chief economist - texas a&m university · 2018-03-26 · monthly change in total nonfarm...

Dr. James P. GainesChief Economist

recenter.tamu.edu

U.S. Outlook

2

• Uncertain impact of “Tax Cut and Jobs Act”

• Slow GDP growth “new norm” – 8 years avg. 2.2%;

2017 ~2.3%; 2018 ~3%

• Interest rates likely to rise… maybe!

• Inflation 2% - 2.5%

• Industrial production and manufacturing positive but

little help on employment

• Housing improving, not fully recovered

• Jobs expand 1.5% - 2%; Unemployment rate ~4.0%

Texas and U.S. Economic GrowthAnnual Percent Change in Real GDP

6.2%

3.9%

3.3%

2.6%

1.5%

0.8%

4.8%

2.3%

6.2%

4.9%

0.6%

-0.6%

2.6%

3.6%

5.7%

5.1%

3.7%

4.5%

0.4%

3.6%

4.1%

4.5%4.7%

4.1%

1.0%

1.8%

2.8%

3.8%

3.3%

2.7%

1.8%

-0.3%

-2.8%

2.5%

1.6%

2.2%

1.7%

2.6%2.9%

1.5%

2.3%

2.8%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

e

20

18

p

Texas US

Sources: BEA; Real Estate Center at Texas A&M University 3

Monthly Change in Total Nonfarm Employment

-1,000

-800

-600

-400

-200

0

200

400

600

Jan

-00

Ju

l-00

Jan

-01

Ju

l-01

Jan

-02

Ju

l-02

Jan

-03

Ju

l-03

Jan

-04

Ju

l-04

Jan

-05

Ju

l-05

Jan

-06

Ju

l-06

Jan

-07

Ju

l-07

Jan

-08

Ju

l-08

Jan

-09

Ju

l-09

Jan

-10

Ju

l-10

Jan

-11

Ju

l-11

Jan

-12

Ju

l-12

Jan

-13

Ju

l-13

Jan

-14

Ju

l-14

Jan

-15

Ju

l-15

Jan

-16

Ju

l-16

Jan

-17

Ju

l-17

Jan

-18

Th

ou

sa

nd

s o

f J

ob

s, S

A

Sources: BLS; Haver Analytics; Real Estate Center at Texas A&M University

Average of ~197,000 jobs per month since October 2010

Six-month

moving average

Inflation Remains Relatively Low

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Jan

-15

Jan

-16

Jan

-17

Jan

-18

5Source: BLS

Consumer Price Index for All Urban Consumers: All Items; Y/Y % change in index

Source: The Conference Board (1985=100); Haver Analytics

Consumer Confidence Index

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

160

Jan

-07

Ju

l-07

Jan

-08

Ju

l-08

Jan

-09

Ju

l-09

Jan

-10

Ju

l-10

Jan

-11

Ju

l-11

Jan

-12

Ju

l-12

Jan

-13

Ju

l-13

Jan

-14

Ju

l-14

Jan

-15

Ju

l-15

Jan

-16

Ju

l-16

Jan

-17

Ju

l-17

Jan

-18

Ju

l-18

6

U.S.

Texas

Harvey hit Texas hard

NFIB Small Business Optimism Index(Overall Index SA 1986 = 100)

84

86

88

90

92

94

96

98

100

102

104

106

108

110

Ja

n-1

1

Ma

r-11

Ma

y-1

1

Ju

l-1

1

Sep

-11

No

v-1

1

Ja

n-1

2

Ma

r-12

Ma

y-1

2

Ju

l-1

2

Sep

-12

No

v-1

2

Ja

n-1

3

Ma

r-13

Ma

y-1

3

Ju

l-1

3

Sep

-13

No

v-1

3

Ja

n-1

4

Ma

r-14

Ma

y-1

4

Ju

l-1

4

Sep

-14

No

v-1

4

Ja

n-1

5

Ma

r-15

Ma

y-1

5

Ju

l-1

5

Sep

-15

No

v-1

5

Ja

n-1

6

Ma

r-16

Ma

y-1

6

Ju

l-1

6

Sep

-16

No

v-1

6

Ja

n-1

7

Ma

r-17

Ma

y-1

7

Ju

l-1

7

Sep

-17

No

v-1

7

Ja

n-1

8

Ma

r-18

Ma

y-1

8

Ju

l-1

8

Source: National Federation of Independent Businesses; based on ten survey indicators

