real Estate Center at Texas A&M University

May Sales in Houston Local Market Areas (Y/Y Percent Change) 1 Tomball 2 4 3 Source: Texas Realtor Data Relevance Project Real Estate Center at Texas A&M University

Tomball Local Market Areas Source: Texas Realtor Data Relevance Project Real Estate Center at Texas A&M University

Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Home Sales Tomball Area 350 300 Spring/Klein/Tomball Tomball South/Lakewood Tomball Tomball Southwest 250 200 150 100 50 0 Source: Texas Realtor Data Relevance Project Real Estate Center at Texas A&M University

Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 1-Tomball Average Price/s.f. $120 $110 $100 $90 $80 $70 $60 $50 Source: Texas Realtor Data Relevance Project Real Estate Center at Texas A&M University 59

Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 2-Tomball Southwest Average Price/s.f. $300 $250 $200 $150 $100 $50 $0 Source: Texas Realtor Data Relevance Project Real Estate Center at Texas A&M University 60

Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 3-Spring/Klein/Tomball Average Price/s.f. $100 $95 $90 $85 $80 $75 $70 $65 $60 Source: Texas Realtor Data Relevance Project Real Estate Center at Texas A&M University 61

Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 $110 $105 $100 $95 $90 $85 $80 $75 $70 $65 4-Tomball South/Lakewood Average Price/s.f. $60 Source: Texas Realtor Data Relevance Project Real Estate Center at Texas A&M University 62

Location, Location, Location!

Houston and Tomball Economic and Housing Outlook Dr. James P. Gaines Research Economist recenter.tamu.edu