I received this great article from Castle Hill Investments that I thought I would share with you:
It is quite an unsettling, historic time in the equity markets.
It seems difficult to decide where to put your money these days. The stock market or Mutual Funds? Yikes. The bank? Nope. Real estate just anywhere? Probably not yet.
Central Texas real estate? Consider this:
Despite all of the national headlines, property values in The Austin and Central Texas market - surprising even to us - continue to gain in value (though sales have slowed) - Click here for the full article.
A third party entity called The PMI Group has recently ranked the four major Texas cities as the "least likely to decline in value in the coming year" with a less than 1% chance of decline. Click here for the full article.
Though we do expect continued mayhem in the markets up until the Presidential election, we continue to encourage value hunters to consider buying this year, because Central Texas sellers are generally more willing to deal than any time in the past several years, and the selection of available inventory would make buyers of the past few years salivate.
Austin continues to benefit from record unemployment, rising rents, and supply constraints preventing new real estate development (read: competition bad).
Though we are not crystal ball wielders, we can reasonably project that this season offers some of the best deals in some of the best areas of town.
Robert Grunnah, 10/8/08
Thursday, October 9, 2008
Tuesday, August 12, 2008
Russian billionaire’s purchase of French villa sets new world record for most expensive home -- $750 million!
Most expensive home on the market in Austin, Texas -- $17,500,000
August 11, 2008 -- The market for the average priced U.S. residence may be soft, but the über rich (especially the Russians) continue to drive prices up at the very top of the world’s luxury market. Case in point -- Villa Léopolda, one of the most historic estates on the French Côte d'Azur, is now under contract by an anonymous Russian billionaire for $750 million (€500m). This three-quarters-of-a-billion dollar sales price sets a new record for the most expensive home sale in the world. The previous record was set earlier this year by Indian billionaire Lakshmi Mittal, with the reported purchase of a London home for his son for an estimated $236 million.
“While the French Villa is a fabulous property, this sale does put into perspective the value U.S. properties represent,” said Lori Wakefield, a luxury home expert with Keller Williams Realty in Austin, Texas. “The most expensive residence on the market locally is listed for just $17,500,000. It is new construction - to be built - with over 17,000 square feet, this house will sit on a three acre waterfront estate on the North shore of Lake Travis. An English Castle design with a two story library and reading loft, state of the art home theatre, exercise room, wine room, art gallery, landmark entrance, and exquisite grounds with pool and private boat dock - not to mention it will be Green Built and Energy Star Rated."
Villa Léopolda, a cream-colored, turreted mansion with two guest houses, is midway between Monaco and Nice overlooking Cap Ferrat, near Villefranche-sur-Mer. The villa was originally built about 1902 by King Leopold II of Belgium. The grounds are regarded as among the most spectacular on the Côte d'Azur. Fifty full-time gardeners look after 20 acres of gardens and terraces, planted with 1,200 olive, orange, lemon and cypress trees.
The property’s new owner is said to be a Russian oil oligarch but not – despite initial rumors – Roman Abramovich, the highly visible owner of Chelsea Football Club, who already owns a €100m mansion near Antibes.
According to the Nice-Matin newspaper, a contract was signed last week to transfer ownership of the villa from Lily Safra, the widow of Edmond Safra, a murdered banking billionaire. Rumor has it that Mrs. Safra held out for months as the persistent mystery buyer kept raising his offering price. The paper also reported that 60 villas or mansions on Cap Ferrat are now owned by wealthy Russians.
The property has a unique history. In 1916, King Leopold’s nephew and heir, King Albert I, turned the villa into a hospital for officers wounded during the First World War. It later passed into the hands of the Agnelli family – Fiat automotive tycoons -- and became the scene in the 1960s for legendary jet-set parties attended by Frank Sinatra, Ronald Reagan (in his acting days) and other celebrities.
“This sale raises the bar and makes the half dozen or so $100 million U.S. properties on the market seem like bargains,” said Laurie Moore-Moore, Founder of The Institute for Luxury Home Marketing (http://cts.vresp.com/c/?TheInstituteforLuxur/bc2ba046f6/b7aeda4219/b1037bf78e), a US-based organization which trains real estate agents who work in the luxury market and awards the international Certified Luxury Home Marketing Specialist designation. “Today’s affluent are citizens of the world and the successful luxury agent must know how to reach them and what lifestyles they are seeking. It’s an exciting and active market for agents at the top.”
Lori Wakefield is a member of The Institute for Luxury Home Marketing and has received special training in assisting upper-tier buyers and sellers.
August 11, 2008 -- The market for the average priced U.S. residence may be soft, but the über rich (especially the Russians) continue to drive prices up at the very top of the world’s luxury market. Case in point -- Villa Léopolda, one of the most historic estates on the French Côte d'Azur, is now under contract by an anonymous Russian billionaire for $750 million (€500m). This three-quarters-of-a-billion dollar sales price sets a new record for the most expensive home sale in the world. The previous record was set earlier this year by Indian billionaire Lakshmi Mittal, with the reported purchase of a London home for his son for an estimated $236 million.