30-Year FMR and the Federal Funds Rate Upper Target

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

13.0

14.0

Jan

-85

Jan

-86

Jan

-87

Jan

-88

Jan

-89

Jan

-90

Jan

-91

Jan

-92

Jan

-93

Jan

-94

Jan

-95

Jan

-96

Jan

-97

Jan

-98

Jan

-99

Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Jan

-15

Jan

-16

Jan

-17

Jan

-18

Inte

rest

Rat

e %

Fed Funds Rate 30-YR FMR

Source: Federal Reserve Board; FHLMC; Haver Analytics;

Real Estate Center at Texas A&M University

Impact on LT rates not as strong

Expected Interest Rate on a 30-Year, Fixed-Rate Mortgage in 2018

Apr-105.10

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Jan

-15

Jan

-16

Jan

-17

Jan

-18

Jan

-19

Source: FHLMC; Real Estate Center at Texas A&M University 9

30-Year FRM rate is projected to

rise in 2018 by 25bp to 100bp

with Fed increasing Fed Funds

rate at least 75 bp

+25bp

+50bp

+100bp

2017 Recovery Year – A Very Good Year

2018: Probably Better

10

Texas Economy

Texas Economic Outlook: 2018 Better Than 2017

11

Employment: +2.5% - 3.0%; Energy & Manufacturing, Healthcare,

Business & Professional Services; Leisure & Hospitality

GDP: 4.1% 2018 from 3.6% 2017

Energy sector downturn mostly over; oil prices $55 - $60/bl.+

Population expansion continues but at slower pace

Local Growth Issues becoming more pressing, causing greater

strain on state and local resources and causing some cost impacts

on local housing

Rebound from Harvey will contribute to economic growth in

2018; impact on property values in affected counties &

neighborhoods ongoing

Texas Annual Jobs

12

7,125,7007,204,6007,301,2007,515,100

7,786,1008,058,700

8,291,400

8,642,700

8,973,7009,189,400

9,461,2009,543,9009,446,4009,400,7009,527,700

9,771,800

10,098,300

10,428,20010,642,400

10,341,10010,374,500

10,604,200

10,914,400

11,241,200

11,593,90011,869,700

12,028,40012,307,850

12,652,470

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

11,000,000

12,000,000

13,000,000

14,000,0001990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017e

2018p

Sources: Texas Workforce Commission, Real Estate Center at Texas A&M University

2011-2017 +1,933,250 jobs;

average 276,193/year; +2.5%

2012 +2.9% +310,200

2013 +3.0% +326,800

2014 +3.1% +352,700

2015 +2.4% +275,800

2016 +1.3% +158,700

2017e +2.3% +306,900

2018P +2.8% +344,600

Weekly Active Texas Rig Count & Price of WTI

13

11/21/2014, 906

5/20/2016, 173

6/27/2014, $106.69

2/12/2016, $28.14

$0$10$20$30$40$50$60$70$80$90$100$110$120$130$140$150$160$170$180

100150200250300350400450500550600650700750800850900950

1,000

1/7

/20

00

3/3

1/2

00

06

/23

/200

09

/15

/200

01

2/8

/200

03

/2/2

001

5/2

5/2

00

18

/17

/200

11

1/9

/200

12

/1/2

002

4/2

6/2

00

27

/19

/200

21

0/1

1/2

00

21

/3/2

003

3/2

8/2

00

36

/20

/200

39

/12

/200

31

2/5

/200

32

/27

/200

45

/21

/200

48

/13

/200

41

1/5

/200

41

/28

/200

54

/22

/200

57

/15

/200

51

0/7

/200

51

2/3

0/2

00

53

/24

/200

66

/16

/200

69

/8/2

006

12/1

/200

62

/23

/200

75

/18

/200

78

/10

/200

71

1/2

/200

71

/25

/200

84

/18

/200

87

/11

/200

81

0/3

/200

81

2/2

6/2

00

83

/20

/200

96

/12

/200

99

/4/2

009

11/2

5/2

00

92

/19

/201

05

/14

/201

08

/6/2

010

10/2

9/2

01

01

/21

/201

14

/15

/201

17

/8/2

011

9/3

0/2

01

11

2/2

2/2

01

13

/16

/201

26

/8/2

012

8/3

1/2

01

21

1/2

1/2

01

22

/15

/201

35

/10

/201

38

/2/2

013

10/2

5/2

01

31

/17

/201

44

/11

/201

47

/3/2

014

9/2

6/2

01

41

2/1

9/2

01

43

/13

/201

56

/5/2

015

8/2

8/2

01

51

1/2

0/2

01

52

/12

/201

65

/6/2

016

7/2

9/2

01

61

0/2

1/2

01

61

/13

/201

74

/7/2

017

6/3

0/2

01

79

/22

/201

71

2/1

5/2

01

73

/9/2

018

6/1

/20

18

Rig Count

(left)

WTI $/bl.

