HOUSTON, Texas /CitizenWire/ — Here is the 2021 business forecast for Houston’s Mortgage, Restaurant, Residential Real Estate, Oil and Gas, Tax, and Healthcare Industries from EO Houston’s leaders and business partners.
— Mortgage
Robert Wagnon, founder and CEO of Republic State Mortgage says mortgage originations are on pace for the best year ever. Record-low interest rates and strong demand for homes boost lenders during the COVID-19 pandemic. In the first nine months of the year, lenders extended $2.8 trillion of mortgages, according to industry-research firm Inside Mortgage Finance. The boom has extended into the final quarter of 2020, prompting analysts to predict origination volume will exceed the prior record of $3.7 trillion in 2003.
— Restaurant
Adam Brackman, owner of Axelrad says the restaurant and bar industry has been hit hard with COVID. Normally bars and restaurants fail because the operator had a bad concept or poor location and now they are struggling to survive through no fault of their own. It’s hard to watch this happen. Operators were forced to find their pivot and adapt to the new environment with creative solutions like mobile trucks or delivery. The PPP loans were a nice stop-gap for a short period, but that money has been long gone and we need better solutions from the government if we are going to be forced to be closed or limited in service in 2021. Please support local businesses through take-out or dine-in as much as you can. While we are seeing the shuttering of many restaurants, we are also seeing new ones opening. I believe as the vaccine is more widespread towards the summer, we will see life begin to return to normal. One big outstanding question is whether people’s dining habits have changed at all. Will more people cook at home now that they have bought all the kitchen gadgets? Will people use delivery apps more and we see a rise of Ghost kitchens that only serve meals to-go? At Axelrad we had to shut down for 4 months, but are now open under safe protocols and doing enough sales to cover costs, but are eagerly anticipating a return to normal.
— Residential Real Estate
Chris Mastrangelo, owner of Habitation Realty sees continued strength in the Houston residential real estate market among all levels despite the pandemic. “This year we are seeing a combination of an all-time low on interest rates and a very low inventory” According to the latest HAR data 7,990 single-family homes sold in November compared to 6,359 a year earlier. That translates to a 25.6 percent increase and marks the sixth straight month of positive sales.
Homes priced at $750,000 and above rocketed 88.4 percent compared to November 2019. That was followed by the $500,000 to $750,000 housing segment, which jumped 72.2 percent year-over-year. Homes between $250,000 and $500,000, which comprise the market’s biggest share of sales, shot up 50.3 percent.
The single-family home average price climbed 15.0 percent to an historic high of $341,765 while the median price increased 12.0 percent to $270,000 – the second highest level of all time. Year-to-date sales are currently 9.0 percent ahead of 2019’s record pace.
Houston’s lease property market staged a lackluster performance in November. Leases of single-family homes fell 11.1 percent year-over-year while leases of townhomes and condominiums tumbled 4.0 percent. The average rent for single-family homes declined 5.5 percent to $1,882 while the average rent for townhomes and condominiums increased 11.5 percent to $1,674.
Chris has observed that Houston continues to be blowing away other US markets in comparison and continues to be cautiously optimistic moving forward.
— Oil and Gas
Richard Hamilton III, founder and CEO of Principle Energy says oil companies’ motto used to be “drill, baby drill”. Companies and leadership teams were rewarded based on increasing total production as opposed to generating a profit. Those days are over. US oil production has decreased from 13,000 barrels per day in 2019 to 11,000 in 2020. Regardless if oil prices increase in 2021, it is unlikely we will see 2019 levels of drilling and production. The reason for this is much of the capital has dried up for operators and now they must rely on free cash flow to fund activity. This should result in a leaner more efficient oil and gas industry.
— Tax
Certified public accountant: John Toth, Weinstein Spira Tax Shareholder says, “with the 2020 election season behind us, we can expect to see some tax reform proposed in 2021. What may change? Income tax for the top bracket may increase to around 39.6%. President-Elect Biden has also proposed the capital gains rate to increase for those with income over $1 million. He also hinted at increasing the corporate tax rate to 28%. We may see changes to gift and estate tax law, as well as social security (FICA) tax in the coming year. Time will tell us what legislation is coming down the pike for 2021.” John also pointed out to be sure to discuss your personal tax strategy with your accountant before making changes to your plan.
— Healthcare
Dr. James McDeavitt, Senior Vice President and Dean of Clinical Affairs with the Baylor College of Medicine, says obviously, the role of telemedicine is going to be on everyone’s list of enduring changes post-pandemic. I believe one specific near-term effect will be an alteration of physician workforce compensation and benefits. Recall two major health system topics of discussion pre-pandemic: the alarming rate of increase of physician burnout, and the Millennial’s increased interest in work-life balance. If you did not lose your job during the pandemic, did not get sick, and did not actually care for patients in a hospital, chances are your life was paradoxically better in some ways during the pandemic. To the extent telemedicine allowed physicians to perform at least some of their practice from home, it gave them the gift of time. With no commute, and the ability to interact with family during downtime, some physicians were able to achieve enhanced work-life balance and greater job satisfaction. I predict health systems’ ability to provide an element of regular “work from home” for physicians will become a major recruiting and retention tool. In some cases, physicians will accept less compensation for the ability to work from home one or two days per week.
Medical schools will see a surge in demand for combined MD-MPH programs.
A significant and visible number of Americans for years to come will continue to don cloth face masks in airports, airplanes and other crowded, contained environments.
New hospital architecture will be heavily, but briefly influenced by our pandemic experience. Developers will push design concepts to enhance surge capacity (e.g. universal rooms, 100% negative/positive pressure rooms, ward spaces designed to flex to accommodate extreme surge demand). Designers will promote public spaces that limit potential pathogen spread (one-way traffic, spaced waiting rooms, specialized air flow). Like the “wired” hospitals of two decades ago, a few state-of-the-art hospitals will be built at a premium. As our pandemia memory faces – as it will – most will judge the added expense unnecessary. A few common sense design elements will survive.
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