“While the French Villa is a fabulous property, this sale does put into perspective the value U.S. properties represent,” said Lori Wakefield, a luxury home expert with Keller Williams Realty in Austin, Texas. “The most expensive residence on the market locally is listed for just $17,500,000. It is new construction - to be built - with over 17,000 square feet, this house will sit on a three acre waterfront estate on the North shore of Lake Travis. An English Castle design with a two story library and reading loft, state of the art home theatre, exercise room, wine room, art gallery, landmark entrance, and exquisite grounds with pool and private boat dock - not to mention it will be Green Built and Energy Star Rated."
Villa Léopolda, a cream-colored, turreted mansion with two guest houses, is midway between Monaco and Nice overlooking Cap Ferrat, near Villefranche-sur-Mer. The villa was originally built about 1902 by King Leopold II of Belgium. The grounds are regarded as among the most spectacular on the Côte d'Azur. Fifty full-time gardeners look after 20 acres of gardens and terraces, planted with 1,200 olive, orange, lemon and cypress trees.
The property’s new owner is said to be a Russian oil oligarch but not – despite initial rumors – Roman Abramovich, the highly visible owner of Chelsea Football Club, who already owns a €100m mansion near Antibes.
According to the Nice-Matin newspaper, a contract was signed last week to transfer ownership of the villa from Lily Safra, the widow of Edmond Safra, a murdered banking billionaire. Rumor has it that Mrs. Safra held out for months as the persistent mystery buyer kept raising his offering price. The paper also reported that 60 villas or mansions on Cap Ferrat are now owned by wealthy Russians.
The property has a unique history. In 1916, King Leopold’s nephew and heir, King Albert I, turned the villa into a hospital for officers wounded during the First World War. It later passed into the hands of the Agnelli family – Fiat automotive tycoons -- and became the scene in the 1960s for legendary jet-set parties attended by Frank Sinatra, Ronald Reagan (in his acting days) and other celebrities.
“This sale raises the bar and makes the half dozen or so $100 million U.S. properties on the market seem like bargains,” said Laurie Moore-Moore, Founder of The Institute for Luxury Home Marketing (http://cts.vresp.com/c/?TheInstituteforLuxur/bc2ba046f6/b7aeda4219/b1037bf78e), a US-based organization which trains real estate agents who work in the luxury market and awards the international Certified Luxury Home Marketing Specialist designation. “Today’s affluent are citizens of the world and the successful luxury agent must know how to reach them and what lifestyles they are seeking. It’s an exciting and active market for agents at the top.”
Lori Wakefield is a member of The Institute for Luxury Home Marketing and has received special training in assisting upper-tier buyers and sellers.
Sunday, February 17, 2008
Austin - A Great Place to Buy
Some Cities Are Spared the Slide in Housing
New York Time
By CLIFFORD KRAUSS and RON NIXON
AUSTIN, Tex. — The real estate market these days is a tale of two Americas, and one of them is not doing too badly.
In the America of big-city housing markets, especially on the coasts and in the struggling industrial Midwest, the huge run-up in values in recent years has given way to big drops in prices and sales volume. Millions of people owe more than their houses are worth.
But in the other America, specifically in cities like Austin; Grand Forks, N.D.; Yakima, Wash.; and Salem, Ore., the available evidence suggests the real estate market is holding up. Prices there never boomed as crazily as they did in the big cities, and now, even though volume is down almost everywhere, prices in many of these towns are firm or rising.
Consider the experience of one Austin resident, Dan Clark. Forced by a job change to put his house here on the market, he wondered whether he would get anything like the $385,000 he paid for it a year ago. He was floored when the second potential buyer to look at the place snapped it up for $429,000. “Manna from heaven,” he said.
Many people are aware that a handful of big-city markets, like Manhattan and San Francisco, have largely resisted the real estate slide. It is less widely known that the same thing is true in scores of smaller markets.
“I would call them backcountry cities,” said Robert J. Shiller, an economist at Yale University and an expert on real estate markets who predicted the bursting of both the housing and stock market bubbles of recent years. “They are just going through normal growth, and they are out of the bubble picture.”
In figures released on Thursday covering 150 metropolitan areas, the National Association of Realtors said that median home prices were falling in 77 markets — but rising in 73.
Real estate statistics must be interpreted with caution, especially when sales volumes are declining, as they are all over the country. But an analysis by The New York Times of three distinct data sets — mortgage data from the government, sales figures from the Realtors’ group and courthouse records from a company called DataQuick — produced a list of 17 metropolitan areas where all three sources of information agree that prices were still rising as of late last year, the most recent figures available.
