Medium-Term Outlook

for
Corpus Christi Housing Market

March 7, 2018
Prepared for:

SOUTH TEXAS ECONOMIC DEVELOPMENT CENTER

College of Business
Texas A&M University Corpus Christi
HOUSING MARKET OUTLOOK

SUMMARY

• This report summarizes historical trends in the Corpus Christi housing market, followed by a projection of
the impact of the ongoing construction activities on the regional market through 2022.
• The outlook for the Corpus Christi housing market is affected three factors, among other things: (1) a
strengthening national economy that is expected to continue to expand and add jobs; (2) an active
statewide housing market that has been constrained by tight housing supply; and (3) an increasingly
tight local housing market in response to a boom in industrial construction and the rebuilding efforts
following Hurricane Harvey.
• New home construction and home sales in the Corpus Christi metro area exhibited cyclical patterns
historically. Current local housing conditions reflect in part Texas statewide trends: An upward pressure
on home prices due in part to robust demand, particularly for homes priced below $300,000.
• Today, about $50 billion of industrial projects are being developed in and around the Corpus Christi Ship
Channel. The ongoing industrial construction activity is adding construction employment and housing
needs.

• Based on the current trends in local housing supply and the outlook for housing demand, imbalances in
the local housing market are expected to accelerate in the medium term at least through 2022. Capital
development projects underway in Corpus Christi will potentially result in local housing needs above the
new home supply trend by 555 units per year on average over the 2018-2022 period.

• Should the housing supply fail to satisfy the projected increases in housing needs, upward pressures on
local home prices would continue to increase. This would likely further reduce the housing affordability
for Corpus Christi home buyers.

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HOUSING MARKET OUTLOOK

Regional Housing Conditions

• Since the end of the last housing boom in 2006, Corpus Christi has followed closely the statewide market.
Economic growth in Corpus Christi and other metro areas in Texas has boosted housing demand. Tight
housing markets have generated upward pressures on home prices, while home prices nationwide have
risen modestly.

Median Home Price Indexes (2006=100)

180
Corpus Christi Texas U.S.
160

140

120

100

80

60

40
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: Real Estate Center at Texas A&M University.

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HOUSING MARKET OUTLOOK

Local Housing Market

• Strong housing demand, especially during the 2011-2014 shale oil boom period, reduced Corpus Christi’s
existing home inventory levels to as low as four months. An inventory of six months is considered a
balanced housing market. By the end of 2017, the local inventory level had reduced to 5.2 months and
the median home price had reached a historic high around $190,000.

Corpus Christi Median Home Price & Inventory

16

$200,000 Median Home Price (12-month moving average, left scale)

14
Inventory (months, right scale)
12
$180,000

10
$160,000
8

$140,000 6

4
$120,000
2

$100,000 0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: Real Estate Center at Texas A&M University.

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HOUSING MARKET OUTLOOK

Supply
• The number of new home permits reflects residential construction activity. Historically the Corpus Christi
metro area added roughly 2,000 homes per year, about 80% of which were built in Nueces County.
• Since the most recent construction peak in 2014, the number of new home starts has reduced over time
while those in Aransas and San Patricio have continued on their recent upward trends.

New Home Construction Permits

3,500
Aransas Nueces San Patricio
3,000

2,500

2,000

1,500

1,000

500

-
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Source: Real Estate Center at Texas A&M University.

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HOUSING MARKET OUTLOOK

Demand
• Growth in home sales in Corpus Christi and across Texas has outpaced the national average, and a recent
slowdown in new home construction was associated in part to rising material costs and skill-labor shortages.
• The imbalances between local housing supply and demand were reflected by a gradual increase in the
existing home sales-listings ratio to a near record high above 2.0.

Corpus Christi Housing Activity

6,000
Sales (Left Scale)

5,000 Listings (Left Scale)

2.0
Sales/Listings Ratio (5-Yr Avg., Right Scale)
4,000

3,000

1.0
2,000

1,000

0 0.0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Source: Real Estate Center at Texas A&M University.

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HOUSING MARKET OUTLOOK

Apartment Markets
• Rental housing faced record high vacancy rates in early 2017 due to a surge in the supply of new
apartment units that outpaced the existing absorption rate. Following Hurricane Harvey, however, residents
displaced by damaged home properties have turned to apartments around Corpus Christi.
• According to Costar Market Analytics, the vacancy rates for local apartments are expected to reduce
steadily to below 8% by 2022.

Apartment Market Indicators

1360 12%

Forecast
1160 Net Absorptiion
Deliveries 10%

960 Vacancy

8%
760

560 6%

360
4%

160

2%
-40
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

-240 Source: CoStar Market Analtyics. 0%

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HOUSING MARKET OUTLOOK

Home Price Appreciation

• Despite strong wage growth in recent years, household incomes in Corpus Christi have failed to keep pace
with rising home prices.
• Between 2011 and 2017, the value of a typical home in the metro area appreciated more than 35 percent
(from $137,500 to $186,500), while the income level of a typical household gained about 20 percent (from
$43,470 to $51,577).

Corpus Christi Housing Affordability Measures

$60,000 $200,000
Median Household Income (left scale) Median Home Price (right scale)

$180,000
$55,000

$160,000
$50,000

$140,000
$45,000
$120,000

$40,000
$100,000

$35,000
$80,000

$30,000 $60,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Sources: Real Estate Center at Texas A&M University, and U.S. Census Bureau.

