Tag >> The Economy
Realtors' group sees ‘slow, sustainable growth' in sales activity NEW YORK - Better news from the U.S. housing industry sent stocks higher Tuesday, including an increase in the number of people with contracts to buy homes. The National Association of Realtors, a trade group, said its index of sale contracts rose 1 percent in December. It was the ninth improvement over the past 10 months as buyers scrambled to take advantage of a first-time homebuyer tax credit before it was set to expire last November. "It's a slow, sustainable growth," said Daniel Penrod, senior industry analyst for the California Credit Union League. "Most people would prefer a quick rebound but that's not likely to happen." The home sales report was the latest bit of encouraging news on the economy. Stocks rose on Monday after a surprisingly strong reading on the manufacturing sector, and on Friday the government reported that the U.S. economy grew at an annual rate of 5.7 percent in the final three months of 2009, a faster pace than expected. Homebuilder stocks rose sharply after D.R. Horton Inc. posted its first profit since 2007 during its fiscal first quarter. Much of its $192 million profit during the October-December period came from a tax gain, but its revenue rose because of a 36 percent jump in home sales. Orders increased 45 percent. The reports brought a positive tone to the market, which stumbled in late January as concerns arose that the recovery might be stalling and that the market's 10-month advance was running out of gas. The Standard & Poor's 500 index fell 3.7 percent in January, its worst month since hitting a 12-year low nearly a year ago. According to preliminary calculations, the Dow rose 111.32, or 1.09 percent, to 10,296.85. The S&P 500 index rose 14.13, or 1.30 percent, to 1,103.32, while Nasdaq composite index advanced 18.86, or 0.87 percent, to 2,190.06. Bond prices inched higher. The yield on the benchmark 10-year Treasury note, which moves opposite its price, dipped to 3.64 percent from 3.66 percent late Monday. Click here for the rest of the article. Story by Associated Press
According to a January article from Realty Times, investors are once again gaining confidence in real estate as a solid investment. Low interest rates, low home prices, and a wealth of properties on the market are all contributors to this trend. To read the entire article, click here.
Austin-area home resales jumped 58 percent last month from November 2008 as buyers scrambled to take advantage of low mortgage interest rates and a tax credit for first-time buyers. But local experts don't expect those big percentage gains to continue. Sales could slow next year, they said, anticipating rising mortgage interest rates and the end of the tax credit, which Congress recently extended through April and expanded to additional buyers. November's percentage increase was the biggest in more than a decade and followed a 38 percent jump in October, according to the Austin Board of Realtors. However, the 997 sales in November 2008 were unusually low, reflecting the worsening economic downturn at the time. Last month, 1,576 homes were sold, the board said. The median price was $179,900, down 2 percent from a year ago. "The numbers are certainly welcome news," said David Reed, a senior loan officer with Austin-based Land Mortgage. "Fifty-eight percent is huge, even if you factor in the extra selling days in November compared to last year." With the median price holding relatively steady, "it's even better news still," Reed said. But the market isn't in the clear yet. More challenges are ahead because of "minimal prospects for short term improvement in the local economy and our job market," said Eldon Rude, local director for Metrostudy, a housing research firm. He said he doesn't expect the market to show strong growth "until the employment picture brightens and consumer confidence strengthens." Rude said the sharp increase in November resales "was definitely tied to the availability of the tax credit but was also related to the significant slowdown in sales activity late last year as the U.S. recession took hold." With the extension, first-time buyers may still qualify for up to $8,000, but other buyers can get up to $6,500. Buyers must have a house under contract by the end of April and close on the sale by the end of June. Year-over-year sales were up 31 percent in the Dallas area, also one of the biggest increases on record; 32.8 percent in Houston; and 52 percent in San Antonio. Reed said he thinks the tax credit alone wasn't enough to spur the Austin area's November surge. He said that interest rates of less than 5 percent also were a factor, as was the specter of rising rates. Reed predicted that interest rates will move into the mid- to high 5 percent range by the end of next year's first quarter. Some real estate agents voiced optimism about 2010. "It just seems like the numbers are going steadily up, along with the economy," said Nell Hurtado, an agent with JB Goodwin Realtors. "People have a different attitude. They're more upbeat about the economy." Reed said he still foresees "a positive year for sales growth in 2010 - just nothing like a robust November we just had." From statesman.com snovak@statesman.com; 445-3856
Posted by: gardnergroup in The Economy on
Oct 15, 2009
FROM STAFF REPORTS Tuesday, September 22, 2009 BBVA Compass economists said that Texas has fared better than most other states in the recession and forecast a return to growth in 2010. The bank, which last month bought Austin-based Guaranty Bank, has made a string of U.S. acquisitions in recent years and now has operations across the Sunbelt, stretching from Florida to California. Nathaniel Karp, BBVA Compass' chief economist, said the Sunbelt will see a quicker recovery than other parts of the country, partly because the region's housing market has begun to stabilize. However, he and other economists said in a report that the troubled commercial real estate markets could hinder the recovery. Some highlights from their report: - Texas will see its gross domestic product rise 1.7 percent in 2010, compared with a loss of 0.4 percent in 2009.
