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Unemployment Worsens in Rio Grande Valley

J Cline — Sat, 04 Apr 2009 06:45:22 +0000

The state of Texas has a much better unemployment rate than the nation does at this moment. Several strong city economies have helped to keep Texas below the 7% unemployment rate thus far. Austin, for example, has an unemployment rate of less than 4%, and has actually managed to create jobs despite our stumbling economy. There are areas in Texas, however, that have not been spared the drag of the current recession. The Rio Grande Valley, which borders Mexico, has a current unemployment rate of 9.5%. The Labor Workforce Commission released a report recently that stated 1 in 10 residents of this area were out of work in the month of March. There are several reasons why this part of Texas has been hit so hard when compared with the rest of the state. First off, its proximity to Mexico means that it is more affected by the decline in value of the peso. Also, there are many migrant workers who make residence here, but travel to harvest crops. They will then return home and remain unemployed while living off of what they have earned elsewhere. It is also believed that many residents do travel out of state for other employment, such as factory work, which has been hit hard by the economy. When they are laid off, residents return home to an equally sparse job market. The most recent report has the state of Texas’ unemployment rate at 6.7%. The national rate as of now is 9%. At the moment, it is anyone’s guess as to when the recession will begin to turn. Most experts believe that 2009 will see more of the same as we did in January and February. While Texas may hang on better as a state, there will still be areas in need of help to recover.

Austin Home Prices Increase Despite Economy

J Cline — Mon, 30 Mar 2009 12:21:03 +0000

It should be no secret by now that Austin and its surrounding areas have fared well throughout the recession. The city has been named to numerous Top Ten lists in magazines such as Forbes, and online on various websites. The plans for downtown reconstruction and remodeling will only serve to increase the city’s charm for businesses and residents alike. Austin did not share in the nation’s real estate boom several years ago, so while many comparable cities have faced huge losses in home values, Austin has not fallen quite so hard. There has been a slowdown in the real estate market, of course. Houses have sat longer than in previous years, but affordability and location have kept people looking to Austin for a place to settle. This week, the Federal Housing Finance Agency released a report stating that Texas home prices increased by just over 2% in 2008. The Austin-Round Rock area actually increased home prices by 4.4%, according to the same report. January saw an increase in home sales for the area. While many economists believe that 2009 will be a bleak year, it is important to note that the Austin economy is in better condition when compared to the nation. The bottom of the real estate crisis is expected this year, with home values and prices beginning to increase in 2010, according to many experts. Austin has maintained so well due to many factors. As previously mentioned, the housing bubble did not exist here. Homes in the last several years were in high demand, while supply was limited. Add to this the fact that Austin actually managed to create about 20,000 new jobs in the past year. The unemployment rate here is less than 4%. The Austin area is expected to emerge from this recession well above many other similarly sized cities throughout the nation.

Daily Real Estate News: 03-17-09

Joe Cline — Wed, 18 Mar 2009 01:42:15 +0000

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From Green Building Talk Getting Into Hot Water: Solar Water Heating Pays For Itself Five Times Over An analysis of the engineering and economics for a solar water-heating system shows it to have a payback period of just two years, according to researchers in India. They report, in the International Journal of Global Energy Issues, on the success of the 1000-liter system operating at a university hostel. The current focus in the developed world is on advanced technological approaches to alternative energy sources, such as photovoltaic cells for solar power and harnessing wind and wave with elaborate systems to generate electricity. However, the cost of such systems may be prohibitive for some applications in the developing world. They also often ignore the fact that a mundane process such as heating water might best be carried out using direct heat from the sun rather than including a waste energy-conversion step. … Read the rest at GreenBuildingTalk.com

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From Associated Construction Publications Construction Jobs Decrease by 104,000 in February Construction employment fell by 104,000 in February with losses throughout the sector. This industry has shed 904,000 jobs since the recession began, with about half of the decline occurring in the past 4 months, according to testimony by Keith Hall, commissioner, Bureau of Labor Statistics, before the Joint Congressional Economic Committee today. Although the stimulus package is expected to positively affect construction employment through “shovel-ready” projects, none of that has started yet. The decline in construction employment mirrors declines in the rest of the labor market as the sharp and widespread contraction continued in February. Nonfarm payroll employment fell by 651,000, following declines of 681,000 in December and 655,000 in January. Since the recession began in December 2007, job losses have totaled 4.4 million, well more than half of which occurred in the past 4 months. In February, the unemployment rate climbed from 7.6 to 8.1 percent, the highest rate in over 25 years. … Read the rest at Associated Construction Publications

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1/9/09 Mortgage Market Week-in-Review

Marie Funston — Mon, 12 Jan 2009 06:01:26 +0000

What Did Interest Rates Do This Week?

