Economist: Houston is a Teflon City
by: Jack Williams, November 14, 2011 8:11:00 am
"Part of it is we're kind of like a roller coaster that didn't ride."
Ted Jones is the chief economist at Stewart Title and knows a thing or two about the housing industry. He confirms something a lot of people who live here already know, that unlike other big cities, Houston never really had a big housing bubble.
"The rest of the country rode that roller coaster really hard. When you go up that roller coaster you come screaming down the other side. We just kind of gradually went up that mountain and as we came down the other side you didn't pick up a whole lot of speed because you weren't very high. And that's where Houston is as far as real estate goes, both commercial and residential, and that's good news."
Jones says while the rest of the country has dealt with much more severe problems when it comes to real estate, Houston learned its lesson back in the 80's when things got bad here.
"We had these neutron buildings. That's a building that killed the developer, killed the lender and killed the appraiser and it still stood. Like the neutron bomb, it took the people out but it didn't hurt the real estate. We learned our lesson. We learned that if you overbuild dramatically, you're going to pay the big price. We learned that if you get really dumb and pay too much money for a property that's not going to cash well and you're not going to be able to own that property. And I think that spilled over both on the housing side and on the corporate side."
Houston is still adding jobs and Jones expects those numbers to get even better over the next year. He says the city has managed to insulate itself against severe economic issues by diversifying and building huge economic drivers like the Port of Houston, The Texas Medical Center and the energy industry.
"We're the energy technology capital for the world. We just had four new airlines schedule cargo flights in and of here, very wide-bodied jets, just to take oil field equipment around the globe for this new energy wave that's taking place right now all based on technology that's coming out of Houston, Texas."
Jones says much like when a pan loses its Teflon coating, Houston isn't totally immune to economic downturns elsewhere.
"If for an example, you got into a very serious global recession and oil and gas business died and all of a sudden business to corporate America and to middle America and to main street America started to slow and dwindle, then our business to our port subsides. The one thing that I don't see shrinking typically is going to be our medical side because you're looking that cutting edge of both delivery of product and research and technology for the future."
He says retail sales have risen in Houston this year and that vacancy rates in commercial properties have dropped.