I wrote this in bullet point format to save you time.

My take on housing:

Employment and housing are related. 

We have experienced way above average growth in employment, incomes, and overall prosperity and it’s reflected in home values increasing. Not to mention in a period before our boom home prices were essentially flat for 5 years.

When people think of the TX economy oil is top of mind, however TX actually has a very nice range of diversity among various (less thought of) job sectors/industries - manufacturing, construction, trade/transportation, education, info/tech mining/logging, financial, leisure/hospitality/tourism. When one is doing poor others are great. The oil bust isn’t devastating for this reason.

Housing is driven by supply and demand

Demand:

Twice as many people migrated to TX than any other state since 2005 (this includes over 1.4 million folks through domestic migration).

Supply:

Home starts are way up, but home construction in the DFW area is still less than 60 percent of the volume before the recession.

Existing home inventory is  3.5 months compared to 4.9 US average.

Cost of housing:

Despite high demand and low supply we still have some of the most affordable housing in the country.

It’s still cheaper to buy than rent (by roughly 3%).

Other supporting factors:

Home equity laws help support fluidity of sales.

No state income tax.

Large tax base coming from RE taxes means govt interest in stable housing long term. 

Concluding question:

We lead the country in population growth, job growth, our housing is cheap, its more expensive to rent, and we have a housing shortage. Why shouldn’t we lead the country in housing? (answer: We should. And we are. And we’re not in a bubble) 

My current assessment:

TX as a whole is not in a bubble. Midland is in a bubble (they’re economy is primarily fueled by oil). Houston, Austin, San Antonio are borderline. DFW is healthy.

My Forecast:

Housing will slow down, however there will be no bubble pop. It’ll go from mind blowing to just pretty good (which will still better than almost anywhere else in the country).

Bonus:

My take on bubbles:

A bubble happens when a boom is caused by something other than supply and demand… Usually when high (but false) expectations lead to speculative purchasing which drives prices into misalignment with market fundamentals.

If the rise is sharp, but still supported by market fundamentals, it isn’t a bubble no matter how big the boom is. 

My take on the Fitch report:

Fitch has been reporting that we’re overvalued since 2014. If they just say it long enough, they’ll eventually be right. The reality is we weren’t overvalued in 2014 and we aren’t now.

Fitch and others point toward a bubble in TX because they know oil is down and they don’t realize that the TX economy is well diversified among many sectors outside of energy.