Economist Ted C. Jones Asserts Houston Real Estate Market Has Returned to Pre-Pandemic Norms

Real estate economist Ted C. Jones recently informed a Houston audience that the regional market has largely reverted to pre-pandemic conditions. Addressing the CommGate Economic Outlook, Jones highlighted four primary economic drivers: affordable energy, technology, inflation-adjusted capitalization rates, and governmental policy. While acknowledging ongoing inflation concerns, he noted that most economic fundamentals mirror those of 2019, prior to the significant downturn and subsequent stimulus measures.

Jones, formerly chief economist for Stewart Title and Texas A&M University's Real Estate Center, and currently with the Houston Association of Realtors, presented an upbeat assessment. He pointed to Texas's inclusion of four of the nation's fastest-growing metropolitan areas, including the Brownsville/Harlingen MSA, boosted by SpaceX. Data centers are also a significant growth factor due to Texas's low electricity costs, making it the second-highest growth state for such facilities.

Both commercial and housing markets are largely at pre-COVID levels, with the notable exception of office occupancy, which remains depressed due to hybrid work. However, Jones cited adaptive reuse projects like The Watt, a $93.3 million conversion of a former headquarters into residential apartments, as an example of developer creativity. He cautioned that inflation persists, anticipating at least one more Federal Reserve interest rate hike this year. Developers and investors should note the market's resilience and the potential for adaptive strategies in evolving sectors.