(right)

Rig Count up 280, +162% since May 2016

Source: Baker Hughes; EIA; RE Center at Texas A&M University

Austin Economy

Austin Monthly Jobs

700,000

750,000

800,000

850,000

900,000

950,000

1,000,000

1,050,000

1,100,000J

an

-10

Ju

l-10

Jan

-11

Ju

l-11

Jan

-12

Ju

l-12

Jan

-13

Ju

l-13

Jan

-14

Ju

l-14

Jan

-15

Ju

l-15

Jan

-16

Ju

l-16

Jan

-17

Ju

l-17

Jan

-18

15Sources: Texas Workforce Commission, Real Estate Center at Texas A&M University

Annual Employment Growth Rates

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Jan

-09

Ap

r-09

Ju

l-09

Oct-

09

Jan

-10

Ap

r-10

Ju

l-10

Oct-

10

Jan

-11

Ap

r-11

Ju

l-11

Oct-

11

Jan

-12

Ap

r-12

Ju

l-12

Oct-

12

Jan

-13

Ap

r-13

Ju

l-13

Oct-

13

Jan

-14

Ap

r-14

Ju

l-14

Oct-

14

Jan

-15

Ap

r-15

Ju

l-15

Oct-

15

Jan

-16

Ap

r-16

Ju

l-16

Oct-

16

Jan

-17

Ap

r-17

Ju

l-17

Oct-

17

Jan

-18

16Source: BLS, Real Estate Center at Texas A&M University

Texas

US

Austin

Austin Annual Jobs

396,100408,800

430,800

461,000

492,000

524,900

549,800

575,500

610,500

645,900

684,000685,300669,200663,900

679,000

704,700

736,400

772,100791,000

774,300785,600

811,900

844,400

884,000

922,900

962,900

999,800

1,025,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,0001990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

17…

17Sources: Texas Workforce Commission, Real Estate Center at Texas A&M University

2015 + 4.3%

2016 + 3.8%

2017 ~2.5%

Austin Employment Change

Industry

December

2016

December

2017 Change

%

Change

Total Nonfarm 1,018,800 1,048,800 30,000 2.9%

Wholesale Trade 49,300 54,000 4,700 9.5%

Transportation, Warehousing, and

Utilities 18,600 19,700 1,100 5.9%

Leisure and Hospitality 123,200 129,700 6,500 5.3%

Mining, Logging and Construction 60,300 63,300 3,000 5.0%

Education and Health Services 118,600 123,400 4,800 4.0%

Other Services 44,700 46,300 1,600 3.6%

Manufacturing 56,300 58,300 2,000 3.6%

Professional and Business Services 171,100 175,500 4,400 2.6%

Government 181,200 183,400 2,200 1.2%

Financial Activities 57,700 58,400 700 1.2%

Retail Trade 108,900 108,800 -100 -0.1%

Information 28,900 28,000 -900 -3.1%Sources: Texas Workforce Commission NSA; Real Estate Center at Texas A&M University