- The state will start adding jobs next year, for a 1.2 percent gain, compared with a 2.3 percent loss in 2009.
- Home sales in Texas will increase 4.5 percent in 2010, compared with a drop of 12.4 percent in 2009.
DOWNTOWN Kirk Gallery closing in 2nd Street District Jeff Kirk said he will close his downtown furniture store Oct. 18, just a year after Kirk Gallery opened in the Second Street District. Kirk said he had been unable to reach agreement with his landlord, AMLI Residential, on adjusting the terms of his lease. Last month, the City of Austin agreed to cut the rents of two other district tenants, Fit City Sports and Austin Java, whose owners said sales had been hurt by the recession and by construction of the W Austin Hotel and Residences. Both of those stores are in the City Hall building. AMLI Residential handles leasing for about 50 other stores and eateries in the district. Catherine DeStasio, AMLI's commercial marketing director, said she could not comment on details of the Kirk Gallery lease. But she said AMLI remains committed to working with Second Street District business owners facing economic challenges. Kirk, whose store sells vintage furniture and accessories, said he plans to open in another location eventually. from Statesman.com
Posted by: gardnergroup in The Economy, Job Market on
Sep 08, 2009
Entrepreneur magazine's August issue ranks Austin the tenth-best start-up city in America. The magazine's look at new business-friendly cities addresses issues such as government incentives, population growth, affordability of commercial rents, and openness to new ideas. Entrepreneur calls Austin the "cross-pollinator" among the top 10 cities. The magazine cites the multiple "scenes" that shape Austin, from music to tech, and how they feed off of one another. "Theoretically, people here are competing, but the opposite is happening," Bijoy Goswami, founder of Bootstrap Austin told Entrepreneur. "Part of that Texas ethos has percolated into the entrepreneur scene: People in Austin just treat each other well." The magazine also highlighted Sweet Leaf Tea Co-founder Clayton Christopher as an example of one of Austin's brightest business minds. "There's a cachet attached to Austin," Christopher said. "It's the live-music capital of the world; it has good Texas values. Having Austin on our bottles has been a huge benefit." The top ten cities in order are Las Vegas, Portland, Ore., Orlando, Fla., San Diego, Phoenix, Chapel Hill, N.C., Atlanta, Madison, Wis., Youngstown, Ohio, and Austin, Texas. From Austin Business Journal
By Alan Zibel, Alex Veiga
ASSOCIATED PRESS
Tuesday, July 28, 2009 WASHINGTON - New home sales rose last month at the fastest clip in more than eight years as buyers eagerly took advantage of bargain prices - a clear sign, economists said, that the real estate market may finally be bouncing back. Historically low interest rates and a federal tax credit for first-time homeowners also helped push home sales to their highest level since November, the Commerce Department reported Monday. While home prices are still falling around the country, sales have now risen for three months in a row. Construction of homes is at the busiest level since last fall. And home resales rose in June for the third straight month. "The worst of the housing recession is now behind us," said David Resler, chief economist at Nomura Securities. But as with the overall economy, he said the recovery is likely to be slow and arduous. Put in perspective, the improvement in sales is modest. The pace of sales for new homes in June was still 72 percent below the peak of four summers ago, and an enormous inventory of homes is still on the market. "There's been signs of improvement, but we're a long ways off from being back to a normal market," said Corey Barton, president of CBH Homes in Meridian, Idaho. Sales there were up in June, but Barton said, "It wasn't our biggest jump in eight years." But there were clear signs the housing market is showing more life than at any point since the recession began. Keystone Custom Homes of Lancaster, Pa., which was founded in 1992, had its best June ever. July looks good, and president Larry Wisdom expects an even stronger August. "We doubled our sales in May, and then in June it took off," he said. New home sales for June came in at a seasonally adjusted annual rate of 384,000, blowing past the expectations of economists surveyed by Thomson Reuters, who were looking for 360,000. The figure is up 11 percent from May, and May's number of 346,000 was higher than previously thought. The increase is the