Later this year, a marketing manager will sit down for his first day of work at HomeAway, a company that helps people rent their vacation homes online. In the firm’s sleek Austin, Texas, headquarters, a glass-wrapped building decorated with travel souvenirs, the marketer will flip on his computer and do his job — a job no one has done before. This, you see, will be a brand-new job, one of the most coveted commodities of economic recovery.
How this job will come to exist is at the heart of the most pressing problem in the economy today. Since the start of the recession in December 2007, the U.S. has shed 8.4 million more jobs than it has gained. The unemployment rate hovers near 10%, and broader measures of labor-market woes that include underutilized workers are as high as 16.8%. Go down the nation’s list of economic problems — from mortgage defaults to state-budget shortfalls — and joblessness lurks in the background.
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Time Magazine: Austin is where the jobs are
Don’t mess with Texas: More Americans moving in
From CNN Money
NEW YORK (CNNMoney.com) — Americans, it seems, still have a love affair with the West. Texas and Wyoming were the big winners in the Census Bureau’s annual population estimates, which were released on Wednesday.
In the year ended July 1, Texas added more people than any other state, and Wyoming had the highest growth rate in the nation.
The population of the United States has grown more than 9% to 307,006,550 since the 2000 census. The population grew 0.86% since last year’s estimates.
Just three states shrank during the year. Michigan’s population fell by 0.33%, Maine dropped 0.11%, and Rhode Island lost 0.03%.
Other Sun Belt states have fared much better. Texas, for example, never went through the boom-and-bust housing cycle that devastated the Sand States. Home prices remained affordable, and the state’s unemployment rate was 8% in October, a full two percentage points below the national average.
So, it’s no surprise that Texas added more than 3.9 million residents during the 2000s. Its population also grew by the greatest number of people (478,000) during the 12 months ended July 1.
America’s Strange Homes For Sale
See the full article at Forbes. Looking for something truly unique? These homes are currently for sale.
Bamboo House - Redwood, CA - $1,395,000
Batcave - Laguna Beach, CA - $11,850,000
Volcano House - Newberry Springs, CA - $750,000
Red Rock Drive Castle - Phoenix, AZ - $3,500,000
Lighthouse - Deer Isle, Maine - $2,873,000
Real Estate Downturn of the Early ’90s Differs From Today’s Crash In Important Ways
By David Lynn, Ph.D.
Many market observers have pointed out similarities between the current downturn in commercial real estate and the downturn in the early 1990s. Both were preceded by an extended period of relaxed underwriting standards, excess capital chasing returns, significant cap rate compression, and steep increases in asset values. It is useful to compare and contrast key elements of the two periods in order to establish a reference point for today’s investment strategies.
Two key regulatory changes during the 1980s paved the way for the overbuilding that defined the 1990s recession in commercial real estate. The 1982 tax cuts included provisions that allowed for generous depreciation allowances and tax shelters for investors. Also during the 1980s, the deregulation of the savings and loan industry allowed these institutions to expand their investments to include commercial mortgages.
The tax laws were changed again in 1986 to remove many of the earlier incentives for real estate investment. But the combination of a general atmosphere of economic recovery, an increasing appetite for real estate investment from institutional capital, and the introduction of the S&Ls as new and often inexperienced lenders for commercial real estate resulted in a massive oversupply of space in many markets.
The silver lining in today’s environment is a general lack of oversupply in most markets. New construction in nearly every sector has been below long-term trends, though some markets are struggling with oversupply problems [Figure 1]. While ample financing was made available for development projects in recent years, the combination of supply constraints and sharply rising land and construction costs helped to keep new supply largely in check.
The recession is reaching all property types, and vacancy rates are expected to approach or surpass 20-year highs. The lack of financing for new construction will likely keep new supply further constrained for some time, helping to improve real estate fundamentals as the economy recovers over the next few years.
FIGURE 1: NEW SUPPLY REMAINS IN CHECK COMPARED TO HISTORIC RATES
Austin Makes Another Forbe’s List: U.S. Cities on the Rise
Forbe’s released another list mentioning Austin, “U.S. Cities On The Rise”.
Among the places in America that have welcomed the most newcomers in 2008, three are home to major colleges and universities: Raleigh, N.C., Provo, Utah, (home to Brigham Young University, one of the country’s largest private colleges), and Austin, Texas, home to the University of Texas at Austin.