Austin & Texas Business-Cycle IndexesMonthly, Seasonally Adjusted, 10/1980=100

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

850

900

950

Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Jan

-15

Jan

-16

Jan

-17

Jan

-18

19Source: Federal Reserve Bank of Dallas

Austin

Texas

Austin Retail Sales

$1,500

$2,500

$3,500

$4,500

$5,500

$6,500

$7,500

$8,500

$9,500

$10,500

$11,500

1Q

19

78

1Q

19

79

1Q

19

80

1Q

19

81

1Q

19

82

1Q

19

83

1Q

19

84

1Q

19

85

1Q

19

86

1Q

19

87

1Q

19

88

1Q

19

89

1Q

19

90

1Q

19

91

1Q

19

92

1Q

19

93

1Q

19

94

1Q

19

95

1Q

19

96

1Q

19

97

1Q

19

98

1Q

19

99

1Q

20

00

1Q

20

01

1Q

20

02

1Q

20

03

1Q

20

04

1Q

20

05

1Q

20

06

1Q

20

07

1Q

20

08

1Q

20

09

1Q

20

10

1Q

20

11

1Q

20

12

1Q

20

13

1Q

20

14

1Q

20

15

1Q

20

16

1Q

20

17

1Q

20

18

Millio

ns

of

Do

lla

rs

20

Texas Demographics

21

Pecos

Brewster

Webb

Hudspeth

Presidio

Terrell

Culberson

Reeves

Val Verde

Crockett

Hill

Duval

Harris

Frio

Bell

Kerr

Kenedy

Starr

Polk

Clay

Edwards

Irion

Hall

Ellis

Jeff Davis

Sutton

Uvalde

Bee

Hale

Dallam

Leon

Bexar

Gaines

Hidalgo

Upton

Hartley

King

Erath

Jack

Kinney

Kent

Zavala

Brazoria

Tyler

GrayOldham

Dimmit

CassLynn HuntWise

La Salle

Rusk

Kimble

Lamb

Medina

Floyd

Terry

Coke

Llano

Liberty

Ector

Andrews

Milam

Travis Lee

Knox

Mills

Smith

Falls

Ward

Collin

Jones

Nolan

Potter

Burnet

Cottle

Nueces

Taylor

Zapata

Real

Coryell

Bowie

Motley

Young

Lamar

Martin

Garza

DallasFisher

Moore

Baylor

Kleberg

Archer

Scurry

Cameron

Cooke

Mason

Parker

Castro

Navarro

Brooks

Hardin

Deaf Smith

Lavaca

Donley

Hays

Goliad

Denton

El Paso

Fannin

Tarrant

Crane

Carson

Crosby

Borden

Schleicher

Gillespie

Shelby

Foard

Wood

Menard

Panola

Walker

Winkler

Harrison

Eastland

Loving

Bandera

Wichita

Hood

Matagorda

Brown

Reagan Houston

Maverick

Jasper

Coleman

Tom Green

Bailey

DeWitt

Atascosa

Bosque

Wharton

Concho

Runnels

Fayette

Haskell

Calhoun

Newton

Live Oak

Randall

Sterling

Jefferson

Briscoe

McMullen

Parmer

Jim Hogg

Mitchell

Wilson

Victoria

Trinity

Roberts

Howard

Bastrop

Grayson

San Saba

Midland

Hockley Dickens

Swisher

Gonzales

Anderson

Dawson

Willacy

Grimes

Wheeler

Cherokee

Colorado

Lubbock

Karnes

Red River

Refugio

Austin

Hemphill

Williamson

Jackson

Blanco

Ochiltree

McCulloch

Sherman

Wilbarger

Hansford

Callahan

McLennan

Yoakum

Angelina

Hopkins

Lipscomb

StephensPalo Pinto

Stonewall

Hamilton

MontagueCochran

Jim Wells

Limestone

Kaufman

Fort Bend

Titus

Comal

Armstrong

Kendall

Freestone

ComancheGlasscock

Johnson

Galveston

Henderson

Montgomery

Brazos

Van Zandt

Chambers

Robertson

Waller

Sabine

Upshur

Hutchinson

Shackelford

Childress

Burleson

Nacogdoches

Lampasas

Collingsworth

Hardeman

Throckmorton

Guadalupe

Caldwell

Aransas

Marion

San Patricio

Madison

San Jacinto

Delta

Washington Orange

Rains

Gregg

Morris

San Augustine

Franklin

Somervell

Rockwall

Estimated Population Change, Texas Counties, 2010 to 2016

22Source: U.S. Census Bureau, 2016 Vintage Population Estimates;

Texas State Demographer’s Office

96 counties lost

population over the 6

year period.