largest since December 2000, when investors scarred by the tech-stock bubble were looking for more stable places to put their money. Sales were strongest in the Midwest, where they jumped 43 percent from May. Sales climbed 29 percent in the Northeast and 23 percent in the West. They declined slightly in the South. The median sales price was $206,200, down from $234,300 a year and $219,000 in May. Economists expect home prices to fall until the competition from low-priced foreclosures ebbs sometime next year. To drum up sales, CBH Homes has slashed prices up to 10 percent from last year's levels. The homes CBH builds have to compete with the glut of foreclosures, which are drawing many first-time homebuyers. In addition to lower prices, buyers are rushing to take advantage of a federal tax credit that covers 10 percent of the home price or up to $8,000 for first-time buyers. The closing must occur by Dec. 1 for buyers to take advantage. "There's definitely more first-time homebuyers in the market than what we've seen in the last several years," Barton said. Fallout from the housing crisis played a central role in the U.S. recession, the longest since World War II. Mortgages went bad, homebuilders pulled back and fired thousands of workers, foreclosures spiked, and lenders were shuttered by the dozen. Although the real estate market appears to be starting a recovery, that doesn't mean it will instantly become an economic engine. Construction is weak because builders have too many unsold homes. At the current pace, the new homes for sale would last nearly nine months. That's slightly less time than in May but still much longer than the six-month mark that indicates a balanced market. Austin upbeat, too Austin's market for new homes is showing its own signs of a rebound. New-home starts in the second quarter were 53 percent higher than in the first quarter. Because builders have pulled back in the past year, there is only a three-month supply of new homes on the market. The shortage of new homes has led to a pickup in the resale market, which had its best month in a year in June. From http://www.statesman.com/search/content/news/stories/nation/2009/07/28/0728econ.html
Posted by: gardnergroup in The Economy, Job Market on
Jul 22, 2009
Forbes named the Austin metro as the best poised for recovery in its list of the 10 U.S. cities poised for a rebound (and the 10 cities with a long slog ahead). Many Texas cities are poised for swift recovery according to Forbes. Texas' economy is diverse, with heavy growth coming from education and health care in recent years and did not see the massive real estate bubble that formed in states like California, Nevada and Florida. Forbes' analysis also shows the importance of a city's economic make-up. Cities with robust technology sectors are poised for stronger recoveries than manufacturing or finance centers. Austin's diverse economy, home to Dell, the University of Texas and the Texas state government, has kept the economy strong. Forbes examined estimates from data provider Moody's Economy.com of the projected gross domestic product of metropolitan areas across the U.S., as well as unemployment figures from the Bureau of Labor Statistics and home prices, incomes and affordability data from the National Association of Home Builders. ( Forbes, 6/10/09)
AMERICAN-STATESMAN STAFF
Thursday, June 04, 2009 The Austin area had the nation's strongest job market among big cities last month, according to data released last Wednesday by the Bureau of Labor Statistics. Among the 38 metro areas with a work force of at least 750,000, only Austin gained jobs from April 2008 to April 2009, the bureau said. It was the third month in a row Austin had earned that distinction. Austin added 3,400 jobs in that period, a 0.4 percent gain that brought the regional job count to 781,400. In January, Austin, Houston and San Antonio were the only large metro areas that had more jobs than a year earlier. But Houston and San Antonio have been losing jobs since then. Austin's job picture isn't all rosy: The area has been losing manufacturing and construction jobs at an accelerating pace, but those losses are being offset by gains in government, retailing and services fields. Central Texas is holding up better in the recession than other technology hubs. In April, the Silicon Valley area lost jobs at a 4.4 percent annual rate. Portland, Ore., was down 4.7 percent, Seattle was down 3.4 percent, and Raleigh, N.C., was down 3.3 percent. Some smaller cities also racked up gains, including Midland, up 2.2 percent, and Odessa, up 2.9 percent.