“If there are lots of newcomers, it’s easy to make friends; there’s a sense of vibrancy there,” says William Frey, a senior fellow at the Brookings Institution. “Places that don’t have a lot of new migrants tend to be older and more stagnant. They’re also more close-knit.”
Intellectual centers like the above-mentioned college towns, however, reliably attract new residents because universities are large, relatively stable employers–and a steady flow of students keeps the population young.
“You have an educated population, and you have a large youthful population,” says Alexander von Hoffman, senior fellow at the Joint Center for Housing Studies at Harvard University. “These places retain people after they’ve graduated, and attract like-minded people.”
Click here to view full story at Forbe’s.com…
Home Sales Up 9.4% in September
By Alan Zibel and Alex Veiga
ASSOCIATED PRESS
Saturday, October 24, 2009
WASHINGTON — Racing to complete their purchases before a tax credit for first-time owners expires, homebuyers pushed sales up last month by the largest amount in more than 26 years.
After jumping 9.4 percent in September, home resales are up nearly 24 percent from the bottom in January, the National Association of Realtors said Friday. But the market’s momentum could be affected if Congress declines to extend the credit of up to $8,000 for first-time buyers beyond the Nov. 30 deadline.
Nationwide sales rose to a seasonally adjusted annual rate of 5.6 million last month, up from a downwardly revised pace of 5.1 million in August. It was the strongest month in two years and beat economists’ forecast of 5.4 million, according to Thomson Reuters business news service. Sales, however, are still down 23 percent from their peak in 2005.
In another positive sign, the inventory of unsold homes on the market fell almost 8 percent to 3.6 million. That’s less than an eight-month supply at the current sales pace and the lowest level since March 2007.
“The excess supply of unsold homes has declined a lot, and this reduces the downward pressure on home prices,” said Harm Bandholz, an economist at UniCredit Global Research in New York. “An improvement in house prices is an important condition for an increase in housing wealth and therefore higher willingness of households to start spending again.”
Although home sales and housing construction have risen steadily after bottoming out this year, most economists say that prices, which recently stabilized, will resume their descent. The median sales price last month was $174,900, down almost 9 percent from $191,200 a year earlier and slightly lower than August’s median of $177,300.
The main reasons prices are weak: Unemployment and foreclosures are still rising. With the current 9.8 percent jobless rate expected to rise as high as 10.5 percent next year, foreclosures will continue to set records.
Austin Makes #2 of Business Week’s Forty Strongest U.S. Metros
Austin took the #2 spot in this national top-40 list for its economic strength. Interestingly, 8 of the remaining top 10 on this list are in driving distance of Austin. It’s no accident that these areas continually make these top-10 lists from various sources, the Texas area has economic strength and stability! It’s what draws so many to the area as well.
- San Antonio, TX
- Austin, TX
- Oklahoma City, OK
- Little Rock-North Little Rock-Conway, AR
- Dallas-Fort Worth-Arlington, TX
- Baton Rouge, LA
- Tulsa, OK
- Omaha-Council Bluffs, NE-IA
- Houston-Sugarland-Baytown, TX
- El Paso, TX
Austin, a high-tech center, is also home to the University of Texas. Employment in the Austin metro peaked in the fourth quarter of last year. Gross metropolitan product peaked in the second quarter. Home prices grew 2.5% in the second quarter compared with the same period a year earlier. And the unemployment rate in June was 7.1%, up 2.6 points from a year earlier.
Job growth (since peak) rank: 2
Gross Metro Product (since peak) rank: 2
Unemployment change (year over year) rank: 16
Home price change (year over year) rank: 18
Breaking News! Senators agree to extend home-buyer tax credit
By Stephen Ohlemacher,Associated Press Writer
WASHINGTON — Senators agreed Wednesday to extend a popular tax credit for first-time home buyers and to offer a reduced credit to some repeat buyers.The tax credit provides up to $8,000 to first-time home buyers but is set to expire at the end of November. The Commerce Department said Wednesday that new home sales fell 3.6% in September, and some industry representatives blamed uncertainty about the tax credit.Senators agreed to extend the existing tax credit for first-time home buyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev.
The tax credits would be available to home buyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers.
