New report focuses on Texas border economiesNew report focuses on Texas border economies2017-05-25T05:00:00Z

​​​​​COLLEGE STATION, Tex. (Real Estate Center​)  — Economies of four Texas metropolitan areas along the Mexico border are shaped by many factors, both from within the state and from across the Rio Grande. A new report from the Real Estate Center at Texas A&M University is monitoring factors influencing economies in Brownsville, El Paso, Laredo, and McAllen.

The inaugural edition of Texas Border Economy notes that economic activity along the Texas-Mexico border slowed late last year, particularly in McAllen and Laredo. Poor economic performance continued into first quarter 2017 for Brownsville and Laredo, dragging down housing demand for both.

“In November, McAllen went through the sharpest contraction," said Research Economist Dr. Luis Torres, “but rallied recently behind strong employment figures. El Paso remains the most stable border economy, but stagnant wages persist there."

Economies in Texas border metros differ. Business cycle indexes for Brownsville and Laredo continue to slide while they are trending upward in McAllen. Although El Paso's index slowed, it maintained its two-and-a-half-year positive trend.

An expanding labor force has pushed El Paso's unemployment rate to 5.4 percent – the metro's highest since 2015. The unemployment rate remained unchanged in McAllen (8.6 percent), Brownsville (8.0 percent), and Laredo (5.0 percent).

“Employment growth in Brownsville and Laredo abruptly decelerated in the first three months of 2017," said Torres. “In Brownsville, employment growth fell from 2.0 to 0.2 percent. Laredo dropped from 3.8 to 0.8 percent. “

Depressed wages continue to plague Brownsville and Laredo. Since 2012, earnings have dropped 26.6 percent in Brownsville. In the last year, Laredo earnings have fallen 8.8 percent.

“Wage decline has not hit McAllen," said Torres. “Hourly earnings in McAllen are up 8.4 percent year-over-year and up 29.5 percent since July 2015. El Paso continues to post stagnant wages, which are still below pre-recession levels."

The peso-per-dollar exchange rate is an important determinant of border economic performance. In March, the rate was down 2.7 percent to 18.77 pesos per dollar.

“Peso-per-dollar depreciation hinders border economies because it reduces consumption by Mexican nationals, particularly in the retail sector," said Torres. “The Laredo and Brownsville economies rely heavily on cross-border business transactions and, therefore, are disproportionately affected by currency fluctuations."

Torres adds that a weaker peso does benefit some sectors of the economy, such as those importing large quantities of goods from Mexico. In March, total value of trade activity expanded across the border. Laredo's trade activity was more than double the total amounts of the other three border metros.

Housing along the border has been affected by underlying economic trends. Laredo's first-quarter home sales were down 6.5 percent. Brownsville avoided a quarterly sales decline thanks to a higher home inventory level.

Following a strong January, home sales in El Paso declined in February and March but still posted a modest quarterly increase of 1.2 percent, said Torres. McAllen's recent economic upswing increased quarterly home sales by 8.3 percent and year-over-year sales by 14.2 percent.

“A glut of new houses in McAllen fueled the sales surge," said Torres, “as the months of inventory (MOI) for new homes remains longer than 12 months and continues climbing. The opposite occurred in Laredo, where the lack of new homes contributed to a sales contraction and an MOI of less than four months. Brownsville and El Paso posted more typical border inventory levels for new homes at 6.7 and 7.1 months, respectively."

Laredo's constricted housing inventory may expand in the near future, notes the Real Estate Center report. Single-family residential construction permits have increased in 11 of the last 12 months.

“Whether all these new permits materialize into actual new home construction depends on Laredo's overall economic condition, which is poor currently," said Torres.

The number of monthly housing permits is down substantially in McAllen. In first quarter 2017, El Paso's housing permits jumped 47.7 percent as demand increased.

Changes in existing home inventories have been more moderate in border metros. The existing home MOI in Brownsville and McAllen remains at 8.6 and 9.0 months, respectively. Existing inventories expanded in Laredo where the MOI rose to 5.9 months, the highest since last May. Higher demand in El Paso precipitated the MOI for existing homes falling to 5.1 months.

Texas Border Economy is free online.​

New Texas border economy report12-0517
Texas housing construction: From bust to robustTexas housing construction: From bust to robust2017-05-16T05:00:00Z

COLLEGE STATION, Tex. (Real Estate Center) – Home construction is ramping up across America, and in no place is that more apparent than in Texas. 