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HOUSING MARKET OUTLOOK

Housing Affordability
• The Real Estate Center Home Affordability Index (THAI) tracks the ability of a typical household (earning the
median income) to buy a house at the median home price. A lower THAI means relatively fewer
households can afford a typical home, and thus the overall housing market has become less affordable.
• Corpus Christi housing affordability remains favorable in comparison with the statewide or nationwide
average, but it has exhibited a considerable decline after 2012 due to rapid home price appreciation that
has outpaced household income growth.

THAI of Home Affordability

2.3
2.1
2.0
Corpus Christi Texas

1.9 1.9
1.8 1.8
1.8 1.8
1.7
1.8
1.6

1.5 1.5
1.4

1.3

0.8
2006 2007 2008 2009 2009 2010 2011 2012 2013 2014 2015 2016 2017

Sources: Real Estate Center at Texas A&M University, and author's calculations.

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HOUSING MARKET OUTLOOK

Population
• The long-term trend of new home supply in Corpus Christi has historically followed local population growth.
The number of new home starts in the metro area averaged about 2,000 per year since 1990.
• Population growth is affected by births, deaths, and the net number of migrants. Since 1980, the metro
population has grown roughly 0.8% per year, and the difference between births and deaths has accounted
for almost all of this local population growth trend.
• According to the 2016 Census, the Corpus Christi metro area of 447,102 residents has a total of 188,648
housing units, or 2.37 persons per housing unit. Excluding Aransas County where the majority of homes
have been destroyed or damaged, the number of residents per home is 2.44.

New Home Starts and Population Change

7,000 14,000
New Homes (left scale) Population Change (right scale)
12,000
6,000
10,000
5,000 8,000

6,000
4,000
4,000
3,000
2,000

2,000 0

-2,000
1,000
-4,000

- -6,000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Source: Real Estate Center at Texas A&M University.

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HOUSING MARKET OUTLOOK

Direct Impact of Capital Development Activities

• Based on data available in media reports and public announcements, ongoing industrial development
projects in Corpus Christi will generate an estimated total of more than 15,000 job-years between 2018
and 2022, or an average of about 3,000 direct jobs per year. Additionally, construction of the new
Corpus Christi Harbor Bridge will require 600 construction workers at its peak time. Details of the direct
employment figures are described in the report “Construction Projects’ Impact on Coastal Bend
Workforce.”
• In addition to temporary construction jobs, the industrial projects will generate an estimated total of 1,647
permanent jobs in the manufacturing sector, or an average of 329 jobs per year.
• Including the manufacturing jobs, the ongoing construction projects together are expected to add an
average of 3,695 jobs per year through 2022.

2018-2022
2018 2019 2020 2021 2022
Annual Average
Construction Employment Change (Job Years)
Harbor Bridge 598 578 352 0 0 306
Industrial Projects 3,914 7,284 3,306 751 43 3,059
Total 4,512 7,861 3,658 751 43 3,365
Permanent Employment Change
Manufacturing Sector 659 363 25 80 520 329

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HOUSING MARKET OUTLOOK

Population Forecast
• The ongoing capital development projects will collectively add 3,695 jobs per year on average through
2022. Given the existing tight labor conditions in the construction industry, most of those job positions would
potentially be filled by workers coming from outside the metro area rather than by local residents.
• The following chart shows the projection of the Corpus Christi population trend through 2022. The projection
of an annual average of 1.33% population growth rate takes into account the direct impact of construction
employment gains, in addition to the historical trend that includes the difference between births and deaths
(2,550 per year).

490,000
Capital Projects' Impact & Population Trend
Forecast
Historical Base Births/Deaths Employment Impact
480,000

470,000

460,000

450,000

440,000

430,000

420,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Sources: Real Estate Center at Texas A&M University, and author's calculations.

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HOUSING MARKET OUTLOOK

Impact on Housing Needs

• Based on the projected local population growth trend through 2022 and the historical figure of 2.44 persons
per housing unit in the region, an average of 2,559 additional housing units per year will be needed to
accommodate the expected future growth of the Corpus Christi metro area.
• Given the historical average supply of 2,004 new homes annually, Corpus Christi is facing a potential
shortage of 555 housing units per year. This shortfall is equivalent to roughly 30% of the existing local home
building capacity.

2018-2022
Annual Average
Projected Housing Needs 2,559 units
Historical Housing Supply 2,004 units

Additional Housing Needs 555 Units

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HOUSING MARKET OUTLOOK

Potential Housing Shortages

• Over the 5-year period between 2018 and 2022, ongoing capital development activities are expected to
generate housing shortages equal to a cumulative total of 2,776 units.
• Should the housing supply fail to satisfy the projected increases in housing needs, upward pressures on local
home prices would continue to increase.

35,000
Cumulative Impact on Housing Needs
Housing Shortage Housing Supply Job Impact Population Change
30,000

25,000

20,000

15,000

10,000

5,000

0
2018 2019 2020 2021 2022
Source: Author's calcuations.

Cumulative Impacts 2018 2019 2020 2021 2022

Job Impact 5,171 13,395 17,078 17,910 18,473
Population Change 7,721 18,495 24,728 28,110 31,223
Housing Needs 3,164 7,581 10,136 11,522 12,798
Housing Supply 2,004 4,009 6,013 8,018 10,022
Cumulative Potential Shortage 1,160 3,572 4,123 3,504 2,776

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 College of Business
Texas A&M University-Corpus Christi
6300 Ocean Drive, Unit 5808
Corpus Christi, Texas 78412

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