-2,010 - 0

1 - 1,000

1,001 - 20,000

20,001 - 100,000

100,001 - 497,469

Median Household Income, Texas counties, 2011-2015

Dallas

Howard

FoardFloyd

Brewster

Franklin

Hunt

Newton

Starr

Kinney

Collingsworth

Tom

Green

Coleman

Brazoria

Leon

Duval

Lamb

Morris

Smith

Jackson

Medina

Wheeler

Dallam

Callahan

Lamar

Coryell

Gaines

Kendall

Nacogdoches

Milam

Hays

Willacy

Johnson

Reagan

Webb

Shackelford

Bowie

Scurry

Kenedy

Somervell

Oldham

Taylor

King

Borden

Walker

Stephens

Deaf Smith

Roberts

Tyler

Val Verde

Brown

Parker

Harris

Zapata

Red

River

Karnes

Palo

Pinto

GlasscockShelby

Wood

Crosby

Refugio

Burnet

Sterling

Montgomery

San Augustine

Rains

Nueces

Jack

Swisher

Brazos

Orange

Colorado

Pecos

Cochran

Parmer

Freestone

Winkler

Wichita

Gray

Schleicher

Hardeman

TravisGillespie

Yoakum

Fayette

Uvalde

Grimes

Van

Zandt

Throckmorton

Falls

Grayson

Ellis

Hall

Dickens

Trinity

Reeves

Marion

Terrell

Lynn

La

Salle

Jasper

Jones

Castro

Victoria

Kleberg

Briscoe

Clay

Matagorda

Brooks

Runnels

Carson

Liberty

Lee

Hale

Bexar

Garza

Montague

Upton

Hamilton

FisherDawson

Dimmit

Limestone

Hutchinson

Llano

Presidio

Eastland

Sabine

Wharton

Rusk

Tarrant

Lavaca

Childress

Hidalgo

Kaufman

Moore

Menard

Edwards

San

Patricio

Terry

Crockett

Houston

Waller

Coke

Ward

Titus

Lampasas

Haskell

Martin

Atascosa

HemphillHartley

Young

BurlesonHardin

Gonzales

McMullen

Erath

Galveston

Hopkins

McLennan

Madison

McCulloch

Donley

Kent

Real

Sutton

Midland

Hudspeth

Zavala

Harrison

Comanche

Mitchell

Navarro

Crane

Lubbock

Wise

Washington

Jeff Davis

El Paso

Gregg

Williamson

Lipscomb

Mason

Henderson

Hansford

Chambers

Hill

Potter

Jim Wells

DeltaStonewall

Ector

Cameron

Maverick

Collin

Baylor

Panola

Guadalupe

Bastrop

Austin

Andrews

Anderson

Blanco

DeWitt

Bandera

Bell

Aransas

Archer

Armstrong

Bee

Angelina

Bailey

Jefferson

Frio

Fannin

Goliad

Loving

Cass

Fort Bend

Bosque

Hockley

San

Saba

Kerr

Mills

Cooke

Wilbarger

Irion

Caldwell

Jim

Hogg

Culberson

Upshur

Cherokee

Denton

Concho

Randall

Kimble

Knox

Polk

Hood

San Jacinto

Robertson

Wilson

Nolan

Cottle

Calhoun

Rockwall

Live

Oak

Motley

ShermanOchiltree

Comal

23

tl_2010_48_county10

MedHHInc15

$22,741.00 - $35,000.00

$35,000.01 - $45,000.00

$45,000.01 - $55,000.00

$55,000.01 - $65,000.00

$65,000.01 - $89,152.00

tl_2010_48_county10

Source: U.S. Census Bureau, American Community Survey, 2011-2015 5-Year

Sample; Texas State Demographer’s Office

Alternative Projections Texas Population 1910-2050

54,369,297

47,386,428

25,145,561 40,502,749

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2015 2020 2025 2030 2035 2040 2045 2050

24Sources: U.S. Census Bureau, Texas State Demographer 2014 Projections

(2000-2010 Scenario)

2000-2010 Scenario

50% 2000-2010 Scenario

2010-2015 Scenario

From 1970 to 2010 (40 years),

Texas added 13.9 million people

From 2010 to 2050 (40 years),

Texas will add between 22

and 30 million people

Projected Population Change, Texas Counties, 2010-2050

25

Source: Texas State Data Center 2012

Population Projections . 2000-

2010 Migration Scenario

Legend

tl_2010_48_county10

F6

-6,200 - 0

1 - 2,000

2,001 - 10,000

10,001 - 100,000

100,001 - 1,000,000

1,000,001 -3,480,000

http://en.wikipedia.org/w/index.php?title=File:I-35.svg&page=1

Austin MSA PopulationBastrop, Caldwell, Hays, Travis & Williamson Counties

301,261585,051

1,249,763

1,716,289

2,306,857

3,035,547

3,960,317

5,176,940

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

1960 1970 1980 1990 2000 2010 2015 2020 2025 2030 2035 2040 2045 2050

26Source: U.S. Census Bureau; Texas State Demographer’s Office 2014

Projection; 2000-2010 Scenario

2010-2050 3,460,651; 202% increase

86,500/year average

Williamson County Population

37,305

422,679

633,783

940,542

1,380,749

1,976,958

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

1970 1980 1990 2000 2010 2015 2020 2025 2030 2035 2040 2045 2050



2010-2050 1,554,279; 368% increase

38,850/year average

Hays County Population

27,642

157,107

246,119

372,120

556,982

824,070

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1970 1980 1990 2000 2010 2015 2020 2025 2030 2035 2040 2045 2050



