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Residential Department: Spotlight: Texas: October 2019

 

Spotlight: Texas

The Lone Star State is a hotbed for jobs and affordable housing.

Texas traversed a tumultuous path to become the 28th state in December 1845. The name of the popular Six Flags amusement-park franchise, which was founded in Texas in 1961, is derived from the fact that the state’s 268,000 square miles have been controlled by six different governments — Spain, France, Mexico, the Republic of Texas, the Confederacy and the United States.

The Lone Star State is home to nearly 29.1 million people, making it the second most populous state behind California. It has added more residents than any other state each year since 2006, including more than 379,000 from July 2017 to July 2018. Its growing population and booming economy go hand in hand: According to a report from Business Insider, Texas leads the nation in crude-oil and wind-power production. It also accounted for $226 billion in manufacturing output in 2017, or 10% of manufacturing in the U.S.

Texas has six of the 25 largest cities in the country (Houston, San Antonio, Dallas, Austin, Fort Worth and El Paso), each of which has more than 500,000 residents. With an estimated population of 2.3 million as of July 2018, Houston is a national hub for companies in the advanced-manufacturing, energy, biotechnology and digital-technology sectors, according to the Greater Houston Partnership. San Antonio, meanwhile, houses the nation’s largest military hospital and has a life-science and health care sector that contributes more than $40 billion annually to the local economy.

Building permits for new single-family homes in Texas increased for a fifth straight month as of this past May, with the Lone Star State accounting for 16% of all construction starts nationwide, the Texas A&M University Real Estate Center reported. The Austin metro area had more than 1,700 permits issued that month, a 12% year-over-year increase, while the 875 permits issued in the San Antonio area outpaced larger metros such as Chicago, Miami and Seattle.

A report released earlier this year by the Texas Higher Education Coordinating Board stated that “a much higher level of cooperation” is needed between the state’s K-12 public schools and its colleges and universities. Texas sends only 52% of its high school graduates directly to college, below the national average of 67%.

U.S. Census Bureau statistics show that 39% of Texans are Hispanic, but they represent 51% of the state’s population that lives below the poverty line. In 2017, the state had a median household income of $59,206, but that figure dropped to about $45,000 for black and Hispanic households across the state.


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Home sales and prices

According to a year-end 2018 report from Texas Realtors, the state’s median home price increased 4.4% year over year to $232,900 and the number of homes sold increased 1.7% to 344,030. Statewide, the median price per square foot of $116.36, the 3.3 months of for-sale inventory and the 101,534 active listings all rose on an annual basis. The state issued more than 115,000 single-family building permits and more than 99,000 new homes were sold last year.

The same report noted that more than 60% of homes in the Lone Star State sold for $100,000 to $300,000. Homeowners spent an average of 20.7% of their income on housing costs, compared with 29.2% for renters. The largest share of Texas homeowners (22.2%) were between the ages of 45 and 54. The state had a homeownership rate of 62%, although rates in metro areas such as Beaumont, McAllen, Brownsville and Midland topped 67%.

Unemployment

The unemployment rate in Texas was 3.4% as of this past July, which was 30 basis points below the national rate. Texas has had declining or stable unemployment every month since September 2016, when its rate was 4.8%, the U.S. Bureau of Labor Statistics (BLS) reported.

The state’s labor force grew 2.6% annually this past July to 12.8 million and several employment sectors — including mining and logging; construction; financial activities; and leisure and hospitality — exceeded that clip, according to BLS. A report from the Texas Workforce Commission noted that, as of July 2018, the state’s labor force had grown 18% beyond its pre-recession peak, compared to 7.7% growth for the nation.

Texas had a per capita personal income of $49,161 in 2018, which was 92% of the U.S. average of $53,712.

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Delinquencies and foreclosures

Attom Data Solutions reported that foreclosures in the Lone Star State, as measured by the number of auctioned and real estate owned properties, peaked at more than 150,000 in both 2006 and 2010. Last year, foreclosures increased on an annual basis, but the 45,977 such filings represented a 64% decrease over an eight-year period.

CoreLogic reported that the Houston metro area had a 30-day delinquency rate of 4.9% and a 90-day delinquency rate of 1.6% this past March. Both figures were higher than the U.S. rates of 2% and 1.4%, respectively.

The Houston Chronicle noted that nearly 75% of the homes in Harris County that flooded during Hurricane Harvey in 2017 were in areas that didn’t require flood insurance. The 267 Harris County homes sold at auction in July 2018 were more than double the number sold in January 2018.


3 Cities to Watch

Dallas

According to census estimates, Dallas grew 12.3% from 2010 to 2018 and now has more than 1.3 million residents. A report from the Federal Reserve Bank of Dallas said that annualized job growth in the Dallas-Fort Worth metroplex was 3.7% in second-quarter 2019, the fastest pace in nearly three years. Construction and mining were the metro area’s fastest-growing employment sector at that time, while trade, transportation and utilities was its largest job sector. The area attracted a record 27.2 million visitors in fiscal year 2017 for events like the NFL draft and Cotton Bowl Classic.

San Antonio r_2019-10_Spotlight_city

The city in south-central Texas has seen growth that has been even more explosive than that of Dallas, with its population expanding 15.5% from 2010 to 2018 to more than 1.5 million people. Real estate brokerage Redfin called San Antonio a “somewhat competitive” housing market this past August, with the typical home spending 35 days on the market and selling for about 2% less than list price. The average sales price of $220,000 at that time, however, was up 3.8% year over year.

Houston

The nation’s fourth-largest city is in the midst of an economic surge. The Houston metro area added 79,800 jobs during the 12-month period ending in May 2019, while its unemployment rate dropped 90 basis points between April and May of this year, labor statistics show. The metro area’s largest employers include Memorial Hermann Health System, ExxonMobil, Shell Oil Co. and United Airlines. As of first-quarter 2019, Houston’s cost of living was 4.6% below the U.S. average and nearly 26% lower than the nation’s 20 most populous areas, according to the Council for Community and Economic Research.

Sources: Attom Data Solutions, Austin American-Statesman, Business Insider, CoreLogic, Council for Community and Economic Research, Federal Reserve Bank of Dallas, Greater Houston Partnership, History.com, Houston Chronicle, Redfin, San Antonio Economic Development Foundation, SmartAsset.com, Texas A&M University Real Estate Center, Texas Higher Education Coordinating Board, Texas Realtors, Texas Workforce Commission, The Dallas Morning News, The Texas Tribune, U.S. Bureau of Labor Statistics, U.S. Census Bureau, U.S. Department of Commerce, World Population Review

What the locals say

“The cost of living, employment opportunity and corporate transfers have been some of the main contributors to our continued growth. In fact, SmartAsset.com came out [in May 2019] with a ranking of the best cities for living the American dream and Texas had 13 of the top 25 cities in the U.S. … For the last three years, we have been in a crazy, multiple-offer [home-purchase] environment. This year, we’re not seeing it as much, but it’s still a hot market. We are seeing some negotiating. We’re seeing where some sellers are willing to pay some costs.”

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Linda Davidson

Branch manager, Fairway Independent Mortgage Corp., Heritage Group


 

Neil Pierson is editor in chief of Scotsman Guide Media. Reach him at neilp@scotsmanguide.com or (800) 297-6061.

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