Texas Poised to Outpace Nation Again in 2012!
Texas’ economic outlook for 2012 is positive. Job growth is occurring in several sectors, and a low cost of living is enticing businesses to move to the Lone Star State.
It will be tougher going for the nation, however, because of several factors. The housing market needs to clear a high number of foreclosures. Consumers need to pay off their debt. The banking system needs to write off bad debt. Small businesses need to start hiring again.
Writing for the January issue of Tierra Grande magazine, Real Estate Center Chief Economist Dr. Mark Dotzour says, “Fortunately, Texas is poised to outperform the U.S. averages. Home sales volume in Texas should show modest improvement over 2011, and prices should be stable throughout 2012.” Dotzour’s economic outlook is titled “Texas Sails On: Nation Battles Headwinds.”
Other articles detailing findings from the nation’s largest publicly funded real estate research organization are in the issue scheduled for mailing in late January.
- “Beyond a Reasonable Drought” by noted agricultural expert Dr. Joe Outlaw and Center Research Economist Dr. Charles Gilliland. Farmers, ranchers and service businesses that support them are suffering negative effects of the drought. To make matters worse, federal agricultural programs are on the chopping block to reduce the deficit.
- “The Great Recession: Why Intensity and Duration Varied” by Center Research Economist Dr. Ali Anari. Why did some Texas metros fare better in the Great Recession? Results from the Center’s business cycle research program pinpoint several reasons. These included shares of employment in the government sector, education and health services industry, mining and construction industry, and the metro’s level of educational attainment.
- “Dialing Down Debt: Road to Recovery Begins at Home” by Center Research Analyst Gerald Klassen. It will hurt, but American households will have to liquidate their assets and reduce debt if they want the economy to recover. This means selling luxury items including vacation homes, boats and RVs, as well as selling investments, declaring bankruptcy or suffering through foreclosure.
- “For the Record: When to Toss Old Tax Records” by Center Research Fellow Dr. Jerrold Stern. At a minimum, tax records should be kept three years. However, a period of seven or more years is recommended. Tax and nontax factors play a role in the decision.
- “Vested Rights: Project Protection for Developers” by Houston attorney Reid C. Wilson. Vested rights freeze land use regulations affecting property classification, building size, lot size-dimension-coverage and certain other matters once the owner or developer files a permit application for that project.
- “The Trouble with Troubled Assets” by Center Research Economist Dr. Harold Hunt. The volume of distressed property sales was expected to be much higher by this time. So far, everyone is still waiting. However, according to commercial real estate insiders, distressed sales are on the way up.
- “Terminated: Transfer Fees Outlawed” by Center legal expert Judon Fambrough. Transfer fees, money paid for transferring interest in real property, were implemented in 2007 legislation. Four years later, that law was repealed, prohibiting any future transfer fees and terminating existing fees that do not comply with the new legal requirements.
Source: RECON
Read MoreTexas Dominates Best-Performing Cities Index for 2011
Milken Institute just released its ”Best-Performing Cities” index for 2011, and Texas is everywhere you look.
Nine Texas MSAs landed in the top 25 on the institute’s list of 200 largest metros, and four of those ranked in the top five, including number one San Antonio.
Others on the list were El Paso (2), Austin–Round Rock (4), Killeen-Temple-Fort Hood (5), Houston-Sugar Land-Baytown (16), McAllen-Edinburg-Mission (18), Dallas-Plano-Irving (20), Fort Worth-Arlington (24) and Lubbock (25).
The state’s smaller metros didn’t do too shabby either, with five among the top 25: College Station-Bryan (4), Longview (9), Waco (12), Tyler (20) and Midland (22).
While it’s good news for Texas to do so well on in index that is based largely on employment growth, Real Estate Center Research Economist Dr. Jim Gaines said the state looked good mainly because other states didn’t.
“Our growth rate and advancement isn’t all that wonderful,” Gaines told the San Antonio Express-News. “We’ve managed to stay flat or have very small positives. But because everybody has so many negatives, we look so much better.”
Texas accounted for one in every five jobs created in the country between June 2010 and June 2011, reported the Express-News. Houston and Dallas alone were responsible for one in every ten new jobs in the country.
Read MoreTexas Leads in Projected Job Growth for 2011
When it comes to which states will add the highest percentage of jobs over the next few years, Forbes reports Texas will lead the way.
Total employment here is forecast to expand 2.9 percent annually through 2015, according to research firm Moody’s Analytics. That represents 1.6 million new net jobs for the state over five years.
Forbes points to Texas’ “low tax, business-friendly climate with a surging population that offers a nearly unlimited supply of young labor” as reasons for the growth. However, it also acknowledges that the state’s rapid population growth has pushed its unemployment rate to 8.5 percent, the highest in 24 years.
Source: Forbes.com
Read MorePrivate Sector Job Growth In Texas Offsets Government Losses In October 2011
Texas’ employment growth rate is slowing down thanks to government job losses, but the state’s private sector is still cranking out jobs and offsetting government job losses, according to the latest Monthly Review of the Texas Economy.
The state created 15.4 percent of total jobs created in the United States from October 2010 to October 2011.
