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RECON for May 15, 2020RECON for May 15, 20202020-05-15T05:00:00Z2020-05-15T05:00:00Z
RECON Real Estate Center
COVID-19 virus with a Texas on it
The Real Estate Center's new economic indicator can help forecast changes in the Texas economy resulting from the COVID-19 pandemic. Read the latest weekly report here, and sign up for our email list to be notified when the report is updated. (Image by Center Creative Manager Bob Beals.)
May 15, 2020

Initial unemployment claims receding but remain elevated

COLLEGE STATION (Real Estate Center) – In the week ending May 9, nearly 141,000 initial unemployment insurance claims were filed in Texas. That brings the total since March 21 to 1.97 million, according to data from the U.S. Department of Labor (DOL). 

Unemployment claims fell for the third straight week after peaking on April 18

​The Real Estate Center estimates the unemployment rate across the state could be as high as 15 percent in April. Unemployment could hit 17.8 percent in May. 

Using data from the DOL and the Employment and Training Administration, the Real Estate Center estimates that from March 21 to May 2, over 405,700 seasonally adjusted claims were filed in Dallas-Fort Worth. That is the highest ​of Texas' major metros. 

In Houston, San Antonio, and Austin, an estimated 388,700, 127,900, and 46,500 claims were filed during that time, respectively. 

At the metro level, the Center estimates May's unemployment rate could be 15.4 percent in Houston, 13.5 percent in San Antonio, 13.4 percent in DFW, and 6.9 percent in Austin.

Accommodation and food services, retail trade, and administrative and support and waste management and remediation services represented the sectors with the biggest unemployment claims.

The data series shows the number of individuals who enter unemployment each week, but it says little about individuals who leave the ranks of the unemployed when they become re-employed.

"In the coming weeks, the number of individuals who continue to file unemployment claims each week and the duration of unemployment could become the most important high-frequency indicators​ of labor market developments​," said Real Estate Center Research Economist Dr. Luis Torres. 

Nationwide, nearly 36.5 million unemployment claims have been filed since March 21. The Center estimates the U.S. employment rate could be 18.7 percent in May. 
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Texas small businesses weathering COVID-19 better than other large states

​​​​​WASHINGTON (U.S. Census Bureau) – Compared with other large-population states, Texas appears to have fared COVID-19's devastating economic effects, but that is not saying much. 

According to this week's Census Bureau's Small Business Pulse Survey, almost half of Texas small business respondents said the pandemic has had a large negative effect on business. 

"Unsurprisingly, that’s better than Michigan, New York, and California due to the massive difference in business restrictions," said Real Estate Center Senior Data Analyst Joshua Roberson.​

Texas sits at the average of state responses with large negative effects at 48 percent.

Around a fifth of Texas small businesses had to reduce the number of employees on their payrolls. According to Roberson, while the number seems low, it is because the inaugural survey period was the week ending May 2, several weeks after the peak unemployment claims. 

Almost 50 percent of Texas small businesses had to continue reducing remaining employee hours. Since March 13, over 77 percent of respondents stated that they had requested assistance from the Payment Protection Program, but only 48 percent said they received that assistance.  

A quarter of respondents said they had less than two week's worth of cash to keep business operations going. A majority of businesses—close to 90 percent both in Texas and nationwide—have avoided missing loan payments.

Retail and accommodation/food services sectors were more likely to be short on cash.

"Even with lifted restrictions in Texas, these industries have a long road to recovery ahead of them," Roberson said. "On top of normal operating costs, these businesses will have to face increased cleaning costs and limited capacity.​"

The overall sentiment among Texas small business owners is positive compared with the nation as a whole. Around 26 percent think business will return to normal within two to three months, while another 28 percent think four to six months. Around 29 percent believe that it would take longer than six months before normal comes back around.

Oil-dependent metros in Texas will likely see a different recovery timeline than other cities.

The Small Business Pulse Survey seeks the opinion of single-location small businesses with fewer than 500 employees and at least $1,000 in receipts. Survey responses are aggregated by nation, industry sector, and state. 
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Commercial real estate outlook at all-time low

​​HERNDON, Va. (San Antonio Business Journal) – NAIOP’s Commercial Real Estate Sentiment Index has dropped from 57 to 45 over six months, reflecting growing pessimism amid COVID-19. 

An index below 50 indicates unfavorable conditions are expected in the coming 12 months. 

This is the first time the index has registered below 50 since it began in 2016.

