Oil prices may have fallen, but the US energy capital Texas continues to lead the nation. This is particularly true in Houston where a diversified economy is ensuring job creation and record property prices.
Texas has a reputation for creating huge employment opportunities. “Texas has been top in the nation for creating jobs for so many years in a row that it’s hard to keep count,” said Governor Greg Abbott in his address to business people in Houston last week. But as he pointed out, in 2014, the state surpassed itself and he highlighted that “reports show that the economic engine we have in Texas continues to gain steam”.
This is excellent news at a time when the energy sector is suffering from the drop in oil prices. The fall has resulted in some job losses in places like Houston, but although analysts believe Houston will create fewer jobs this year than last, 2015 will still be about rising employment. Quoted in The Economist, Patrick Jankowski, an economist with the Greater Houston Partnership, predicts 50,000 new jobs for this year.
The diversification of the economy is the main reason behind these forecasts for Houston. Although the oil and gas industry still forms a main pillar of the Houston economy, the city also has several other very buoyant sectors.
One of these is healthcare – the Texas Medical Center based at Houston employs over 100,000 people with further growth expected. Two more are transport hubs such as Houston port, which handles more goods than any other US port and Houston airports with over 51 million passengers. In addition, the education and customer service sectors are expanding rapidly. This diversification is widely expected to be the mainstay of the city’s economy in the near future.
Another indicator of Houston’s continued buoyancy can be clearly seen in property statistics. February figures for the Houston property market showed record highs for both single family homes and condos. In the single family market, where sales fell slightly, the median price rose by 7.9 per cent year-on-year to reach US$199,400. For the townhouse/condo sector, the increase was 4.2 per cent. Sales of this type of property went up by 10.6 per cent in the year.
Inventory levels remain extremely low. February’s rate of 2.7 months is a slight increase on 12 months earlier (2.6 months), but still well below the national level of 4.7 months. The market is also moving more quickly – properties in Houston took an average of 59 days to sell in February compared with 64 a year ago.
Rental rates for Houston properties continue an upward trend too. Those for single family homes rose by 5.4 per cent in the year to February to reach US$1,676. Townhouse/condo rentals increased by 2 per cent and averaged US$1,509.