For another 43 cities, two data sets, from the Realtors and the government, suggested that prices were still rising late in the year. DataQuick could provide no information on those cities.
How long the situation will last is anyone’s guess. One possibility is that the smaller cities are just lagging behind the big ones in seeing prices fall. And if the economy weakens drastically, all bets are off. But for now, buyers in these towns seem to feel they are getting a lot of house for the money; sellers and brokers are realizing that they have, so far, dodged a bullet.
“When I read about the national real estate market, I feel fortunate I am in Austin,” said a real estate agent who is happy she turned down a chance four years ago to relocate to Las Vegas, which was booming then and is sinking now. “Our highs are not as high and our lows are not as low.”
Economists say small and medium cities, especially those where land availability is not a constraint on growth, have done better than the nation as a whole because they have followed more traditional economic patterns. New-home prices in most of these places still reflect, more or less, the cost of the labor and materials used to build the houses, in addition to a profit margin.
“There are a lot of places where you didn’t have flipping of real estate,” said Steve Dennis, a business professor at the University of North Dakota. “Since you didn’t have the price appreciation, you don’t have the price correction.”
Generally, the markets that are showing strength do not have the bulging housing inventories of larger cities, because there was relatively little speculative building during the early part of this decade. Most of the towns have only modest exposure to the subprime loan crisis. And falling mortgage rates are buoying these markets.
Typically, their local economies are still producing new jobs and healthy income growth because of factors like rising crop prices (as in Bismarck, N.D.) or local oil booms (Midland, Tex.) or an influx of second-home buyers (Sun Valley, Idaho).
“In 2008, I see momentum growing in Middle America for prices to stabilize and increase, given the historic mortgage rates,” said Lawrence Yun, chief economist for the Realtors. But he added, “If we go into a recession, it’s possible some markets will reverse themselves.”
Austin is a good example of a real estate market that was slow and steady for years and now appears to be taking off. Austin’s high-tech industries are attracting well-heeled buyers from cities where real estate is far more expensive.
Sales prices for existing homes barely moved from 2001 to 2005, when the markets in a handful of superstar cities were on fire. But last year, the median price for a single family home rose 6.4 percent, to $185,000. It was the second consecutive strong year.
I have to calm my buyer clients down,” said an Austin Realtor, “so they don’t pay too much.”
The fly in the ointment for these cities is declining sales volumes, which prompt some experts to argue that median prices are presenting an unduly rosy picture. If fewer houses sell, but the ones that do sell are at the high end of the range, that can skew median prices.
“In the markets that are doing better, lots of people are not selling their houses, so you don’t see the prices going down because they are not selling for a lower price,” said Todd Sinai, a real estate professor at the University of Pennsylvania. “The market is doing a lot worse than what the median prices would show.”
Still, in many of the cities where prices are strongest, local Realtors contend that volume drop-offs have been modest, just a few percentage points.
Mr. Clark is one Austin home seller with a happy tale. When a recruiter called him late last year with an enticing executive health care job in Fort Worth, Mr. Clark thought twice about trying to sell a house he had bought only a year before.
“I was concerned after my relocation package ran out I would have to carry either two mortgages or a mortgage and apartment rent,” he recalled. Instead he sold the house for a profit, and only $10,000 below his asking price. “A weight was taken off our shoulders,” he said.
Mike Colpitts, the editor of Housing Predictor, an online housing forecaster, says that the market is still slowing and that some smaller cities will be hit. He projects that only 60 of the 251 markets in the United States that he monitors will show price appreciation in 2008. “The housing market is real sad, and getting sadder,” he said.
Realtors in medium and small cities contend the median price figures may actually underestimate market sentiment, because the issuance of large mortgages has frozen up in recent weeks because of problems on Wall Street. In the view of these Realtors, it is the high-end sales that are stalled in smaller cities, skewing the median price data downward.
“Call me back next year, and we’ll probably have a 3 percent to 5 percent price increase in 2008,” said Rob Higgins, executive vice president for the Spokane Association of Realtors. The median price for a home sold in Spokane was up 2.6 percent in 2007.
In Salem, Ore., “everything is going up, even the lower-income homes,” said Marlene Scully, executive vice president of the Salem Association of Realtors. Realtor data for the metro area that includes Salem showed a 3.6 percent increase for the year.
Ms. Scully noted that of the houses that were listed in 2007, 97.6 percent sold for the listed price, “which tells me there is a strong market because if there weren’t, the sellers would have to negotiate down.”
Clifford Krauss reported from Austin in late January and later added updated information. Ron Nixon reported from New York.
New York Time
By CLIFFORD KRAUSS and RON NIXON
AUSTIN, Tex. — The real estate market these days is a tale of two Americas, and one of them is not doing too badly.
In the America of big-city housing markets, especially on the coasts and in the struggling industrial Midwest, the huge run-up in values in recent years has given way to big drops in prices and sales volume. Millions of people owe more than their houses are worth.