** according to Freddie Mac **

30-yr Fixed – Lower

This Week: 5.01% — lowest since 1971

Last Week: 5.10%

1yr Ago: 5.87%

15-yr Fixed – Lower

This Week: 4.62%

Last Week: 4.83%

1yr Ago: 5.43%

5/1 ARM – Lower

This Week: 5.49%

Last Week: 5.57%

1yr Ago: 5.63%

Highlight of This Week’s Major Economic Reports

Despite a recent uptick in Treasury yields, mortgage rates actually fell during the first full week of the New Year. One major catalyst driving this dip is the start of the Fed’s foray in purchasing mortgage-backed securities. The $500 billion budgeted for this shopping spree is helping to increase demand, which in turn has kept rates low.

Stocks also took a hit throughout the week as retailers and other corporations took turns issuing earnings warnings. This then led to a ‘flight to quality’ mad-rush over to the bonds markets, thereby further driving down rates.

And, lastly, there was the much-anticipated Employment Report. We knew it wasn’t going to be pretty. 524,000 jobs lost in December, which brought the final 2008 tally to 2.6 million. The unemployment rate now sits at a level we haven’t seen in 16 years – 7.2%. Despite the gloomy outlook for the job market, most economists do not anticipate the unemployment rate to hit double-digit levels, since the economy (i.e., GDP) is expected to make a comeback (albeit a modest one) in the second half of the year.

What to Look for Next Week

We’ll get to find out just how bad the worst holiday shopping season in years was when the latest Retail Sales figures come out on Wednesday. Then, of course, there are the all-important inflation gauges in the Consumer Price and Producer Price Indexes. Inflation is not expected to be an issue at all; it’s more so seeing if the numbers start to creep into deflationary territory, as many economists fear.

Short-Term Rate Outlook

Fractionally Lower

Marie Funston

Senior Mortgage Advisor | Cell: (512) 750-7270

Living in Luxury in North Austin

J Cline — Fri, 09 May 2008 06:54:56 +0000

Construction began in February 2008 on two luxury apartment complexes in the North Austin area, both constructed by the Texas division of Alliance Residential Company: Alliance Communities. Broadstone Travesia will be a 396 unit, built next to Travesia Corporate Park and Broadstone Grand Avenue, a 280 unit complex, will be build near Round Rock on the Grand Avenue Parkway. The Travesia complex is scheduled for completion by mid-2009. Rents on the one-, two-, and three-bedroom apartments will range from $785 to $1,465 per month. It will be located across from La Frontera, a mixed-use development containing retail and office space, residential areas, and financial institutions. The Grand Avenue project is also expected to be completed in 2009, offering one-, two-, and three-bedroom units ranging in rent from $760 to $1,430 per month. The apartment complex will be located at the northeast area where Grand Avenue and Interstate Highway 35 intersect. Construction financing for the Travesia apartments is being provided by Guaranty Bank, while Bank of America is providing the financing for the Grand Avenue project. This new construction is indicative of the Austin area’s healthy and growing economy. Austin continues to attract major corporations to locate their headquarters in the area, and has been a leader in a new growth industry – “green” jobs and construction. As concerns over global climate change and warming grow, Austin stands ready to answer with alternative energy sources and sustainable landscaping, reusing waste water to irrigate lawns and plantings, designing new buildings with existing energy sources – natural sunlight and warmth, as well as cooling – in mind. The new apartment complexes will provide housing for an expected influx of workers in the north Austin area.

Overbuilding in Austin's Central Business District

Joe Cline — Tue, 22 Jan 2008 07:00:55 +0000

I’ve got to say the whole time the boom was going on in the last 18 months and our developments were selling out as fast as we could build them, I still felt that the downtwon market was being overbuilt. As Neal mentions in the excerpt below, the jobs in dowtown Austin are just not numerous enough or well paying enough (given all the state and local government jobs) to support the amount of $300+/sq ft condos going up. Some of these condos have MONTHLY HOA fees in excess of $600. That’s the cost of a $100k mortgage on a home. Needless to say, there is bound to be some number of folks who get burned by the glut. If you’re in the market for a downtown condo, make sure you strike a good deal. You might be facing a lot of competition from the new builders if you decide to sell in the next 3 years. Excerpt from the Neal Spelce Austin Letter.