2010-2050 667,000; 425% increase

16,675/year average increase

29

Housing Market

Macro Housing Issues

2. Affordability: the main challenge for the next several years (decades?); income growth vs. price changes

1. Demographics: generational life cycles; shifting tastes,

preferences, attitudes & desires

3. Capital Flows & Lending Requirements: equity requirements; interest rates and monetary/fiscal policies

4. Infrastructure: transportation, education, utilities

5. Development: Design, Density, Resources and Processes

6. Regulatory: lending; environmental; land use controlsFederal

State

Local

2018 Housing Market• Mortgage Rates: Probably up ~0.5%+/- by year-end

• Household Formations: ~1.25 million+; millennial demand grows, but

constrained by debt, income, prices, savings

• Sales volume slower but price growth• Increased first-timers, millennials more active

• Prices pushed up from low inventory & high demand ~4.5%

• Rental Market: loosening, low vacancies from greater inventory, higher

rents

• Single-family Rental: organized SF rental market with institutional owners

competing with entry buyers

• Home Construction: possible slow down in volume; significant cost

increases in labor, materials, land

• Affordability: prices and rents increasing faster than incomes – definite

constraint on market

Source: TAR Data Relevance Program; Real Estate Center at Texas A&M University

103,344102,789110,830

120,749

126,525126,279

142,940151,861

177,179

191,189195,568

204,084209,438

224,215

250,380

277,649

304,762

286,778

241,666

221,768211,640213,396

247,090

287,235296,828

309,518

323,607

336,502

358,375

$50,000

$70,000

$90,000

$110,000

$130,000

$150,000

$170,000

$190,000

$210,000

$230,000

$250,000

$270,000

$290,000

$310,000

$330,000

$350,000

$370,000

50,000

70,000

90,000

110,000

130,000

150,000

170,000

190,000

210,000

230,000

250,000

270,000

290,000

310,000

330,000

350,000

370,0001

99

0

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

p

Sales Avg Price Md Price

Since 2011

Sales + 58%

Average Price + 42%

Median Price + 52%

2018p sales +6-7%

Prices +4%

Annual Texas Home Sales

32

Texas SF Building Permits

38,233

46,209

59,543

69,96470,45270,421

83,13282,228

99,912101,928108,782

111,915

122,913

137,493

151,384

166,203163,032

120,366

81,107

68,23068,17067,254

81,926

93,478

103,045

105,448106,511

115,262

125,636

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7e

201

8p

Source: US Census Bureau; NAHB; Real Estate Center at Texas A&M

2015 +2.3%

2016 +1.0%

2017e +10.4%

2018p +9%

1990-2016 average 95,529/year

Texas SF Building Permits per 1,000 New Households

34

316

401

739

645580

528

1,339

689

347

851

398435

648719

435

585592

714699

809

1,191

1,550

2,018

970

888

1,242

894

455

646

324

602679668619

731688745

100

300

500

700

900

1,100

1,300

1,500

1,700

1,900

2,100

2,300

198

1

198

2

198

3

198

4

198

5

198

6

198

7

198

8

198

9

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7e

Source: US Census Bureau, Real Estate Center at Texas A&M

1995-2015 average

820/year

2008-2016, added 1.33 million HHs.

Would have built 1.1 million SF

homes at average/year; actually

built 776k. About 315,000 units

short.

Texas MF Building Permits

8,96210,2989,514

15,545

32,23734,68435,720

43,794

56,918

44,716

32,620

38,427

42,40943,081

39,796

44,431

53,894

58,542

49,897

17,375

21,504

32,260

56,40656,644

67,319

69,995

59,34256,854

55,149

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7e

201

8p

Source: US Census Bureau, Real Estate Center at Texas A&M

1995-2016 average 45,444/year

Texas Residential Construction Leading and Coincident Indexes

Jan 2000=100

40

60

80

100

120

140

160

180

40

60

80

100

120

140

160

180

Jan

-00

Ju

l-00

Jan

-01

Ju

l-01

Jan

-02

Ju

l-02

Jan

-03

Ju

l-03

Jan

-04

Ju

l-04

Jan

-05

Ju

l-05

Jan

-06

Ju

l-06

Jan

-07

Ju

l-07

Jan

-08

Ju

l-08

Jan

-09

Ju

l-09

Jan

-10

Ju

l-10

Jan

-11

Ju

l-11

Jan

-12

Ju

l-12

Jan

-13

Ju

l-13

Jan

-14

Ju

l-14

Jan

-15

Ju

l-15

Jan

-16

Ju

l-16

Jan

-17

Ju

l-17

Jan

-18

Ju

l-18

Source: Real Estate Center at Texas A&M University

Leading Index

Coincident Index

Total Housing

Permits (12-MMA)