Texas gained 232,500 nonfarm jobs during the period, an annual growth rate of 2.2 percent compared with 1.2 percent for the United States. The state’s private sector added 287,900 jobs, an annual growth rate of 3.4 percent compared with 1.7 percent for the nation’s private sector.
The state’s seasonally adjusted unemployment rate increased to 8.4 percent in October 2011 from 8.2 percent a year earlier. The nation’s rate decreased from 9.7 to 9.0 percent.
All Texas industries except the information industry and the state’s government sector had more jobs in October 2011 than in October 2010. The state’s mining and logging industry ranked first in job creation, followed by the professional and business services industry, and the leisure and hospitality industry.
All Texas metro areas except Abilene, Wichita Falls, Texarkana and College Station-Bryan had more jobs in October 2011 than in October 2010. Victoria ranked first in job creation followed by Laredo, Corpus Christi, Odessa and Lubbock.
The state’s actual unemployment rate in October 2011 was 8 percent. Midland had the lowest unemployment rate followed by Amarillo, Odessa, Lubbock and College Station-Bryan.
Source: Real Estate Center
Read MoreTexas’ “Whole Wheat” Economy
Add “baked goods” to the list of colorful analogies used to compare Texas’ relatively strong economy to that of the United States. That’s what State Comptroller Susan Combs did at yesterday’s 2012 Forecast Conference in Houston.
“The U.S. has what has been referred to as a ‘Twinkie economy,’” she said. “There are no natural ingredients. [Texas is] whole wheat, if you want to take a look at us versus the U.S. economy.”
Combs was speaking to a crowd of more than 400 business leaders, developers and students at the half-day event, which was presented by Urban Land Institute Houston and the Real Estate Center.
“We are now, as an economy, more diverse than either of our neighbors Canada or Mexico,” Combs said. “Our GDP, per capita, since 2001, [has] been larger than the U.S. every single year.”
Texas has lost about 4 percent of its jobs since the beginning of the recession, less than the United States (6 percent). Of those jobs, Combs said Texas has replaced about 90 percent, while the U.S. has replaced 23 percent.
“What’s more interesting to me is oil and gas,” Combs said. “Oil and gas lost well over 20 percent. They lost over 47,000 jobs. They’ve now regained more than that — about 57,000.”
Those jobs come with high wages, which helps drive sales tax revenue.
“The average weekly wage in the Eagle Ford is $2,764, about $140,000 per year,” Combs said. “Texas’ average is $940. So sales tax is being driven largely by the oil and gas sector. And sales tax is about 64 or 66 percent of all tax revenue. So when you’ve got a very aggressive, positive cycle of activity in oil and gas, it helps a lot.”
Although Combs focused largely on the positive aspects of the state economy, she didn’t shy away from the challenges facing an ever-growing, ever-changing Texas. One of the biggest is meeting the educational needs of the state as its demographic shifts to predominantly Hispanic, a group that historically has had a lower educational attainment than Anglos.
According to U.S. Census Bureau data, 43 percent of Hispanics in Texas did not have a high school diploma in 2009, compared with 8 percent of non-Hispanic whites. In addition, Combs said 50 percent of Anglos have college degrees.
The result is a disparity in how much each group earns: Hispanic households in Texas earn, on average, $29,000 per year. The average Anglo household brings home $47,000.
In short, Texas is juggling huge growth, shifting demographics and challenges in both public and higher education.
“We have to manage all these in some better way than we are doing now,” Combs said.
Source: Real Estate Center
Read MoreTexas Claims Top Business Climate Title
Texas has claimed the top slot in Site Selection magazine’s “Top Business Climate 2011″ contest.
The Lone Star State finished strong in the objective, data-driven component of the index used to determine the top business climates, as well as in the subjective input supplied by respondents to the magazine’s annual executive survey of site selectors.
One survey respondent commended Texas for being “a pro-business, entrepreneurial, right-to-work state.” Another applauded the state’s tax climate, regulatory environment, incentive programs and work-force development efforts.
Site Selection reported that 40 percent of the new U.S. jobs created since June 2009 were created in Texas. A ranking by NewGeography.com supports that.
Illustration by Bob Gravlee
That site’s “Best Cities for Job Growth 2011″ rankings look at employment data over time across three population tiers. In the small metros category, Killeen-Temple-Fort Hood placed first, College Station-Bryan third and Midland fourth. El Paso placed first in the midsize tier, followed by Corpus Christi and, in fourth, McAllen-Edinburg-Mission. In the large tier, Austin-Round Rock-San Marcos placed first, Houston-Sugar Land-Baytown third, San Antonio-New Braunfels fourth and Dallas-Plano-Irving fifth.
Those jobs mean demand for office space, another area in which Texas has stood out. Houston, Austin and Dallas finished in the top ten markets nationally in office space demand, according to an analysis by national real estate services firm Cassidy Turley. The firm found those three markets alone accounted for nearly 20 percent of all net demand in third quarter 2011.
“Other markets in Texas are also positive,” said Kevin Thorpe, chief economist with Cassidy Turley. “The U.S. is a mixed-bag story, with many negative markets and many positive markets. In Texas, it’s positive across the board.”
Source: Site Selection
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