Volume 31, Number 9 of The Neal Spelce Austin Letter http://www.austinletter.com/ When the Texas Legislature adjourns next week, this is certain: Texas will have a balanced budget with no tax increases and there will a big increase in its Rainy Day Fund "savings account." Look around you. No other major state can make those claims. Members of the Texas House and Senate will leave Austin next week after adjourning sine die 6/1/09. They will not re-convene in Austin in regular session until January 2011. Many of them will watch other states raise taxes, cut their budgets and plea with Washington for help. Texas' competitor California is really struggling. Just how bad is it? Governor Arnold Schwarzenegger has just proposed borrowing $2 billion from California cities and counties. The cities and counties squawked to high heaven because they, too, are cash-strapped. The Governator made this proposal after voters last week overwhelmingly rejected a series of measures to help keep the state solvent. While Texas has billions of dollars in its Rainy Day fund, California is facing a $21 billion shortfall. And, in addition to raising taxes, officials there are talking about more and more cuts, including cutting about $600 million from colleges and universities. Let this sink in. When we say California is a "competitor" state, consider that California has an impressive higher education system. One of the best in the nation. And, even as we speak, you can bet UT Austin is ramping up recruiting efforts to siphon top flight professors from California. California might look to Minnesota for a road map. Minnesota was facing a multi-billion dollar shortfall. But Governor Tim Pawlenty outmaneuvered his legislature after it sent him an outsized spending bill and a long list of tax hikes. Minnesota already has one of the highest tax burdens in the nation, so Pawlenty said "we shouldn't raise taxes in the worst recession in 60 years" and said he will veto the tax hikes and, furthermore, taking advantage of a little-used provision in Minnesota law, he says he will cut $2.7 billion from the state spending bill to balance the state's budget. He did this after the legislature adjourned last week. Other states may not fare as well as Minnesota. Let's look at how higher and higher state taxes are impacting many states - and, ultimately may benefit Texas - in the next item. Americans know how to use the moving van to escape high taxes. People, investment capital and businesses can leave tax-unfriendly states and move to tax-friendly states. And they are doing that. Other states are making their comparative situation with Texas even worse during these difficult economic times. Arthur Laffer and Stephen Moore, writing in a new study for the American Legislative Exchange Council, pointed out the difficulties high tax states were having long before this current economic crisis. The study, titled "Rich States, Poor States," found that from 1998 to 2007 more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Texas, Florida, Nevada and New Hampshire. "Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair," they ask. "No. Dozens of academic studies - old and new - have found clear and irrefutable statistical evidence that high state and local taxes repel jobs and businesses." And now look what's happening. Lawmakers in California, Connecticut, Delaware, Illinois, New Jersey, New York and Oregon want to raise income tax rates on the top 1% or 2% or 5% of their citizens. In fact, the new governor of Illinois has proposed a 50% increase in the income tax rate on the "wealthy." Or take New Jersey. (Please!) In the early 1960s, the state had no state income tax and no state sales tax. It was a rapidly growing state attracting people from everywhere and running budget surpluses. "Today its income and sales taxes are among the highest in the nation yet it suffers from perpetual deficits and its schools rank among the worst in the nation. People are fleeing the state in droves," Laffer and Moore report. Texas was singled out by the authors for its fiscal soundness. And, as we noted previously, the Texas tax situation will keep its envied status for at least two more years, while other states are turning to even higher taxes to solve their fiscal instability. "The Texas economic model makes a whole lot more sense than the New Jersey model, and we hope the politicians in California, Delaware, Illinois, Minnesota and New York realize this before it's too late," they noted. At least Minnesota's governor took this advice last week. But the other states have not followed suit. And this is where Texas benefits economically. Jobs will continue to flee these high-tax states for the foreseeable future. And many of them will be created here - providing income and a decent living for those who live in Texas. Much has been made of the fact that Austin is the only major metro in the nation to gain jobs during this downturn - and rightly so. But where are those jobs being created? Admittedly the increase in jobs in the Austin metro is small and the number of unemployed is higher than a year ago. But, hey, it's the best job situation in the nation. Given this, an examination of how this has occurred is timely. The release last Friday of the April 2009 workforce numbers show that Austin's net job gain was 0.4% over April 2008, while Texas job totals are down 1.6% and nationally, the comparative numbers show a 3.8% loss. In pure numbers, the Austin metro gained 3,400 jobs. An analysis by Beverly Kerr, VP/Research for the Austin Chamber, shows that Austin's April-over-April net gain in jobs is due to a 3,900 gain in the government sector that compensated for 500 jobs lost in private industry. Which Austin private sector segments are losing the most jobs? Kerr said the highest rate of losses occurred in these three categories: natural resources and construction, manufacturing and wholesale trade. As we have reported previously, government jobs are becoming more and more attractive in these uncertain times. After all, most government jobs in Austin offer a high degree of security, an attractive health benefits program and solid retirement packages. Other states may be cutting government jobs. Here, they are among the most sought-after.
2009 Austin Area Market Update While homeowners nationwide have watched their home values plummet, the Central Texas real estate market has fared much better in comparison. Economic forecasters now say a looming housing shortage will increase real estate prices within the next two years. With the relatively healthy local economy encouraging continued population inflows to Austin, economic consultant Angelos Angelou forecasts demand to soon outstrip supply, a theory consistent with current real estate sales absorption rates. Angelou estimates newcomers move to Austin at a rate of approximately 42,000 per year. New residents coupled with a decrease in the number of new home starts locally may lead to a shortage over the next few years, he said. Three years ago, we were building at the pace of 18,000 a year, but last year, only 8,100 were built; this year, only 6,000 new homes will be built. Angelou said this is an ideal time to buy, and that current sellers may consider waiting for increased demand and prices in the upcoming housing shortage. Like in January and last fall, the number of transactions per month are still down as many borrowers face difficulty securing financing and investors wait for signs of confidence in the markets. Austin-area prices remain stable and affordable, and properties are selling, on average, after just 83 days on market. Stay on top of market trends and information with market insight (pdf) from Austin Title Company.
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