In Stark Contrast To The Red-Hot Building Boom
The American Statesman reports from Texas. “By sidestepping the national bubble, the Austin housing market served as a stabilizing force for the Central Texas economy. That, experts say, was key to helping the region outperform many other U.S. metro areas during the economic downturn. ‘Housing is a giant job creator,’ said Scott Norman, an Austin mortgage broker and past president of Texas Mortgage Bankers Association. ‘There are a lot of people whose livelihoods depend on a house being bought and sold.’”
“The housing market in the Austin area has bottomed, said D’Ann Petersen, a business economist with the Federal Reserve Bank of Dallas, and it’s well-positioned to improve going forward ‘as long as any unforeseen issues don’t show up.’”
“Manufacturing and construction continue to be significant employers in Central Texas, despite taking a hit from the recession. In terms of jobs, neither sector has returned to pre-recession levels. The local construction industry’s recent peak came in November 2007, when there were 50,700 construction jobs in the Austin area, according to numbers from the Dallas Fed. By early 2010, more than 12,000 of those jobs were gone.”
“That’s hardly unique to Austin; construction almost everywhere suffered with the collapse of the housing bubble. ‘I think as a whole, nationwide, the construction industry got hit harder than any segment of the economy I know,’ said Harry Savio , executive VP of the Home Builders Association of Greater Austin. Savio said area housing starts are down 50 percent from the bubble’s peak in 2006-07 and are still down about 30 percent from a realistic level.”
The Express News. “After several years of setting record highs for foreclosure postings, Bexar County property owners got a bit of relief in 2011. Lenders have moved to foreclose on just more than 15,000 properties this year, about 10.8 percent fewer than last year’s total, according to RexReport. The dip comes thanks in large part to lenders intentionally slowing down the foreclosure process for several months this year. The monthly postings have since started to creep back up.”
“James Gaines, research economist with the Real Estate Center at Texas A&M University, doesn’t think the foreclosure levels — although still historically elevated — will be quite as high going forward. That’s because many of the questionable loans made during the real estate boom already have gone bad, he said. ‘There won’t be a flood of foreclosures,’ Gaines said. ‘I don’t think there’s this huge backlog in San Antonio. I think there is this huge backlog nationally, but, especially in San Antonio, I don’t think it’s a problem.’”
“If it seems like half the people you meet are from California, you might be onto something. Census figures show that more than 363,000 Californians have moved to Texas over the past five years. Texas’ relatively strong economy is getting most of the credit — the state’s unemployment rate of 8.5 percent is substantially less than California’s and below the national average.”
“The impact of the long-term economic downturn the country has experienced is evident in the figures released by the Census — just 11.6 percent of Americans moved between 2010 and 2011, the lowest percentage since the Census Bureau began tracking the information in 1948. ‘It’s much more difficult for someone to put their house on the market and relocate now,’ said Lloyd Potter, director of the Texas State Data Center.”
“In another sign of the times, Alison Fields, chief of the Census Bureau’s migration statistics branch, said so many people who moved wrote on their forms that they were forced out by foreclosure or eviction that the bureau will add those options to official forms beginning next year.”
The Houston Chronicle. “The housing market in Texas is starting to look like it did before the real estate boom - and subsequent bust - according to a report released this month. Home sales in the third quarter were comparable to levels seen in the early 2000s, indicating the market is returning to a ‘more normal sales pace,’ economist Jim Gaines said, commenting on the latest quarterly housing report from the Texas Association of Realtors.”
“A 1,100-acre parcel in Fort Bend County that was purchased near the peak of the real estate market but never developed is back on the block. When Texas Industries sold it about five years ago, it had mapped out a development plan with 3,300 home lots, parks, lakes and commercial space. The purchase price was not disclosed.At the time, large parcels in the area were selling for around $35,000 an acre. The seller is asking $20,800 per acre for the residential tract.”
The Galveston Daily News. “Lenders have posted the 1,000-acre Pointe West property on the island’s western tip for a Dec. 6 foreclosure sale, forcing layoffs of the resort development’s hospitality and sales staff and the closure of clubs, pools, fitness rooms and other amenities. ‘We regret that market conditions and other economic factors have led the lenders to these decisions,” said Jason Leeds, president and chief operating officer of Terramesa Resort Properties, in a letter to owners and employees. ‘We will be contacting owners who have property in the rental program in order to discuss the specifics of the plan to cease operations.’”
“Announced in 2003, Pointe West was among the biggest real estate projects ever proposed in Galveston. Centex had planned a walkable community with single- and multifamily residences from beach to bay. The project includes condominiums and single-family homes. News of foreclosure is in stark contrast to when Pointe West was announced and the island was enjoying a red-hot building boom. In 2005, lots at the development were selling for $200,000. Today, some are selling for less than $5,000.”
“In September, crews finished building a house at Pointe West for Houston resident Doug Pennekamp and family. While Pennekamp, whose home is on the bay side, worries about the care of the amenities, such as the pool, he is optimistic there won’t be a shortage of investors seeking to buy the Pointe West development. The location is good and the concept viable, he said.”
“The Pointe West house is a second home for the Pennekamp family. ‘I’m not too worried about what the future will hold,’ Pennekamp said.”
From Pegasus News. “TMZ is reporting that Terrell Owens took a bath on his Azure condo — a $56,513 loss. Here’s the real story. Owens owns not one but TWO units at The Azure, as I told you way back. He also owns a 2,297 square foot townhome at the East Side Lofts on 1st Street. The smaller Azure unit on McKinnon, is on the market for $279,000, price lowered from $325,000. The price per square foot is just over $300. This is a smaller, one bedroom unit at 881 square feet, and while he may have paid $340,000 for that one, he bought both props in 2008. Yeah, pre-bust.”