But in the other America, specifically in cities like Austin; Grand Forks, N.D.; Yakima, Wash.; and Salem, Ore., the available evidence suggests the real estate market is holding up. Prices there never boomed as crazily as they did in the big cities, and now, even though volume is down almost everywhere, prices in many of these towns are firm or rising.
Consider the experience of one Austin resident, Dan Clark. Forced by a job change to put his house here on the market, he wondered whether he would get anything like the $385,000 he paid for it a year ago. He was floored when the second potential buyer to look at the place snapped it up for $429,000. “Manna from heaven,” he said.
Many people are aware that a handful of big-city markets, like Manhattan and San Francisco, have largely resisted the real estate slide. It is less widely known that the same thing is true in scores of smaller markets.
“I would call them backcountry cities,” said Robert J. Shiller, an economist at Yale University and an expert on real estate markets who predicted the bursting of both the housing and stock market bubbles of recent years. “They are just going through normal growth, and they are out of the bubble picture.”
In figures released on Thursday covering 150 metropolitan areas, the National Association of Realtors said that median home prices were falling in 77 markets — but rising in 73.
Real estate statistics must be interpreted with caution, especially when sales volumes are declining, as they are all over the country. But an analysis by The New York Times of three distinct data sets — mortgage data from the government, sales figures from the Realtors’ group and courthouse records from a company called DataQuick — produced a list of 17 metropolitan areas where all three sources of information agree that prices were still rising as of late last year, the most recent figures available.
For another 43 cities, two data sets, from the Realtors and the government, suggested that prices were still rising late in the year. DataQuick could provide no information on those cities.
How long the situation will last is anyone’s guess. One possibility is that the smaller cities are just lagging behind the big ones in seeing prices fall. And if the economy weakens drastically, all bets are off. But for now, buyers in these towns seem to feel they are getting a lot of house for the money; sellers and brokers are realizing that they have, so far, dodged a bullet.
“When I read about the national real estate market, I feel fortunate I am in Austin,” said a real estate agent who is happy she turned down a chance four years ago to relocate to Las Vegas, which was booming then and is sinking now. “Our highs are not as high and our lows are not as low.”
Economists say small and medium cities, especially those where land availability is not a constraint on growth, have done better than the nation as a whole because they have followed more traditional economic patterns. New-home prices in most of these places still reflect, more or less, the cost of the labor and materials used to build the houses, in addition to a profit margin.
“There are a lot of places where you didn’t have flipping of real estate,” said Steve Dennis, a business professor at the University of North Dakota. “Since you didn’t have the price appreciation, you don’t have the price correction.”
Generally, the markets that are showing strength do not have the bulging housing inventories of larger cities, because there was relatively little speculative building during the early part of this decade. Most of the towns have only modest exposure to the subprime loan crisis. And falling mortgage rates are buoying these markets.
Typically, their local economies are still producing new jobs and healthy income growth because of factors like rising crop prices (as in Bismarck, N.D.) or local oil booms (Midland, Tex.) or an influx of second-home buyers (Sun Valley, Idaho).
“In 2008, I see momentum growing in Middle America for prices to stabilize and increase, given the historic mortgage rates,” said Lawrence Yun, chief economist for the Realtors. But he added, “If we go into a recession, it’s possible some markets will reverse themselves.”
Austin is a good example of a real estate market that was slow and steady for years and now appears to be taking off. Austin’s high-tech industries are attracting well-heeled buyers from cities where real estate is far more expensive.
Sales prices for existing homes barely moved from 2001 to 2005, when the markets in a handful of superstar cities were on fire. But last year, the median price for a single family home rose 6.4 percent, to $185,000. It was the second consecutive strong year.
I have to calm my buyer clients down,” said an Austin Realtor, “so they don’t pay too much.”
The fly in the ointment for these cities is declining sales volumes, which prompt some experts to argue that median prices are presenting an unduly rosy picture. If fewer houses sell, but the ones that do sell are at the high end of the range, that can skew median prices.
“In the markets that are doing better, lots of people are not selling their houses, so you don’t see the prices going down because they are not selling for a lower price,” said Todd Sinai, a real estate professor at the University of Pennsylvania. “The market is doing a lot worse than what the median prices would show.”
Still, in many of the cities where prices are strongest, local Realtors contend that volume drop-offs have been modest, just a few percentage points.
Mr. Clark is one Austin home seller with a happy tale. When a recruiter called him late last year with an enticing executive health care job in Fort Worth, Mr. Clark thought twice about trying to sell a house he had bought only a year before.
“I was concerned after my relocation package ran out I would have to carry either two mortgages or a mortgage and apartment rent,” he recalled. Instead he sold the house for a profit, and only $10,000 below his asking price. “A weight was taken off our shoulders,” he said.
