It is that time of year to start planning your summer vacations. The days are longer, Spring Break is over, and now we can look forward to a sunny spring and summer. This planning brings to mind our Texas beaches. On that note, today I would like to highlight Corpus Christi.
The South Texas Economic Development Center Economic Pulse, 2017, Issue 4 on the “Housing Market Downswing?” covers how the Corpus Christi housing market has boomed since the beginning of the decade. According to the article, “recently, the local economy has stalled in the wake of falling oil prices. Still the area’s residential construction remains remarkably active, and home prices stay at historically high levels.”
Here is a snapshot of the article:
- The housing market has grown without major interruptions since 2000. Even during the burst of the nationwide housing bubble and the subsequent recession of 2007-2009, local home prices merely slowed down.
- Along with other metro areas in Texas, Corpus Christi was among the top cities in home price appreciation during the decade ending in 2016.
- The area’s median home price grew nearly 40 percent over the 2006-2016 period, slightly below the 45 percent and 44 percent growth rates for Houston and Dallas, respectively.
While the median home price of the Corpus Christi metro area tended to rise at a solid pace in the past decade, the housing conditions varied widely across its local communities.
A real estate bubble might have developed and then burst recently in the Rockport-Fulton area—the major community of Aransas County. Construction of a large number of industrial sites around the Port of Corpus Christi seems to have boosted the housing markets of various communities in San Patricio County. Following a long period of swings in different directions, the median home prices of these three counties converged to about $160,000 by the end of 2016.
- Developers responded to rising home prices by increasing the supply of home units.
The column chart below shows the Real Estate Center’s Texas Home Affordability Index (THAI) for Corpus Christi and the state. The index indicates the ability of the typical household, measured by total earnings, to buy a house selling for the median home price. The higher is the index, the more affordable are homes in the area.
The chart suggests that homes in both Corpus Christi and Texas are less affordable today than in 2012. Home prices across Texas have caught up with income growth, which has recently slowed down from the 2011-2014 period of economic boom. Still the latest THAI readings remain higher, meaning more affordable, than their respective readings at the previous housing boom ending in 2007.
- Given its relatively large exposure to the oil and gas industry, Corpus Christi’s overall economic condition is tied to developments in the oil market. For the three years that local personal income per capita recorded a loss, the crude oil price also fell. Year 2016 was the most recent period that local income per capita shrank, after the collapse of the oil market beginning in early 2015.
- Oil and gas drilling and production in South Texas began to rebound in late 2016, and based on the oil futures market, oil prices are expected to rise steadily at least in the next six months.
- Should the current market trends continue under normal conditions, home prices would rise modestly through the end of this year.
- Corpus Christi will likely continue to recover from the recent economic downturn, holding up home demand.
Let’s talk about seasonal activity.
According to the Texas A & M Corpus Christi South Texas Economic Development Center Corpus Christi employment and unemployment reflect remarkable seasonal fluctuations. This to me, is no surprise given the tourist attractiveness of the city. In this article, Jim Lee covers the seasonal variations in unemployment not only from tourism, but also other cyclical activities which greatly effect South Texas, like harvest seasons and how this effects the agricultural sector, as well as government job and hiring patterns and their contribution to seasonal fluctuations. The graph below shows the Corpus Christi MSA unemployment rates, both the original and then in blue the seasonally adjusted rates.
“The level of farm employment indeed shows considerable seasonal variations. For the United States as a whole, the peak months for farm employment are March and September. Another regular seasonally pattern occurs in retail sales, which tend to peak during the holiday season in November and December 2017.” For Corpus, “employment typically peaks in April, and dips the most in January with New Year holidays.”
To explain the dips in the latter summer months, Lee attributes this to local government. He states, “compared to the average for the first half of the year, employment in the local government sector fell about 1,500 positions on average in July and about 1,200 position in August. This regular pattern was attributable to the summer break taken by some of those 2,500 local grade school teachers. The public sector typically recovered most of the jobs lost from those two summer months in the latter part of the year beginning in September.”
The bottom line, Corpus Christi will continue to be a strong housing market. There is inventory, homes continue to be affordable and the city is on the upward swing of recovery from the energy crisis. And, we now have the seasonal activity to look forward to. Bring on the summer.
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