36

37

The Austin

Housing

Market

Austin Annual Home Sales

7,0687,4858,389

9,78410,418

11,29112,40612,253

15,338

17,84518,32118,09518,41419,469

22,193

26,448

29,767

27,571

22,068

20,40719,547

20,999

25,209

29,97130,16431,435

32,71133,907

37,637

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

p

Source: ABOR; Real Estate Center at Texas A&M University

Austin Months Inventory

0

1

2

3

4

5

6

7

8

Jan

-91

Ju

l-91

Jan

-92

Ju

l-92

Jan

-93

Ju

l-93

Jan

-94

Ju

l-94

Jan

-95

Ju

l-95

Jan

-96

Ju

l-96

Jan

-97

Ju

l-97

Jan

-98

Ju

l-98

Jan

-99

Ju

l-99

Jan

-00

Ju

l-00

Jan

-01

Ju

l-01

Jan

-02

Ju

l-02

Jan

-03

Ju

l-03

Jan

-04

Ju

l-04

Jan

-05

Ju

l-05

Jan

-06

Ju

l-06

Jan

-07

Ju

l-07

Jan

-08

Ju

l-08

Jan

-09

Ju

l-09

Jan

-10

Ju

l-10

Jan

-11

Ju

l-11

Jan

-12

Ju

l-12

Jan

-13

Ju

l-13

Jan

-14

Ju

l-14

Jan

-15

Ju

l-15

Jan

-16

Ju

l-16

Jan

-17

Ju

l-17

Jan

-18

Ju

l-18

39Source: ABOR: Real Estate Center at Texas A&M University

Average since 1990 5.1 months

75

180

830

3,803

6,964

5,595

7,310

3,829

3,514

933

869

8,000 6,000 4,000 2,000 0

Sales

Austin 2017 Sales and EoY Months Inventory by Price

40

1.3

0.7

1.0

0.8

1.2

2.0

2.5

2.5

2.8

3.7

7.1

0.0 2.0 4.0 6.0 8.0

$0 - $69,999

$70,000 - $99,999

$100,000 - $149,999

$150,000 - $199,999

$200,000 - $249,999

$250,000 - $299,999

$300,000 - $399,999

$400,000 - $499,999

$500,000 - $749,999

$750,000 - $999,999

$1,000,000 +

MOI

Source: BCS Regional Association of REALTORS®; Real Estate Center at Texas A&M University

Austin Median Home Prices

72,25275,86582,929

90,94995,158

100,025107,884111,819

117,207125,888

143,550149,611153,545153,836153,198

160,701

171,272

183,292187,319

185,150189,356189,900

203,000

220,000

240,000

260,000

280,000

295,000

311,225

$50,000

$70,000

$90,000

$110,000

$130,000

$150,000

$170,000

$190,000

$210,000

$230,000

$250,000

$270,000

$290,000

$310,000

$330,0001

99

0

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

2018p

41Source: ABOR; Real Estate Center at Texas A&M University

2015 +8%; 2016 +7.7%; 2017 +5.4%

2018p +5.5%

Austin Monthly Median Home Price12-Month Moving Average

$100,000

$125,000

$150,000

$175,000

$200,000

$225,000

$250,000

$275,000

$300,000

$325,000J

an

-99

Ju

l-99

Jan

-00

Ju

l-00

Jan

-01

Ju

l-01

Jan

-02

Ju

l-02

Jan

-03

Ju

l-03

Jan

-04

Ju

l-04

Jan

-05

Ju

l-05

Jan

-06

Ju

l-06

Jan

-07

Ju

l-07

Jan

-08

Ju

l-08

Jan

-09

Ju

l-09

Jan

-10

Ju

l-10

Jan

-11

Ju

l-11

Jan

-12

Ju

l-12

Jan

-13

Ju

l-13

Jan

-14

Ju

l-14

Jan

-15

Ju

l-15

Jan

-16

Ju

l-16

Jan

-17

Ju

l-17

Jan

-18

Ju

l-18

42Source: Real Estate Center at Texas A&M University

Average Annual Appreciation ~ 5%

Austin Monthly Average Home Price per Square Foot for Resale Homes

$60

$70

$80

$90

$100

$110

$120

$130

$140

$150

$160

$170

$180

$190

$200

Jan

-11

Ju

l-11

Jan

-12

Ju

l-12

Jan

-13

Ju

l-13

Jan

-14

Ju

l-14

Jan

-15

Ju

l-15

Jan

-16

Ju

l-16

Jan

-17

Ju

l-17

Jan

-18

Ju

l-18

Austin Md Price/sf Tx MdPr/sf

43Source: ABOR; TAR Data Relevance Project; Real Estate Center at Texas A&M University

