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Houston Economic Update - February 2013

Houston Economic Update - February 2013

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Published by Coy Davidson
Economy at a Glance
Economy at a Glance

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Published by: Coy Davidson on Feb 05, 2013
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02/05/2013

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February 2013 ©2013, Greater Houston Partnership Page 1
 
 A publication of the Greater Houston Partnership Volume 22, Number 2
 
February
 
2013
A Three-Peat for Houston
– ’12 marked the third consecutive year in which Houstonled the state in job growth. Houston, with 23.7 percent of the state’s population, ac-counted for 31.8 percent of the state’s job growth last year. The 10-county metro areaadded 84,500 jobs, a 3.2 percent increase over the previous year. GHP’s official em-ployment forecast called for the region to create 84,600 net new jobs in ’12. Growth inthe region fell short of the GHP forecast by only 100 jobs, essentially a rounding error inan economy with 2.7 million in total nonfarm payroll employment.
Texas Metro Areas Ranked by Total Jobs Created
December Employment Annual Change
Metro Area
'12 '11 Nominal %
Houston-Sugar Land-Baytown 2,731,000 2,646,500 84,500 3.2
Dallas-Fort Worth-Arlington 3,040,500 2,961,300 79,200 2.7Austin-Round Rock-San Marcos 833,900 799,300 34,600 4.3San Antonio-New Braunfels 878,600 856,600 22,000 2.6El Paso 287,800 284,300 3,500 1.2Corpus Christi 187,500 184,900 2,600 1.4Odessa 71,300 68,900 2,400 3.5Waco 107,800 105,400 2,400 2.3McAllen-Edinburg-Mission 235,100 232,900 2,200 0.9Midland 78,100 76,000 2,100 2.8Wichita Falls 60,100 58,000 2,100 3.6Beaumont-Port Arthur 159,500 157,500 2,000 1.3Killeen-Temple-Fort Hood 131,600 129,700 1,900 1.5Amarillo 115,600 113,900 1,700 1.5Texarkana 60,200 58,500 1,700 2.9Tyler 98,500 96,800 1,700 1.8Abilene 66,700 65,100 1,600 2.5Laredo 96,700 95,200 1,500 1.6Victoria 52,100 50,900 1,200 2.4San Angelo 47,700 46,700 1,000 2.1Longview 99,600 98,700 900 0.9College Station-Bryan 97,600 96,900 700 0.7Sherman-Denison 43,600 44,000 -400 -0.9Lubbock 130,200 132,000 -1,800 -1.4Brownsville-Harlingen 125,600 130,000 -4,400 -3.4
State of Texas 10,972,800 10,707,300 265,500 2.5 
Source: Texas Workforce Commission
 
HOUSTON—THE ECONOMY AT A GLANCE
 
February 2013 ©2013, Greater Houston Partnership Page 2
Data sets for the full year are now available for most sectors. This issue of 
Glance
re-views them.
Going, Going, Gone
– Houston realtors sold 74,682 homes in’12, a 17.4 percent increase over the 63,606 sold in ’11, reportsthe Houston Association of REALTORS
®
(HAR). Last yearwas the fourth best year on record. That performance shouldbe viewed in the proper context. Subprime lending fueled salesin the three best years on record, so last year’s volume—sustained by solid fundamentals—was truly a milestone. Fivefactors drove those sales—job growth, household incomegrowth, low interest rates, pent-up demand, and growing con-sumer confidence.
 
The Texas Workforce Commission reports the Houston re-gion gained more than 250,000 net new jobs since the bot-tom of the recession, giving many would-be homeownersthe wherewithal to purchase a house, condo or townhome.
 
The U.S. Census Bureau reports that between ’09 and ’11the number of households with annual incomes of $75,000or greater grew by more than 48,000. As a rule a thumb, ahousehold can afford a home worth two to three times itsannual income. The market for homes in Houston priced at or above $150,000 hasbeen the strongest. When data becomes available for ’12, another 16,000 to 20,000 lo-cal households will most likely be above the $75,000 threshold.
 