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Industry representatives said uncertainty about the tax credit is hurting new home sales. September’s decline was the first since March.
It takes 45 days to 60 days to close on a house, making it unlikely a sale made today would be consummated by the end of November, said Lucien Salvant, spokesman for the National Association of Realtors.
“Buyers right now have an incentive to hold off, not knowing whether the credit will be extended,” Salvant said.
About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.
This credit continues to help first-time homebuyers, but still leaves out a large group: those who have owned a home for fewer than 5 years. Should those current homeowners who are moving after owning their home fewer than 5 years be ignored?
What about those who need to move or relotate for employment? Aren’t they still taking a hit selling a home even if they haven’t owned it 5 years?
What about those who are downsizing to avoid foreclosure with unemployment uncertainty? Should they be left out?
What about those who are having other financial trouble due to divorce, etc.?
How do YOU think lawmakers did on this decision?
Central Texas Economy In Perspective, Austin is a National Best Performing Metro!
Austin Makes the Top of Yet Another Top 10 List!
Central Texas Economy In Perspective
by Beverly Kerr, Chamber Vice President of Research
Last week we looked at the release of September data for nonfarm payroll jobs for Texas and its metros and this week we have the release by the U.S. Bureau of Labor Statistics of that same data for all U.S. metros and states.
Since Austin’s year-over-year change in payroll jobs for September (-0.7%) was slightly less negative than San Antonio’s (-1.1%), it seemed likely that we would again show as best or second best in our ranking of performance of the nation’s 50 largest metros.
In addition to Austin and San Antonio, it looked likely that Fort Worth’s performance would also be near the top nationally, and, indeed, the Texas metros are 2, 3, and 4, behind Virginia Beach (-0.6%). Dallas’s -2.6% job losses put it just out of the top 10 at 11th and Houston’s -3.0% decline puts it at 18th. Among the 50 largest metros, losses range from -0.6% to -9.4% and the median rate is -3.8%.
If this ranking was expanded to the 100 largest metros, instead of the 50 largest, there would be three additional metros outperforming Austin. Alone among the 100 largest metros, Bethesda has added jobs (5,700 or 1.0%) since September 2008. Baton Rouge and New Orleans are the other metros with slighter jobs losses than Austin.
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Homebuyer Tax Credit Update
We’ve heard a lot of good news lately in Austin, but and news on expanding the home buyer tax credit that expires this November 30th is great news. There were many bills on the table for this plan and now this version looks very likely. This tax credit would help the already recovering Austin housing market!
This news is good news, from Bloomberg…
By Dawn Kopecki and Ryan Donmoyer
Oct. 27 (Bloomberg) — U.S. Senate leaders moved closer to an agreement replacing an expiring $8,000 tax credit for first- time homebuyers with a smaller one that would expand access to so-called step-up purchasers, two people familiar with the matter said.
The deal would reduce the size of the tax credit to 10 percent of the sale’s price, capped at $7,290, the people said. The credit would be available on home purchases that are under contract by April 30, and borrowers would have 60 days more to close the sale. The existing credit is due to end Nov. 30.
The new agreement, which is still being negotiated and may change, would grant the credit to borrowers who have lived in their current home for at least five years. Lawmakers want to keep home sales from slipping as the economy struggles to recover from the worst drop in home prices since the Great Depression.
The demand for new homes and condominiums may increase by “more than two times because you’re allowing step-up buyers into the equation,” said Andrew Parmentier, a managing partner at Height Analytics, a research firm in Washington. “ You just opened up a whole new pool of people who can buy into those empty homes and empty condos that were built out.”
The income eligibility for first-time homebuyers would remain the same at $75,000 for individuals and $150,000 for couples. The income criteria for step-up buyers would be $125,000 for individuals and $250,000 for couples.
The credit would be limited to homes costing $800,000 or less. There is currently no price cap on home purchases.
Unemployment-Benefits Bill
Lawmakers are trying to attach the legislation, which is also being considered by leaders in the House, to a bill extending unemployment benefits under debate on the Senate floor, said Richard Durbin of Illinois, the Senate’s No. 2 Democrat.
Senator Bill Nelson, a Florida Democrat, told reporters yesterday of the tax credit that “we should be able to extend that later this week.” Nelson was traveling with President Barack Obama on Air Force One to a speech in Jacksonville, Florida.
