According to a report released by SmartAsset, a financial tech company based in New York, Harris County ranked number one in the state for gross domestic product (GDP) growth and second overall in the United States. Additionally, the county fared well in incoming investment rankings, taking the top spot for Texas and the second spot compared to the rest of the U.S. What does this mean? Let’s start with how SmartAsset arrived at these numbers.
How Did SmartAsset Calculate These Numbers?
From the report, SmartAsset uses several different metrics to arrive at their conclusions. The GDP growth is factored using real growth statistics from a given area, adjusted for inflation. In Harris, the 2016 GDP growth was listed at more than $38 billion.
The second number is investment rankings, which a combined ranking of each of the four metrics provided by SmartAsset: business growth, GDP growth, new building permits and municipal bonds. The 2016 investment ranking for Harris County was 89.38, surpassed only by Williams, North Dakota.
Here is Why This is Good News for Real Estate Investors
Most experts agree that GDP growth does not, in and of itself, paint a complete picture of a healthy economy — although it is a pretty good indicator. GDP is a measurement of how much money is flowing through an economy, which means that at over $38 billion in growth, there is quite a lot of money, both existing and new, flowing through the Harris County economy. What real estate investors can take away from this is that the Houston housing market is unlikely to be depressed. Homeowners and potential homeowners are reaping the benefits of the GDP growth, thus having more money to spend on housing.
Then there is the income investment ranking. This statistic is a measure of whether or not a particular place is worthwhile for investors — and as the top ranking county in Texas, and second ranked county across the United States, it is safe to say that SmartAsset feels Harris County is a great place to invest.
There is a third number that may be of interest to developers in particular, and that is the new building permits per 1,000 existing homes. In Harris County, there were about 20.8 new building permits issued per 1,000 homes in 2016. This number is lower than some of the other places ranked in this data, but higher than many others — overall, not a bad market for developers.
To extrapolate a little further, U.S. Census data from 2010 shows that there were 1,598,698 housing units, with more development occurring in the northern part of the county. If the numbers are correct, this means that there were more than 33,000 new building permits requested in Harris County over the course of 2016.
These statistics paint a rosy picture, but will it last? The 2015 SmartAsset report shows similar numbers, placing Harris County at number six overall for incoming investment and number two overall for GDP growth, which means this appears to be a trend and not a one-time occurrence.