prophesy a real estate market downturn aren't talking about Texas.
negative news is not happening in Texas," said Mark Dotzour, chief
economist at the Real Estate Center at Texas A&M University.
economy is among the nation's strongest, and San Antonio and Austin have
two of the hottest real estate markets, said Dotzour, who was in the Alamo
City on Wednesday for a meeting with the Real Estate Council of San
"Our job growth
is double the national average, and our population growth is
unbelievable," Dotzour said, referring to Texas overall.
about 400,000 new residents every year, he said.
Of San Antonio,
Dotzour said: "The taxes are low, and it's one of the best places in
America for corporations to relocate."
"Our houses are
affordable, and we're not overbuilding."
He warned that
Dallas and Houston could be getting close to overbuilding in commercial
real estate, which would cause prices to start dropping.
"I don't see
that happening in San Antonio," he said.
property values are increasing rapidly, especially in Central and South
Texas, Dotzour said. He used Austin's Frost Bank Tower as an example.
Equity Office Properties Trust bought the downtown office tower last year
for $188 million, setting a Texas real estate transaction record at $354
per square foot. Blackstone Real Estate Advisors bought Equity last year
for $39.2 billion.
is selling the tower to Los Angeles-based Thomas Properties Group Inc.,
along with nine other office buildings, for $1.15 billion.
"And they think
that's a great deal," Dotzour said.
remarks contradicted a report released Wednesday from Moody's, which
ranked San Antonio among the worst markets for commercial real estate,
based on limited data. Moody's is an investor services company that
provides credit ratings, research and risk analysis.
Moody's tracks commercial real estate markets based on data from seven
property types but only captures numbers for three in San Antonio:
multi-family, full-service hotels and limited-service hotels. Missing are
data for retail, downtown office, suburban office and industrial property
concluded that developers overbuilt apartments and hotels in response to a
population increase from Hurricane Katrina evacuees and that now there's a
supply of apartments and hotels that is too high, making it a risky market
circles, those reports are very relied upon. They're very valid, and they
can give a good indication of the strengths and weaknesses of certain
markets," said Kim Gatley, research director for REOC Partners Ltd., who
tracks the retail, office and industrial markets in San Antonio.
"It seems that
the Moody's report always shorts the San Antonio market, and it's because
they don't weigh in on all the data."
report doesn't give an accurate picture of the local commercial real
estate market, she said.
indications are that we're going to have another strong year in San
Antonio," she said.
estate seems to be just one segment of an overall hot real estate market
in the area. Dotzour noted that San Antonio and Austin also have two
of the strongest housing markets.
San Antonio has
4.8 months of existing home inventory. A 6.5-month inventory is considered
healthy, and anything less is considered a high-demand market.
builders would be stampeding, but they're not," Dotzour said.
large-volume home builders have slowed down in reaction to lowered demand
in other parts of the country but aren't making exceptions for Texas,
where demand is high and supply is low.
builders aren't building new homes in San Antonio and Austin "defies
economic logic," he said.
real estate professionals to watch the mortgage industry for signs of
serious mistakes by lending to people they shouldn't have, and that's
coming to roost now," he said.
will speak about the Texas real estate economy today at the Annual Outlook
for Texas Land Markets conference at the Hyatt Regency San Antonio hotel.