In ’10 (the year Houston began to emerge from the recession), local realtors sold61,005 homes, the fewest since ’02, according to HAR. Houston also had one millionfewer residents in ’02. Clearly, Houstonians had postponed buying homes during therecession until they felt more confident about their economic prospects.
 
The cost of borrowing has gone down. In August ’08, the typical interest on a 30-year,fixed rate conventional mortgage was 6.48 percent, according to data compiled by theFederal Reserve Bank of St. Louis. As of December ’12, the rate was 3.35 percent.
 
The strong performance of Houston’s economy over the past three years has boostedHoustonians’ confidence. History will show that Houston was the first of the majorU.S. metro areas to recover from the recession.
 1
 
1
Houston returned to its pre-recession employment peak in November ’11. Of the nation’s 20 most populous metro areas, onlyWashington, D.C. and Dallas-Fort Worth have returned to their previous peaks, and they did so after Houston.
Metro HoustonHome Sales*
 
Year Sales
'12 74,682'11 63,606'10 61,005'09 63,801'08 69,336'07 83,736'06 87,799'05 79,012'04 72,183'03 64,600'02 58,914
* Includes houses, duplexes,townhomes, condominiumsSource: Houston Associationof REALTORS
 ® 
 
 
HOUSTON—THE ECONOMY AT A GLANCE
 
February 2013 ©2013, Greater Houston Partnership Page 3
The national media have noted Houston’s strong performance as well.
 
In July ’12,
Forbes
rated Houston number one among America’s Coolest Cities toLive.
Forbes
based the rankings on the number of entertainment options per capita,recreational opportunities, number of pro and college sports teams, number of restau-rants and bars per capita, cultural composition, median age, net migration in ’11 andunemployment rates.
 
In March ’12,
Site Selection
ranked Houston the top metro for new and expanded cor-porate facilities. The ranking was based on the 195 projects that GHP identified andsubmitted to publishers.
2 
 
In January ’12,
 Business Insider 
ranked Houston number one among U.S. cities withthe Fastest-Growing Wages in America. The organization’s PayScale Index trackshow many times private sector wages have changed since ’06.Two more items of note. First, the sale of foreclosed homes no longer has a significantimpact on the market. In January ’09, one in every three homes sold through HAR’s Mul-tiple Listing Service was a foreclosure. By December ’12, foreclosures accounted for onein seven sales. Second, supply remains tight. Houston has 3.7 months of available inven-tory,
i.e.,
the number of months it would take to deplete current active inventory based onthe prior 12 months of sales activity. Six months of inventory is considered a balancedmarket. As recently as June ’11, Houston had a 7.9-month inventory.Looking ahead to ’13, the GHP doesn’t see any significant shifts in the above fundamen-tals. Houston realtors should enjoy another strong year of home sales.
Beep-beep, beep-beep, yeah!
– Auto dealers in the Houston metro area sold 325,088 ve-hicles, a 27.5 percent increase over the 254,996 sold in ’11, reports
TexAuto Facts
, pub-lished by InfoNation, Inc. of Sugar Land. This represents the third best year in the past10. Like housing, solid fundamentals—job growth, income growth, pent-up demand,growing consumer confidence—drove auto sales. Several factors specific to the autosdrove sales as well:
 
Motorists who held onto their vehicles in uncertain times finally felt comfortable trad-ing in their clunkers for more recent models. According to R.L. Polk & Company, theglobal automotive intelligence firm, the average age of the U.S. passenger vehicle inJune ’11 was 11.1 years; for a light truck, it was 10.4 years. That compares to around8.4 years for both vehicle types in the mid-’90s. Granted, it is better that vehicles lastlonger now, but the aging of the fleet helps spur sales. And older cars are less likely to
2
A list of the projects which have relocated or expanded to Houston in the past three years can be purchased through the Partner-ship’s Publication Sales Department, 713-844-3600.

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