Texas real estate sales have skyrocketed, and some may wonder how it compares to other past real estate booms and bubbles, including the one in California more than a decade ago that led to the 2008 financial crisis.
Luis Torres, a research economist at Texas Real Estate Research Center at Texas A&M University, told Texas Standard that there are some differences between the current boom in Texas and what happened in California in the mid-2000s.
First, mortgage lenders’ practices were unique during California’s housing bubble and contributed significantly to the credit crunch that destabilized the financial system.
“The joke at the time was that anyone who wanted to take out and apply for a mortgage would get that mortgage,” said Torres. “A lot of people who shouldn’t have taken out a mortgage got funding to buy a home.”
Then, of course, he says that there was weak oversight of these lenders.
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Since then, lending practices have changed and laws have been passed.
Torres says the main thing that is similar meanwhile is the “frenzy” over home buying.
âLet’s call it the ‘pandemic frenzy’ now,â he said, âwhere you feel like you’re left out of the real estate market. You’re scared, you think, ‘Oh my god, I want to buy a house. If I don’t buy it now and I see the prices rise sharply ‘- you feel like you’re being priced out, don’t you? “
He says homeowners have benefited the most from this pandemic frenzy, as have those who have jobs in industries where they can work remotely. Those who had the funds could improve their home offices by finding a home with more space, living in a more desirable location, or having a larger yard. Torres says that those people who were able to grant their desire to improve their living space had job security during the pandemic. some even flourished in the past year and a half.
But he says what’s happening in Texas isn’t an apartment bubble, so it’s not going to burst. However, there will be a slowdown. Torres expects mortgage rates to rise, which should weaken demand somewhat. He also says more homes are coming on the market, which could also help lower demand and bring prices down.
What is unlikely to change are higher house prices than they were before the pandemic. Texas has become a desirable state for many people. According to Torres, prices usually only go down in places where people don’t want to live.
âThink of cities like Detroit, where people moved because the auto industry wasn’t doing so well; there has been a big shift in this industry, âhe said. âBut that doesn’t happen in Texas; Texasâs economy is booming. We expect the Texan economy to continue booming in the years to come. So these prices are here to stay. “
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