Mike Colpitts, the editor of Housing Predictor, an online housing forecaster, says that the market is still slowing and that some smaller cities will be hit. He projects that only 60 of the 251 markets in the United States that he monitors will show price appreciation in 2008. “The housing market is real sad, and getting sadder,” he said.
Realtors in medium and small cities contend the median price figures may actually underestimate market sentiment, because the issuance of large mortgages has frozen up in recent weeks because of problems on Wall Street. In the view of these Realtors, it is the high-end sales that are stalled in smaller cities, skewing the median price data downward.
“Call me back next year, and we’ll probably have a 3 percent to 5 percent price increase in 2008,” said Rob Higgins, executive vice president for the Spokane Association of Realtors. The median price for a home sold in Spokane was up 2.6 percent in 2007.
In Salem, Ore., “everything is going up, even the lower-income homes,” said Marlene Scully, executive vice president of the Salem Association of Realtors. Realtor data for the metro area that includes Salem showed a 3.6 percent increase for the year.
Ms. Scully noted that of the houses that were listed in 2007, 97.6 percent sold for the listed price, “which tells me there is a strong market because if there weren’t, the sellers would have to negotiate down.”
Clifford Krauss reported from Austin in late January and later added updated information. Ron Nixon reported from New York.
Austin #1 Forbes Fastest Growing Metros
America Fastest-Growing Metros
Brian Wingfield and William Pentland 01.30.08, 2:20 PM ET
It's no secret that the Southeast and Western United States are booming. The costs of living and doing business there are often cheaper there than in big coast-al cities. But where and how much those cities are thriving might surprise you.
Take Alabama. The state has some of the fastest growing metro areas in the country, including Mobile, which is projected to have the greatest change in "gross metropolitan product (GMP)," 34% between 2007-2012, according to research forecasts done for us by Moody Economy.com.
One boon to Alabama is ThyssenKrupp's announcement last year to build a $3.7 billion steel plant in Mobile. And Huntsville--expected GMP growth 15% by 2012--has long been a hub for defense and space research. Since the mid-1990s, Alabama has also become a manufacturing center for automakers like DaimlerChrysler, Toyota and Hyundai. "The automotive industry has been Alabama's real growth industry in the last 15 years," says Brian Hilson, president and CEO of Huntsville's chamber of commerce.
Other metro areas, like Port St. Lucie and Palm Bay, are part of a growing biotech cluster in central Florida. Straddling Texas and Arkansas, Texarkana is seeing war-related development: Its Red River Army Depot is a major maintenance and storage facility for military equipment. And St. George, Utah, located about 120 miles from Las Vegas, has boomed in recent years as a destination for retirees.
All of them sit at or near the top of Forbes' list of America's fastest-growing metropolitan areas, places large and small that offer at least the promise of booming economies for years to come.
To compile our list, we looked at all of the country's 363 metropolitan areas, defined by the U.S. Census Bureau has a geographic region with a "core urban area" of at least 50,000 people. Because many small metro areas are high growth--and because we wanted to show growth in large cities as well--we split the group into two classes: the largest 100 metro areas (with at least 528,000 people) and everyone else. We use projections run for us by Moody's Economy.com to show growth in GMP between 2007-2012.
Of course, if one looks at economic growth in the country's largest 100 metros, the usual suspects jump to the top of the list. With an estimated 32% GMP growth from 2007-2012, Austin, Texas, is the winner for big metros. Atlanta, Seattle, Orlando, Houston and San Jose, Calif., also appear high on the list. What do they all have in common? They're tech hubs with proximity to universities and a healthy increase in population. Austin's population, for example, is expected to increase by nearly 15% by 2012, according to Moody's Economy.com forecasts.
Bruce Katz, director of the Metropolitan Policy Program at the Brookings Institution, says there are several factors to take into consideration when measuring the pulse of a metro area: innovation, human capital, infrastructure and the actual quality of a place.
"These assets drive everything," says Katz. Some ways to measure them: the number of patents a metro area produces (innovation), the number of college graduates that live there (human capital), the amount of passenger miles its residents travel (infrastructure) and the vibrancy of its downtown area (quality of place).
A glance at the country's most economically healthy large metro areas underscores his point. Computer manufacturer Dell and the University of Texas anchor Austin's tech community. San Jose receives an influx of grads from places like Stanford and UC-Berkeley who want to work in Silicon Valley. Atlanta, home to Emory University and the Georgia Institute of Technology, is also the headquarters of UPS, CNN and AT&T Mobility, the largest cellular carrier in the United States.
To be sure, GMP is not the only method of measuring a metro area's economic vibrancy. Population growth, job growth, housing starts and personal income growth are all other factors to consider. However, we felt that an examination of the output of goods and services in a metro area was perhaps the purest method of determining how vibrant an economy will be several years down the road.
Statistics on the other factors, compiled for us by research firm Global Insight, supported the forecasts for GMP growth. Mobile, Austin, Port St. Lucie, Cape Coral, St. George and other regions with high GMP growth projections all appeared near the top of their lists.
