Dr. Mark Doutzour, Chief Economist for the Texas Real Estate Center (at Texas A&M) made bold predictions in a speech today for Houston real estate professionals. Primarily covering the Houston housing market outlook, Dr. Dotzour said that Houston was expected to have another record sales year, based on the fundamentals of the real estate market. He further commented to HoustonRealNews that one market in which he discouraged investment is Houston's market for single family rental homes.

Speaking at the Asian American Real Estate Association, he spoke about three key drivers to Houston's positive outlook - Job Growth, Low Housing Inventory and Low Interest Rates.

Dr. Dotzour made a "bold predication," that long-term fixed mortgage rates would not increase by more than .50%. He was emphatic that the Federal Reserve (Fed) "is doing everything they can to slow down the economy, and they are succeeding." He noted that the recent Fed rate increases is beginning to be observable in the economy.

Houston's job growth is above both state and national rates, a fact he attributes to being a jumping off point for the rebuilding after Hurricane Katrina.

The researchers at the Real Estate Center identify 6.5 months as a key amount of housing inventory. Above that mark, and property supply can be expected to dampen housing prices. Below, and property prices have room to grow.

HoustonRealNews reported on Saturday that housing inventory dropped nearly 10% year-on-year from the end of 2004 to the end of 2005.

In an important statement for Houston real estate investors and landlords, Dr. Dotzour cast doubt on the stratagy of purchasing single-family rental homes for investment purposes. He had been bullish rentals 3 years ago, but stopped recommending rentals 18 months ago.

Despite the strong Houston market (about which HoustonRealNews wrote on January 12th), Dr. Dotzour notes he sees increasing signs of softness. He noted that the one-time shock of Katrina evacuees renting Houston homes has been good to real estate investors, but may not change the underlying market fundamentals.