“After an anemic start to the year, the number of Texas single-family home construction permits soared 11.5 percent in March to a ten-year high of 10,481," said Dr. Luis Torres, a research economist with the Real Estate Center at Texas A&M University. 

"Texas led the nation in total permits issued and ranked fifth in permits per capita," he said. “Construction permits increased significantly in the Texas Urban Triangle. 

Houston and Dallas were the national permits-issued leaders. Houston (No. 1) issued 3,543 and Dallas (No. 2) 2,405. Fort Worth recorded 863 new permits for the month, a 45.4 percent increase since January. 

The permit boom is highlighted in the Center's latest issue of Texas Housing Insight​. Torres, Center Chief Economist Dr. Jim Gaines, and Research Assistant Wesley Miller author the monthly update. 

“After lagging in February, permits in Austin and San Antonio surged as well," said Torres. “The 1,547 permits issued in Austin were the most in a decade. San Antonio's 705 new home permits was a 27.2 percent increase." 

Texas housing starts, which generally lag construction permits, were up 26.7 percent quarter-over-quarter, the strongest showing in more than a decade. Quarterly starts were up 4.6 percent in Dallas, 5.3 percent in Houston, and 5.8 percent in San Antonio. 

“Housing starts fell in Austin," said Torres, “but should gain momentum from positive permit numbers."Despite all the good housing news, there is not much relief in sight for Texans seeking homes priced at $200,000 or less, the most constricted price range. 

“Lower-priced housing is in short supply," said Torres. “Texas has only a 3.1-month supply of homes for sale in that price range, and around six months is considered balanced. Increasing land and labor prices have forced homebuilders to concentrate on the higher-end market." 

As demand for Texas housing goes up, the time the average home is on the market goes down.“The average time a Texas home is on the market has held steady at 57 days for the last three months," said Torres. “Homes in the $200,000 to $300,000 price range are driving this demand as shown by their even shorter time-on-market of 52 days." 

Texas' total housing sales rose 3.3 percent during March after a weak showing in the previous month. March sales rose in every price range and in every major Texas metro, according to the Real Estate Center report, which is available online. 

Funded primarily by Texas real estate licensee fees, the Real Estate Center was created by the state legislature in 1971 to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public. The Center is part of Mays Business School at Texas A&M University.​​

Austin Realtor elected chairman of Real Estate Center advisory committeeAustin Realtor elected chairman of Real Estate Center advisory committee2017-02-14T06:00:00ZCOLLEGE STATION (Real Estate Center) – Stephen D. "Doug" Roberts of Austin was elected chairman of the Real Estate Center's advisory committee at the group's meeting Friday in Austin. W. Douglas Jennings of Fort Worth was re-elected vice chairman.

Roberts, who succeeds Russell L. Cain of Port Lavaca as chairman, is a real estate broker with Moreland Properties.​

A graduate of Texas A&M University, Roberts is a certified residential specialist and accredited buyer representative.

As a Realtor, he is a member of the Real Estate Council of Austin, Austin Board of Realtors, Texas Association of Realtors, and National Association of Realtors.

Roberts' term on the advisory committee expires in January 2019.

Jennings is a vice president and principal for William C. Jennings Company. His father, William C. Jennings, served on the advisory committee in the 1980s.

The University of Texas alumnus is a member and past commercial chairman of the Texas Association of Realtors, member and past governmental affairs chairman of the Greater Fort Worth Association of Realtors (GFWAR), member and past chairman of the Society of Commercial Realtors, and a member of the National Association of Realtors.

In 2004, Jennings was named GFWAR's Realtor of the Year. He was also the 1997 recipient of the Lone Star Trophy Award for the year's most outstanding commercial transaction in Texas, and the 2002 recipient of the Charles D. Tandy Award for most outstanding commercial Realtor.

Jennings' term expires in January 2021.

The committee has three public members and one each representing residential, commercial, and industrial properties. Others represent real estate brokerage, construction and finance. Each is appointed by the governor for a six-year term. The Texas Real Estate Commission is represented by an ex-officio member.

Roberts represents the real estate brokerage sector and Jennings the commercial sector on the committee.

The committee approves the Center's research plans and reviews findings. Members also approve the Center's proposed budget before it is submitted to the university.

Funded primarily by Texas real estate licensee fees, the Real Estate Center was created by the state legislature in 1971 to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public. The Center is part of Mays Business School at Texas A&M University.​​​
Eminent domain a road block for Houston-to-DFW rail projectEminent domain a road block for Houston-to-DFW rail project2017-02-02T06:00:00Z​COLLEGE STATION, Tex. (Real Estate Center) – Texas Central’s planned, controversial high-speed railroad between Houston and Dallas-Fort Worth is one of about 50 infrastructure projects that have garnered support from the Trump administration. However, for the project to move forward, Real Estate Center Research Attorney Rusty Adams says the state, landowners, and Texas Central have to sort out issues regarding the use of privately owned land.