Despite the mantra being heard of “live and work downtown,” Austin traffic patterns could change dramatically once the surge in downtown high-rise condo construction nears completion and occupancies reach saturation.

The problem is simple. Currently there are not enough jobs in the downtown area to support full occupancy of the new high-rise condos and apartment buildings that are nearing completion. And the pace of job creation in the downtown area is not yet vigorous enough to meet that demand, should the demand materialize. So, living downtown and walking to work may not be possible for hundreds of residents in the Central Business District.

What does this mean? Well, it means that many of those who rush to live downtown will find themselves part of a new traffic pattern during rush hour. You might call it a reverse commute. Cars will start streaming out of the downtown area to places of employment at the same time cars are converging on the downtown area from the suburbs and other neighborhoods.

This potential alteration is based on the assumption that downtown living units will be occupied at a reasonably fast clip (as owners, developers and lenders are hoping!!!). With that assumption, the only thing that could stem this traffic pattern change would be for more major employers to move into the downtown area. These major employers would need to pay a higher-than-average wage so their employees could afford these new units. So far, not many major employers have rushed to acquire pricey downtown space for their companies.

Remember, the majority of the employees in the downtown area right now draw government paychecks; they don’t fit the target profile for the new condo and apartment marketers. When the day is done, they head to their living units in the less expensive parts of town. It will be interesting to watch this develop as our downtown undergoes dramatic changes.

Mortgage shake-up, job growth, and why Austin rocks for businesses

Joe Cline — Tue, 30 Nov 1999 06:00:00 +0000

The tightened credit in the home mortgage field may actually be helpful to Austin area businesses. As we have reported, the impact of the subprime mortgage crisis has slammed the door on many borrowers — even those with “good”credit.More and more Austin area residents who, just a few months ago, might have sailed through a second mortgage application, a refinancing or a home purchase are finding it more difficult – if not impossible – to be approved for those loans today.This is where business borrowers come in. For the most part, Austin area financial institutions are eager to lend to businesses – especially small businesses with good credit records. This helps to offset their dwindling mortgage income. Not to minimize the crisis that is tightening the screws in the mortgage market. It’s a serious problem. But out of this problem an opportunity is emerging for businesses that may need to seek more money. Jobs are a basic driver of the economy. And the Austin area is among the strongest in the nation in creating new jobs.For more than two years now, the Austin metro area has been adding new jobs at one of the strongest paces in the nation.Our metro includes the counties of Travis (Austin), Williamson (Round Rock, Georgetown), Hays (San Marcos) Caldwell (Lockhart, Luling) and Bastrop. The pace of job growth shows no signs of letting up. Not only does Austin lead the state economically, but by at least one measure Austin is the best place in the US for business. Moody’s Economy.com Inc. gave Austin the top spot over almost 400 US metro areas, based on current conditions and expected trends as well as potential risks. - Excerpt from From The Neal Spelce Austin Letter (www.AustinLetter.com).

The Austin Market When I read these tidbits yesterday I remembered that, like all markets and businesses, there are ups and downs. While the mortgage fiasco has made the real estate market slow a bit, Austin is still outperforming most places in the United States. I think the reactions from people has to do with the incredible (by Austin standards) year that 2006 turned out to be for real estate. Comparing the 2007 real estate market to the 2006 real estate market and going bearish, resembles stock market investors worrying about a few hundred point drops when the DJIA is higher than it’s ever been. As you might guess, I’m still optimistic about the market in Austin as a whole. That said, there’s at least one place where I wouldn’t want my money right now. Downtown Austin Condos Yesterday, Avera Development removed The Magnolia development from it’s website and is reevaluating it’s development plans. The Magnolia was planned to be 139 units and no definitive direction was announced by the owners although some sources expect the land to be used for an apartment complex. Additionally, another development group working on a project announced as The View is selling the land and scrapping plans for their 69 unit green development.It’s understandable that people are starting to reevaluate their developments. With the number of planned and in development units for downtown at an all time high, I’d hate to be the last guy to complete my condos. While the condos in many of the developments have sold quickly, if the pace of building keeps up I wonder if we’ll wind up like Denver or Miami were 2006. Given that our market generally lags the nation a bit, we could be in for a bumpy ride in the chic downtown Austin condo market.