Austin Sales by Price Distribution

Price Range

Percent Distribution

2011 2012 2013 2014 2015 2016 2017

$0 - $69,999 4.5 2.9 1.7 0.9 0.6 0.4 0.2

$70,000 - $99,999 6.5 5.3 3.3 1.9 1.1 0.8 0.5

$100,000 - $149,999 21.6 19.5 15.9 11.0 6.5 3.7 2.5

$150,000 - $199,999 20.9 21.3 22.2 22.1 19.5 15.3 11.2

$200,000 - $249,999 13.0 13.9 15.2 17.0 18.6 19.5 20.5

$250,000 - $299,999 10.0 10.3 10.9 12.2 14.3 15.7 16.5

$300,000 - $399,999 11.0 11.9 13.6 15.5 17.4 19.8 21.6

$400,000 - $499,999 5.1 6.3 7.5 8.2 9.2 10.4 11.3

$500,000 - $749,999 4.6 5.5 6.0 7.5 8.4 9.6 10.4

$750,000 - $999,999 1.5 1.6 1.8 1.8 2.2 2.6 2.8

$1,000,000 + 1.3 1.4 1.8 1.9 2.2 2.2 2.6

Source: ABOR; TAR Data Relevance Project; Real Estate Center at Texas A&M University

32% 63%

67% 35%

Williamson Co. Annual Home Sales

6,297

7,752

9,576 9,682

10,24710,542

11,068

5,000

5,500

6,000

6,500

7,000

7,500

8,000

8,500

9,000

9,500

10,000

10,500

11,000

11,500

12,0002011

2012

2013

2014

2015

2016

2017

2011-2017 +76%


+3%+6%+1%

+24%

+23%

+5%

Current Months Inventory 2.1

Williamson Co. Median Home Price

$172,270

$181,000

$200,000

$221,000

$241,000

$257,500

$273,500

$150,000

$160,000

$170,000

$180,000

$190,000

$200,000

$210,000

$220,000

$230,000

$240,000

$250,000

$260,000

$270,000

$280,000

20

11

20

12

20

13

20

14

20

15

20

16

20

17

2011-2016 +49%


+7%

+9%

+11%

+11%

+5%

+6%

Hays Co. Annual Home Sales

1,798

2,173

2,797

3,0893,230

3,3913,560

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,0002011

2012

2013

2014

2015

2016

2017

2011-2017 +98%

Source: Four Rivers AoR; TAR Data Relevance Project;


+5%

+21%

+29% +10%+5%

+5%

Current Months Inventory 2.9

Hays Co. Median Home Price

$163,000

$178,000

$192,700

$205,874

$229,000

$239,650

$255,990

$150,000

$160,000

$170,000

$180,000

$190,000

$200,000

$210,000

$220,000

$230,000

$240,000

$250,000

$260,000

$270,000

20

11

20

12

20

13

20

14

20

15

20

16

20

17

2011-2017 +57%

+5%

+9%

+8%

+7%

+11%

Source: Four Rivers AoR; TAR Data Relevance Project;


+7%

Industrial Warehouse Rent Rates(Triple-Net Asking Rent Overall)

3

4

5

6

7

8

9

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

1Q

20

01

1Q

20

02

1Q

20

03

1Q

20

04

1Q

20

05

1Q

20

06

1Q

20

07

1Q

20

08

1Q

20

09

1Q

20

10

1Q

20

11

1Q

20

12

1Q

20

13

1Q

20

14

1Q

20

15

1Q

20

16

1Q

20

17

1Q

20

18

Austin DFW Houston San Antonio

Source: CoStar and NAI REOC; Real Estate Center at Texas A&M University

Retail Rent Rates(Triple-Net Asking Rent Overall)

10

12

14

16

18

20

22

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00

$22.00

1Q

20

01

1Q

20

02

1Q

20

03

1Q

20

04

1Q

20

05

1Q

20

06

1Q

20

07

1Q

20

08

1Q

20

09

1Q

20

10

1Q

20

11

1Q

20

12

1Q

20

13

1Q

20

14

1Q

20

15

1Q

20

16

1Q

20

17

1Q

20

18



Overall Office Rent Rates(Gross Asking Rates)

14

16

18

20

22

24

26

28

$14.00

$16.00

$18.00

$20.00

$22.00

$24.00

$26.00

$28.00

1Q

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Dr. James P. GainesChief Economist

recenter.tamu.edu

chief economist - texas a&m university · 2018-03-26 · monthly change in total nonfarm...

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