Why The Fort Worth Market Has not Crashed
This Sunday at church I was speaking with a professor from Texas Christian University about our local real estate market. He had some interesting observations about our local market and why we have not had a crash like so many areas and have in some areas thrived.
The first issue is job creation. He pointed they said out that one of the main determinates of a declining market is job loss. In Fort Worth in particular and north Texas in general the job market has been quite strong. An interesting note is that we have a high foreclosure rate which is usually indicative of job loss also. His contention is that the main culprit behind our foreclosure rate is the high use of 100% financing and other risky loans to marginally qualified buyers. When the buyer encounters the slightest economic hardship they end up losing their home due to lack of assets.
His other main point was diversity of the job base. Tarrant county, where Fort Worth is located, and the surrounding counties of Parker and Johnson counties feed an economic engine like few others in the country. We have the international companies like AMR, the parent of American Airlines and defense contractor Lockheed Martin. We also have the large companies like Pier One, Radio Shack, Bell Helicopters, and a very large military base. We also have wonderful new discovery that has put money in thousands of area resident’s pockets. Sometimes millions of dollars. I am referring to the discovery of the largest natural gas field in Texas. The Barnett Shale.
So all of this helps us economically explain why the Fort Worth real estate market has held up while the larger US market is having dramatically falling home prices. But his most telling reason we have had such strength in our housing values is that we never had a huge run up in prices. While parts of the nation were experiencing double digit appreciation we never left the single digits. His contention is this explosive growth in other areas is the reason of the implosive contraction of their values.
The other result of our slow steady growth is that our market is essentially moving forward now while the rest of the nation is pausing. While it might take the average house a few more days to sell our market is, to a large extent, unchanged from last year or the year before that. We will slow but we will not crash. That sure makes me feel better. He is convinced he is right and based his conclusions on historical market data and job projections for our local market.
So the upshot seems to be that the Fort Worth real estate market should be active and stable in the near term. He feels the larger market will stabilize and shake out by early 2009 but that will be a non-event to us in the Fort Worth area since we will have been outside of those troubles.