The sentiment reading for effective rents fell from 62 last fall to 45. The outlook for occupancy rates fell from 57 to 44. Sentiment was 67 for both debt and equity availability in September, but both are now in the mid-40s. 

The outlook for construction material and labor costs went from 29 to the low 40s, signaling that respondents believe costs will fall because of lower demand.
kitchen remodelIn observance of National Home Improvement Month, the National Association of the Remodeling Industry (NARI) has released advice for homeowners looking to improve their homes. 
  • Be vigilant in checking licenses and insurance for anyone that you allow to enter your home. 
  • Stay focused on safe habits and do not let the excitement of remodeling your home blur your vision for the safeguards you have in place for your loved ones.
  • Start your research at NARI's website, remodelingdoneright.com. The site can help you connect with a safe, professional, and trusted remodeler. 

Houston housing feels COVID-19's effects in April

​​HOUSTON (Houston Association of Realtors) – The local housing market’s strong start to the new year was abruptly interrupted in April as the full impact of the coronavirus outbreak was felt across Texas and the rest of the country​​.​

According to the Houston Association of Realtors, home sales had been outpacing 2019’s record volume prior to April as consumers took advantage of historically low interest rates. However, year-to-date sales are still running 1.4 percent ahead of last year’s level.

Last month, 6,199 single-family homes were sold across the metro, down from 7,666 sales a year earlier, a 19.1 percent decline. This ended a nine-month run of positive sales growth. 

Pricing, however, showed little impact. The single-family average sales price was $310,331, less than $100 lower than the average prices in April 2019. The median sales price increased 2.4 percent over the year to $251,000. 

Single-family inventory tightened by 0.3 months to 3.6 months. The Real Estate Center considers six to 6.5 months of inventory a balanced market. 

Last month, there were 7,125 single-family pending sales, down 17.6 percent from April 2019. 

Sales of all property types totaled 7,192, down 21.6 percent over the year. Total dollar volume for the month fell 20.4 percent to slightly more than $2.1 billion.
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Pico Union picks up 844-unit housing portfolio

SAN ANTONIO (REBusiness Online) – Pico Union Housing Corp. has purchased a five-property, 844-unit housing portfolio. 

The properties, built between 1960 and 1976, include the:
  • 120-unit Roselawn Apartments at 3346 Roselawn Rd., 
  • 160-unit Spanish Spur Apartments at 68​35 Pecan Valley Dr., 
  • 160-unit Villas of Pecan Manor at 6840 Pecan Valley Dr.,
  • 308-unit Westwood Plaza Apartments at 2600 Westward Dr., and 
  • 96-unit Winston Square Apartments at 2506 S. General McMullen Dr.
Average unit size is 769 sf. 

JLL represented the seller, Terravista Partners, and procured the buyer.
market viewer screen shotTexas Realtors' MarketViewer tool helps members and their clients quickly understand the market statistics in their area. This powerful tool is a member benefit available exclusively to Texas Realtors and local Realtor associations in Texas. Data are compiled and analyzed through a research agreement between Texas Realtors, the Real Estate Center, and all MLSs across the state. 

New Uptown Dallas high-rise in the works

DALLAS (Dallas Morning News) – Trammell Crow Co. is working on a 27-story office and retail tower at 2401 McKinney Ave. between Maple Ave. and Fairmount St.

The high-rise will include 670,000 sf of offices, 15,000 sf of retail, and underground parking. Truluck’s will be the anchor retail tenant.​

Connecticut-based architect Pickard Chilton designed the project. HKS will be the architect of record.

Work starts early next year and will wrap up in mid-2023. 

The developer is seeking zoning changes to allow for greater height and density for the project.​ The project will be Uptown's largest office building.
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Sabot moves forward with SA mixed-use project

​​SAN ANTONIO (Cadence McShane Construction Co.) – Austin-based ​​Sabot Development is building Elmira at Myrtle, a 1.55-acre mixed-use tower near The Pearl district.​

The 11-story project will include 14,000 sf of ground-floor retail and restaurant space, three floors of above-grade parking, and 325 residential units across eight floors. 

Cadence McShane Construction Co. is the general contractor. 

Construction will begin in first quarter 2021. 
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Material herein is published according to the fair-use doctrine of U.S. copyright laws related to non-profit, educational institutions. Items attributed to sources other than the Real Estate Center at Texas A&M University should not be reprinted without permission of the original source. To send news items for consideration, e-mail Hayley Rieder. The Real Estate Center is part of Mays Business School at Texas A&M University in College Station - the heart of the Research Valley.


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