How does the Central TX real estate market today compare to the great recession in 2007? Let’s take a look at what statistics can help determine the health of the market before you buy, invest in or sell land.
Whenever we’re purchasing land or working with clients, we always look at what is happening in the market today, what happened yesterday and what is going to happen in the future. Obviously, no one has a crystal ball, but we try to forecast that as much as possible. I’ve always been really interested in what happened during the great recession and what’s happening now. When you compare those statistics, it’s actually quite interesting.
Right now, the consumer confidence index hovers about 113. Unemployment rates are getting back to normal after COVID, we’re around 5.2.
Some really interesting stats when comparing now to the great recession is the overall housing market index. According to the National Association of Home Builders, right now we’re at 75. Whereas in 2007, right before the great financial recession, we were at 42. According to the National Association of Home Builders, anything over 50 indicates a good overall market, a healthy market. Anything under 50 is the opposite of that. So back in 2007, before the Great Recession, they were already sounding the alarms.
Another interesting statistic is building permits. Building permits year over year from 2020 to 2019 increased six percent. In 2007, they actually decreased almost 40 percent, which is actually really interesting.
Another one that I like to follow is supply, the overall housing market supply. Right now we’re about 640,000 homes. In 2016, we’re at 1.5 million. In 2007, which is when they had overbuilt, we were at three million in our housing supply inventory. So, if you think about that, right now we simply cannot meet the demand. We have about a 640,000 overall in the U.S. market.
Another thing that we track is the 10-year treasury when compared to the 2-year treasury, for example. This is called the yield curve. If the 10-year treasury is greater than the 2-year treasury, that is a positive outlook as well. Right now, the 10-year treasury hovers around 1.3. The 2-year is around .2. If those are ever inverted, also known as an inverted yield curve, that is also sounding the alarm as well, because investors are thinking that the short-term is greater than the long-term outlook.
So these are a few of the statistics that we follow. Of course, we always recommend if you’re purchasing land, consult with your attorney, your CPA, a financial analyst.
Feel free to reach out to us with questions or other topics you’d like to see covered.
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