“The Big Legal Question in all of this is whether Texas Central has the right to take the property needed to build the railroad,” Adams writes in his latest article, “Courts, Trains, and Eminent Domain.” “The law calls this eminent domain.”

Eminent domain is the power of the government to take property for public use without the owner’s consent. In some cases, the government can grant that authority to private persons or corporations for projects that benefit the general public. The process of actually taking the property is called condemnation.

“This is how we get roads, sidewalks, water supply systems, pipelines, and electrical transmission systems,” Adams says. “But the landowner must be adequately paid for the property.”

Texas Central might claim to have eminent domain authority under two statutes of the Texas Transportation Code.

One provides that a “railroad company” may acquire property by condemnation if the property is required for certain purposes listed in the statute, such as right-of-way, a roadbed, or the construction and operation of tracks.

Texas Central claims to be performing some of the purposes listed in the statute, but landowners disagree.

“The landowners say that a company with no right-of-way, no tracks, and no trains—and not enough money to buy them—cannot possibly be operating a railroad,” Adams says. “If a person can’t buy a ticket and ride a train, they contend, it’s not a railroad, and it certainly isn’t ‘operating.’”

The other statute defines “interurban electric railway company” as a corporation chartered under Texas law to conduct and operate an electric railway between two municipalities in Texas. That section provides that such a company may exercise eminent domain powers the same as a railroad company, and may condemn to acquire right-of-way on which to construct and operate rail lines, as well as sites for depots and power plants.​​

To learn more, read Adams’ latest research article, “Courts, Trains, and Eminent Domain,” now online at https://www.recenter.tamu.edu/articles/tierra-grande/Courts-Trains-Eminent-Domain​​.

Funded primarily by Texas real estate licensee fees, the Real Estate Center was created by the state legislature in 1971 to meet the needs of many audiences, including the real estate industry, instructors, researchers and the general public. The Center is part of Mays Business School at Texas A&M University.
Real Estate Center chief economist: Fed interest rate increase could mean good news for some marketsReal Estate Center chief economist: Fed interest rate increase could mean good news for some markets2016-12-15T06:00:00Z​​​COLLEGE STATION, Tex. (Real Estate Center) – Real Estate Center Chief Economist Dr. James Gaines said the Federal Reserve’s increase in its key interest rate could have different — in some cases positive — impacts on different markets.

The increase, which was announced yesterday, raised the key interest rate by 0.25 percent to a range of 0.50 and 0.75 percent. Yesterday’s increase marks only the second in a decade, and the Fed said it expects three more rate increases in 2017.

“We could see some fallout in the housing market, but the immediate short-term impact on the housing market could be an increase in demand,” Gaines said. “People who are on the fence about buying a home might anticipate rates, as well as prices, going up in the next six to 12 months. This might give them the push they need to buy now.”

Gaines said mortgage interest rates have already gone up at least 40 basis points in just the last 30 or 40 days. The current reported 30-year, fixed-rate mortgage is about 4.3 percent. During the course of the past year, it had bottomed out at about 3.3 percent, so on a total basis it’s up about 100 basis points from its low point during the past year.

“We expect to see more,” he said. “The expectations in the market for the coming year are that interest rates will trend upward. At what rate, though, we’re not sure.”

Gaines said the rate increase could be “somewhat good news” for investors.

“People who count on interest return on investments and retirement savings and so forth have been getting virtually no interest at all on their savings for the past six or seven years,” he said. “In the coming year, they might see some slight increases in interest rates on things like bank savings rates and certificates, and deposits.”

On the other hand, Gaines said the increases may not be enough yet to make a big difference.

He said the other thing to consider is what the rate increase means in the global capital market.

“Our ten-year treasury is now bordering at 2.6 percent, which is a very appealing rate to other countries that might have invested funds or might have investible funds and capital to place somewhere,” he said. “It’s ironic that raising the rates could actually create demand for our bonds that should, theoretically, react to lowering the rates.”

The Fed last raised rates in December 2015.

Funded primarily by Texas real estate licensee fees, the Real Estate Center was created by the state legislature in 1971 to meet the needs of many audiences, including the real estate industry, instructors, researchers and the general public. The Center is part of Mays Business School at Texas A&M University.