dr. james p. gainesdr. james p. gaines. ... shelby sterling jefferson briscoe mcmullen parmer jim...

Chief Economist

Dr. James P. Gaines

2018 A Very Good Year -2019 Definite Slowdown

2

• Real GDP growth 2018 2.9% 2019 ~2.5%

• Jobs expanded ~1.5% Unemployment rate ~4.0%+

• Interest rates up/down during the year;

• Inflation approached 2.5%

• Tax Cuts added positive impacts

• Industrial Production high but less labor

• Income and spending growing

• Real Disposable Personal Income +2.9% thru 3Q18

• Real PCE +2.6% thru 3Q18

• Housing improving, not fully recovered; recent stalling

• U.S. became #1 oil producer and net exporter

Economy’s & Housing’s Future

• Jobs & Income

• Demographics

• Capital & Money Markets

• Government

• Technology

3

Source: The Conference Board; Haver Analytics

Texas Consumer Confidence Index

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

160

170

Jan

-07

Ju

l-07

Jan

-08

Ju

l-08

Jan

-09

Ju

l-09

Jan

-10

Ju

l-10

Jan

-11

Ju

l-11

Jan

-12

Ju

l-12

Jan

-13

Ju

l-13

Jan

-14

Ju

l-14

Jan

-15

Ju

l-15

Jan

-16

Ju

l-16

Jan

-17

Ju

l-17

Jan

-18

Ju

l-18

Jan

-19

Ju

l-19

4

NFIB Small Business Optimism Index(Overall Index SA 1986 = 100)

84

86

88

90

92

94

96

98

100

102

104

106

108

110

112

114

Ja

n-1

1

Ma

r-11

Ma

y-1

1

Ju

l-1

1

Sep

-11

No

v-1

1

Ja

n-1

2

Ma

r-12

Ma

y-1

2

Ju

l-1

2

Sep

-12

No

v-1

2

Ja

n-1

3

Ma

r-13

Ma

y-1

3

Ju

l-1

3

Sep

-13

No

v-1

3

Ja

n-1

4

Ma

r-14

Ma

y-1

4

Ju

l-1

4

Sep

-14

No

v-1

4

Ja

n-1

5

Ma

r-15

Ma

y-1

5

Ju

l-1

5

Sep

-15

No

v-1

5

Ja

n-1

6

Ma

r-16

Ma

y-1

6

Ju

l-1

6

Sep

-16

No

v-1

6

Ja

n-1

7

Ma

r-17

Ma

y-1

7

Ju

l-1

7

Sep

-17

No

v-1

7

Ja

n-1

8

Ma

r-18

Ma

y-1

8

Ju

l-1

8

Sep

-18

No

v-1

8

Ja

n-1

9

Ma

r-19

Ma

y-1

9

Ju

l-1

9

Source: National Federation of Independent Businesses; based on ten survey indicators

Fed Funds Rate, 10-Year Treasury, 30-Year FMR

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

Jan

-07

Ap

r-07

Ju

l-07

Oct-

07

Jan

-08

Ap

r-08

Ju

l-08

Oct-

08

Jan

-09

Ap

r-09

Ju

l-09

Oct-

09

Jan

-10

Ap

r-10

Ju

l-10

Oct-

10

Jan

-11

Ap

r-11

Ju

l-11

Oct-

11

Jan

-12

Ap

r-12

Ju

l-12

Oct-

12

Jan

-13

Ap

r-13

Ju

l-13

Oct-

13

Jan

-14

Ap

r-14

Ju

l-14

Oct-

14

Jan

-15

Ap

r-15

Ju

l-15

Oct-

15

Jan

-16

Ap

r-16

Ju

l-16

Oct-

16

Jan

-17

Ap

r-17

Ju

l-17

Oct-

17

Jan

-18

Ap

r-18

Ju

l-18

Oct-

18

Jan

-19

Ap

r-19

Ju

l-19

30-Year FMR

Fed Funds Rate

10-Year Treasury

Source: Haver Analytics; FHLMC; St. Louis FED;

Real Estate Center at Texas A&M University

Fed Funds Rate, 10-Year Treasury, 30-Year FMR & Inflation

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

Jan

-07

Ap

r-07

Ju

l-07

Oct-

07

Jan

-08

Ap

r-08

Ju

l-08

Oct-

08

Jan

-09

Ap

r-09

Ju

l-09

Oct-

09

Jan

-10

Ap

r-10

Ju

l-10

Oct-

10

Jan

-11

Ap

r-11

Ju

l-11

Oct-

11

Jan

-12

Ap

r-12

Ju

l-12

Oct-

12

Jan

-13

Ap

r-13

Ju

l-13

Oct-

13

Jan

-14

Ap

r-14

Ju

l-14

Oct-

14

Jan

-15

Ap

r-15

Ju

l-15

Oct-

15

Jan

-16

Ap

r-16

Ju

l-16

Oct-

16

Jan

-17

Ap

r-17

Ju

l-17

Oct-

17

Jan

-18

Ap

r-18

Ju

l-18

Oct-

18

Jan

-19

Ap

r-19

Ju

l-19

30-Year FMR

Fed Funds

10-Year Treasury

Inflation

Source: Haver Analytics; FHLMC; St. Louis FED;