In the current economic climate, predictions for housing starts are open to the most uncertainty. Moody's forecasts take the current slowdown into consideration but do not account for a potential recession. A study compiled by Global Insight and released by the U.S. Conference of Mayors in November found that the most significant losses in real GMP were concentrated in California, though every state has taken a hit.
Several burgeoning metro areas barely missed our list, including Raleigh, N.C., San Antonio, and Atlantic City, N.J. But what about those near the bottom? Most are smaller metro areas in historical manufacturing centers in the Northeast and Midwest. Of the bigger metros Rochester, N.Y., Youngstown, Ohio, and Springfield, Mass., top the list.
They're also low for expected population growth. Why stay there when so many other urban centers are thriving?
Thursday, February 7, 2008
Austin Economist Delivers Forecast
Austin economist says 2008 will see modest job growth, improvement in 2009
Builders didn't recognize that the local market is healthier than the rest of the country, economist says.
By AMERICAN-STATESMAN STAFF Friday, January 25, 2008
Economist Angelos Angelou acknowledged Thursday that this is a chancy time to be making a forecast on the Austin area's near-term growth prospects. But he took a shot at it anyway.
Despite international panic in the financial markets and rising worries about the implosion of the American subprime lending bubble, Angelou said he said he expects Austin to muddle through 2008 with modest job growth before seeing an economic upturn in 2009.
"We have been through tough times before, and Austin has always weathered the storm pretty well," he said. "But that doesn't mean we are not going to go through a storm this time."
Angelou, who heads an economic development consulting firm, delivered his 23rd annual economic forecast Thursday, predicting that the Austin metro area will create 17,000 jobs in 2008 for a 2.3 percent growth rate, which would be the area's lowest job growth rate since 2004, when the area was climbing out of a prolonged high-tech slump.
Angelou began issuing economic forecasts for Austin in 1985, when he was economist at the Greater Austin Chamber of Commerce. He later became head of economic development at the chamber before starting his own economic development consulting firm in the mid-1990s.
Next year, he expects the five-county metro area to add another 24,000 jobs, an increase of about 3 percent.
But all bets are off, he said, if the national economic picture turns really bad or if one of the area's major private employers announces a big downsizing move.
The biggest job growth sectors for 2007 and 2008, Angelou said, will be the area's traditional standbys: government, professional services, leisure and hospitality, wholesale and retail trade, and education and health services.
New private sector jobs in the area are mostly coming from small businesses, venture-backed startups and young technology companies, he said. Big companies "FFFFFF97 including Dell Inc., Freescale Semiconductor Inc. and Advanced Micro Devices Inc. "FFFFFF97 all suffered through weak years in 2007, he noted.
"We are modestly optimistic," Angelou said, "but the situation needs to be monitored closely depending on national trends. If we don't have any significant challenges (downsizing moves) from major employers, then I think I am going to stick with my numbers."
Angelou expects the area's population of 1.58 million to increase by 85,000 people over the next two years. That is on par with the local population increase estimated at 42,000 for last year, but well below the 2006 increase of 58,900.
The biggest local impacts from the national real estate crunch, he said, are likely to be rising apartment rents, slow demand for houses costing less than $180,000, increasing foreclosures and an overreaction from major builders who cut back too far on new housing starts.
Austin could face a shortage of new homes in the next year or so, Angelou said, because builders overreacted and didn't recognize that the local market is healthier than most of the nation's other housing markets.
"The home building industry is reacting to national trends, and Austin is not a typical U.S. community," Angelou said. "The big winner is going to be apartments. People will have to live somewhere. Apartments rents are going higher.
"We are concerned about the low number of housing starts," he added. "Austin is a different market, and the development community is treating this market like it is treating everyone else (by cutting back sharply on home building). We may find ourselves with a serious housing shortage."
On the national level, Angelou says it is hard to say whether the U.S. will slide into a formal recession. He expects there will be continued problems in the mortgage lending industry, which will bleed over into the broader investment finance industry.
"It is going to be a prolonged slowdown (in growth), which is going to feel like a recession" at the national level, he said. "It may take the nation a year or two to go through these tough times.
"The recovery is not going to be quick. In any economic recovery, you need to have the financial sector drive it, and a lot of those folks are hurting."
Builders didn't recognize that the local market is healthier than the rest of the country, economist says.
By AMERICAN-STATESMAN STAFF Friday, January 25, 2008
Economist Angelos Angelou acknowledged Thursday that this is a chancy time to be making a forecast on the Austin area's near-term growth prospects. But he took a shot at it anyway.
Despite international panic in the financial markets and rising worries about the implosion of the American subprime lending bubble, Angelou said he said he expects Austin to muddle through 2008 with modest job growth before seeing an economic upturn in 2009.
"We have been through tough times before, and Austin has always weathered the storm pretty well," he said. "But that doesn't mean we are not going to go through a storm this time."