“But the condo he is probably most anxious to shed, and the ONE THAT IS SALES PENDING, is the big mama on the 20th floor that he had listed for $2,250,000 that is 3,559 square feet with six garage spaces. This 3 bedroom, 4.5 bath custom residence on the 20th floor comes with all those garages plus two storage spaces. Best of all, the place has not been lived in much. This pad has been reduced to $1,600,000, and at that price, brings the price per square foot at The Azure for this essentially Ferrari property down to $449.56. And that’s if they got asking!”
“If T.O. paid anywhere near $2 million, he is most certainly taking a bath. Not a $56,000 bath, but more like a tsunami – close to a million going bye-bye …”
well-positioned to improve going forward ‘as long as any unforeseen issues don’t show up.’
Yeah, no reason to expect any unforeseen issues. Nobody can ever see them coming.
Upton Sinclair should have made his quote revolve around eyesight: “It is difficult to get men to see or anticipate anything that threatens their profits.”
. ‘There are a lot of people whose livelihoods depend on a house being bought and sold.’
And most of them are parasites that add nothing of value to the transaction. Also, a clear sign of a hollowed out economy.
As soon as I read the “livelihoods” sentence, here’s what I said out loud:
Therein lies the problem.
“By sidestepping the national bubble, the Austin housing market served as a stabilizing force for the Central Texas economy….It’s slow, steady and sensible here.”
What bull. This seems to be the standard post-bubble propaganda. “We didn’t really have a bubble. We’re morally superior to the rest of the country. Prices are what they are supposed to be. Shut up and buy them.” I noticed that they are not allowing comments to the article, someone else might have a different view.
My wife’s nephew just moved to Austin. They are living in a rental at the moment and looking to buy in the next 3 months. It will be interesting to hear what their experience is. She is a consultant that works all over, and he is a stay at home dad that will look for work once their son is in school. They used to live in Houston but after one of his trips to Canada to see his parents he wasn’t allowed back in the US because the border guard thought he was working illegally (he wasn’t, he was looking after their son). So it took three years but they are finally back, and he has a green card now to boot.
By early 2010, more than 12,000 of those jobs were gone.”
Actually, a lot more jobs were gone. They were just never on the books to begin with.
The state actually claims a net increase in construction jobs for 2011.
I drove all over Texas last summer. Although there are plenty of foreclosures, the builders are still at it, especially in the central part of the state.
This state has had a peculiar path. In 2005 their bubble was collapsing ahead of most. It took a bounce, and the reasons could be many; inflow of cashed- out Californians. Oil prices. But it reminds me of other places like Vegas. While the bubble was growing, they said, ‘we don’t have a problem. Look at all the activity.’ To me Texas is like that. The reason they think they don’t have a bubble is because it’s still expanding.
There is a huge oilfield that is under developement using fracking tech going on in South Texas, so there is some method to their madness.
Eagle Ford boom runs up rents in South Texas
By JOHN MacCORMACK, STAFF WRITER
http://www.chron.com/business/energy/article/Eagle-Ford-boom-runs-up-rents-in-South-Texas-2183856.php
“I’m asking $125 a week per man. It can hold up to eight beds, even 10 or 12, and I pay the utilities,” said landlord Gustavo Ayala. In comparison, the longtime tenant who was evicted this summer paid $550 a month.
Oil in Shale Sets Off a Boom in Texas - NYTimes.com
CATARINA, Tex. — Until last year, the 17-mile stretch of road between this forsaken South Texas village and the county seat of Carrizo Springs was a patchwork of derelict gasoline stations and rusting warehouses.
Now the region is in the hottest new oil play in the country, with giant oil terminals and sprawling RV parks replacing fields of mesquite. More than a dozen companies plan to drill up to 3,000 wells around here in the next 12 months.
http://www.nytimes.com/2011/05/28/business/energy-environment/28shale.html?pagewanted=all
I think it’s interesting that Austin’s unemployment rate is lower than many parts of the rest of the country. I still think that’s the key to a good real estate market. Unfortunately, it’s also the hardest thing to improve anywhere.
Fine Young Cannibals
Housing bubble: Austin has not remained immune - it just lagged the initial run-up in prices as seen in the worst hit sand states. In 2007, there were weekly caravan tours being organized by a local real estate team for out of town speculators, enthusiastically citing Austin as “the next hot market!” It was also around this time that the condo towers downtown started sprouting like weeds, and an increasing number of granny shacks were being leveled in order to build big Tuscan Garage Mahals and boxy neo-modern duplexes with lots of up-lit agave and corrugated metal fences.
It would follow that Austin has lagged the subsequent crash. This is due in part to all of the incentives designed to put a floor under the collapsing housing market in the hardest-hit cities; this provided Austin with a shot of adrenaline it didn’t need.
People *want* to believe — especially Californians seeking a simulacrum of SF/LA. There’s loads of inventory for sale as the more savvy Austinites have been unloading in the last few years. Sellers comments on various message boards are tinged with either disbelief or smug satisfaction.
I forgot to mention, Homeaway, an Austin-based creation, has provided something of a bulwark against a correction here. Many single family homes that were listed at California Crazy prices were yanked and turned into tax-free lodgings for out-of-town festival goers.