There may be a downside to the booming housing market in Houston and much of the country. A new warning from Lawrence Yun, chief economist for the National Association of Realtors, that home values are rising too fast. "Prices are running ahead of income growth consistently, and it is linked to the housing shortage," Yun tells KTRH. He points out that in the past six years, the average home price has increased by nearly 50 percent, while the average wage has only grown by 14 percent. That, according to Yun, is not sustainable.
The biggest problem for the housing market is a lack of supply to keep up with demand, which is accelerating the pace of price increases. "There's just not enough new home building, which needs to occur," says Yun. "That is causing a housing shortage, and thereby the buyers are trying to outbid each other."
The same low supply-high demand phenomenon is happening here in Houston, despite the effects of Hurricane Harvey. "In Houston, even with the terrible flood situation that occurred last year, housing demand remained quite resilient," says Yun. "Part of the reason is the strong jobs market and local economy."
As for the solution to this logjam of buyers...build, build, build. "Things like relaxing zoning requirements and trying to get more construction workers through vocational training...all of that will be critical for future housing supply," says Yun. "We've got a good economy, the demand is solid...we just need more supply to catch up with demand."