Angelou, who heads an economic development consulting firm, delivered his 23rd annual economic forecast Thursday, predicting that the Austin metro area will create 17,000 jobs in 2008 for a 2.3 percent growth rate, which would be the area's lowest job growth rate since 2004, when the area was climbing out of a prolonged high-tech slump.
Angelou began issuing economic forecasts for Austin in 1985, when he was economist at the Greater Austin Chamber of Commerce. He later became head of economic development at the chamber before starting his own economic development consulting firm in the mid-1990s.
Next year, he expects the five-county metro area to add another 24,000 jobs, an increase of about 3 percent.
But all bets are off, he said, if the national economic picture turns really bad or if one of the area's major private employers announces a big downsizing move.
The biggest job growth sectors for 2007 and 2008, Angelou said, will be the area's traditional standbys: government, professional services, leisure and hospitality, wholesale and retail trade, and education and health services.
New private sector jobs in the area are mostly coming from small businesses, venture-backed startups and young technology companies, he said. Big companies "FFFFFF97 including Dell Inc., Freescale Semiconductor Inc. and Advanced Micro Devices Inc. "FFFFFF97 all suffered through weak years in 2007, he noted.
"We are modestly optimistic," Angelou said, "but the situation needs to be monitored closely depending on national trends. If we don't have any significant challenges (downsizing moves) from major employers, then I think I am going to stick with my numbers."
Angelou expects the area's population of 1.58 million to increase by 85,000 people over the next two years. That is on par with the local population increase estimated at 42,000 for last year, but well below the 2006 increase of 58,900.
The biggest local impacts from the national real estate crunch, he said, are likely to be rising apartment rents, slow demand for houses costing less than $180,000, increasing foreclosures and an overreaction from major builders who cut back too far on new housing starts.
Austin could face a shortage of new homes in the next year or so, Angelou said, because builders overreacted and didn't recognize that the local market is healthier than most of the nation's other housing markets.
"The home building industry is reacting to national trends, and Austin is not a typical U.S. community," Angelou said. "The big winner is going to be apartments. People will have to live somewhere. Apartments rents are going higher.
"We are concerned about the low number of housing starts," he added. "Austin is a different market, and the development community is treating this market like it is treating everyone else (by cutting back sharply on home building). We may find ourselves with a serious housing shortage."
On the national level, Angelou says it is hard to say whether the U.S. will slide into a formal recession. He expects there will be continued problems in the mortgage lending industry, which will bleed over into the broader investment finance industry.
"It is going to be a prolonged slowdown (in growth), which is going to feel like a recession" at the national level, he said. "It may take the nation a year or two to go through these tough times.
"The recovery is not going to be quick. In any economic recovery, you need to have the financial sector drive it, and a lot of those folks are hurting."
Austin Tops List of Best Housing Markets
Whether you're looking to relocate or purchase that next move-up, the Austin area tops the list of the best places in the nation to buy a home!
Austin has seen incredible job growth and very stable home prices despite the downturn nationwide. Jobs continue to grow here -- a factor for keeping inventory low and prices stable.
Read the entire article from Entrepreneur.com here:
Best and Worst Places to Buy a House
Call Lori Wakefield Real Estate today at 512-657-4455 or visit us online at www.LoriWakefield.com to begin the search for your next home!
Austin has seen incredible job growth and very stable home prices despite the downturn nationwide. Jobs continue to grow here -- a factor for keeping inventory low and prices stable.
Read the entire article from Entrepreneur.com here:
Best and Worst Places to Buy a House
Call Lori Wakefield Real Estate today at 512-657-4455 or visit us online at www.LoriWakefield.com to begin the search for your next home!
Comptoller Reports Good NewsTexas Revenue Rising
Texas revenue rising despite recession talk
By JOHN MORITZ
Star-Telegram staff writer
AUSTIN -- With the national economy slowing to a crawl and more than one-third of the states facing revenue shortfalls this year, Texas is bucking the trend.
According to the state comptroller's office, Texas had significant upticks in tax receipts from nearly all of the sectors that measure economic health in 2007.
Sales tax revenue for the 12 months ending Dec. 31 was up nearly 10 percent from the year before. And revenue from oil production and levies on cocktails mixed at bars and restaurants was consistent with that trend.
"Thankfully for us, relatively few of the negative forces going on in the national economy are showing up in Texas right now," said R.J. DiSilva, spokesman for Comptroller Susan Combs, whose tax-collecting office is the canary in the state's coal mine when it comes to warning lawmakers and the governor of potential fiscal problems.
The newsletter which is funded by the Pew Charitable Trust to follow state government trends, reported last week that 18 state governments are facing shortfalls totaling more than $14 billion this year. The outlook gets even bleaker for 2009 when 18 states are likely to be in the red to the tune of $32 billion, according to the newsletter.
DiSilva said the comptroller's office is watching troublesome trends such as the mortgage-lending crisis and the ever-rising price of energy, but remains relatively optimistic that Texas will weather the coming storms.
One of the revenue streams that showed the biggest increase was the tax collected on tobacco products. The dollar figure nearly tripled, not because Texans are smoking more, but more because lawmakers raised the cigarette levy from 41 cents to $1.41 a pack.
Bernard Weinstein, an economics professor at the University of North Texas in Denton and director of the school's Center for Economic Development and Research, said Texas' budget hawks would be wise to keep a close eye on the bottom line in the months ahead.
The home mortgage woes that are hammering states such as Arizona and California, which rely heavily on real estate taxes, will likely make their effect known in Texas as other segments of the economy weaken, Weinstein said.
"In 2007, Texas had the healthiest economy in the nation," he said. "Job creation was twice the national average and unemployment was down by 1 percent. There is no way that 2008 will be as good a year. It looks like we're headed for a recession nationally. Texas will be insulated, but not immune."
Potential trouble spots for Texas are the weakening job market, rising prices fueled by the cost of gasoline and electricity, and a slowdown in housing demand.
Any hitch in the economy would likely affect state revenue, Weinstein said, but it might take several months before the Texas treasury feels the pinch.
The upside to a downturn is that it could actually buy time for state and local governments to make improvements to public infrastructure because labor becomes cheaper, Weinstein said.
DiSilva said there is nothing in the trends suggesting that the comptroller needs to flag state budget writers to make adjustments to the two-year spending plan enacted by the Legislature last year.
"I think we're in good shape for now," he said.
By the numbers
Revenue source 2006 2007
Sales tax $18.9 billion $20.7 billion
Oil production tax $854 million $932 million
Natural gas production $2.1 billion $2.0 billion
$403 million $442 million
Tobacco tax $509 million $1.5 billion
Source: Texas comptroller's office
By JOHN MORITZ
Star-Telegram staff writer
AUSTIN -- With the national economy slowing to a crawl and more than one-third of the states facing revenue shortfalls this year, Texas is bucking the trend.
According to the state comptroller's office, Texas had significant upticks in tax receipts from nearly all of the sectors that measure economic health in 2007.
Sales tax revenue for the 12 months ending Dec. 31 was up nearly 10 percent from the year before. And revenue from oil production and levies on cocktails mixed at bars and restaurants was consistent with that trend.
"Thankfully for us, relatively few of the negative forces going on in the national economy are showing up in Texas right now," said R.J. DiSilva, spokesman for Comptroller Susan Combs, whose tax-collecting office is the canary in the state's coal mine when it comes to warning lawmakers and the governor of potential fiscal problems.
The newsletter which is funded by the Pew Charitable Trust to follow state government trends, reported last week that 18 state governments are facing shortfalls totaling more than $14 billion this year. The outlook gets even bleaker for 2009 when 18 states are likely to be in the red to the tune of $32 billion, according to the newsletter.
DiSilva said the comptroller's office is watching troublesome trends such as the mortgage-lending crisis and the ever-rising price of energy, but remains relatively optimistic that Texas will weather the coming storms.
One of the revenue streams that showed the biggest increase was the tax collected on tobacco products. The dollar figure nearly tripled, not because Texans are smoking more, but more because lawmakers raised the cigarette levy from 41 cents to $1.41 a pack.
Bernard Weinstein, an economics professor at the University of North Texas in Denton and director of the school's Center for Economic Development and Research, said Texas' budget hawks would be wise to keep a close eye on the bottom line in the months ahead.
The home mortgage woes that are hammering states such as Arizona and California, which rely heavily on real estate taxes, will likely make their effect known in Texas as other segments of the economy weaken, Weinstein said.
"In 2007, Texas had the healthiest economy in the nation," he said. "Job creation was twice the national average and unemployment was down by 1 percent. There is no way that 2008 will be as good a year. It looks like we're headed for a recession nationally. Texas will be insulated, but not immune."
Potential trouble spots for Texas are the weakening job market, rising prices fueled by the cost of gasoline and electricity, and a slowdown in housing demand.
Any hitch in the economy would likely affect state revenue, Weinstein said, but it might take several months before the Texas treasury feels the pinch.
The upside to a downturn is that it could actually buy time for state and local governments to make improvements to public infrastructure because labor becomes cheaper, Weinstein said.
DiSilva said there is nothing in the trends suggesting that the comptroller needs to flag state budget writers to make adjustments to the two-year spending plan enacted by the Legislature last year.
"I think we're in good shape for now," he said.
By the numbers
Revenue source 2006 2007
Sales tax $18.9 billion $20.7 billion
Oil production tax $854 million $932 million
Natural gas production $2.1 billion $2.0 billion
$403 million $442 million
Tobacco tax $509 million $1.5 billion
Source: Texas comptroller's office
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