2015-2016 Oil Decline; Down Years

2017 Recovery – A Good Year

2018: Better than 2017

2019 Some Headwinds, but Not Bad

8

Texas Economy

2018 a Very Good Year Economically For Texas

• Rebound from Harvey going strong but not over

• State GDP +3.2% vs. 0.2% 2016 & 2% 2017

• Personal Income +5.3% vs. 4.5% nationally

• Oil Prices >$70 until 4Q – dropped then rebounded

• Jobs increased 276,100 +2.3%

• Population increased 379,128 to 28,701,845• 190,951 natural increase (50.3%)

• 104,976 foreign immigration (27.7%)

• 82,569 domestic immigration (22%)

9

Texas Economic Outlook: 2019 Positive but Slower Growth Than 2018

10

U.S. Economy stays relatively strong

Employment: ~1.5% - 2.0% from 2.3% in 2018 (revised)

GDP: 4% 2019 from ~5% 2018

Energy sector neutral; oil prices $40-$60/bl.

Population expansion continues but at slower pace

Exports doing well and contributing to economy – trade

agreements and value of dollar add uncertainty

Retail Sales steady but not significantly higher

Texas’ Leading Economic Index

95.0

100.0

105.0

110.0

115.0

120.0

125.0

130.0

135.0

140.0

Source: Federal Reserve Bank of Dallas, 1987=100

T

e

c

h

W

r

e

c

k

GreatRecession

Oil Bust

A composite of 8 leading indicators: 1) value of

the dollar, 2) U.S. leading economic index, 3)

real oil price, 4) well permits, 5) initial claims

for unemployment insurance, 6) Texas stock

index, 7) help-wanted index, and 8) average

weekly hours worked in manufacturing.

Weekly Active Texas Rig Count & Price of WTI

12

11/21/2014, 906

5/20/2016, 173

6/27/2014, $106.69

2/12/2016, $28.14

$0$10$20$30$40$50$60$70$80$90$100$110$120$130$140$150$160$170$180

100150200250300350400450500550600650700750800850900950

1,000

1/7

/20

00

4/2

8/2

00

08

/18

/200

01

2/8

/200

03

/30

/200

17

/20

/200

11

1/9

/200

13

/1/2

002

6/2

1/2

00

21

0/1

1/2

00

21

/31

/200

35

/23

/200

39

/12

/200

31

2/3

1/2

00

34

/23

/200

48

/13

/200

41

2/3

/200

43

/24

/200

57

/15

/200

51

1/4

/200

52

/24

/200

66

/16

/200

61

0/6

/200

61

/26

/200

75

/18

/200

79

/7/2

007

12/2

8/2

00

74

/18

/200

88

/8/2

008

11/2

6/2

00

83

/20

/200

97

/10

/200

91

0/3

0/2

00

92

/19

/201

06

/11

/201

01

0/1

/201

01

/21

/201

15

/13

/201

19

/2/2

011

12/2

2/2

01

14

/13

/201

28

/3/2

012

11/2

1/2

01

23

/15

/201

37

/3/2

013

10/2

5/2

01

32

/14

/201

46

/6/2

014

9/2

6/2

01

41

/16

/201

55

/8/2

015

8/2

8/2

01

51

2/1

8/2

01

54

/8/2

016

7/2

9/2

01

61

1/1

8/2

01

63

/10

/201

76

/30

/201

71

0/2

0/2

01

72

/9/2

018

6/1

/20

18

9/2

1/2

01

81

/11

/201

95

/3/2

019

Rig Count

(left)

WTI $/bl.

(right)

Rig Count up 318, +184% since May 2016

Source: Baker Hughes; EIA; RE Center at Texas A&M University

Current and Futures Monthly Average Price of WTI

$30

$40

$50

$60

$70

$80

$90

$100

$110

$120

Ja

n-1

3

Ma

r-13

Ma

y-1

3

Ju

l-1

3

Sep

-13

No

v-1

3

Ja

n-1

4

Ma

r-14

Ma

y-1

4

Ju

l-1

4

Sep

-14

No

v-1

4

Ja

n-1

5

Ma

r-15

Ma

y-1

5

Ju

l-1

5

Sep

-15

No

v-1

5

Ja

n-1

6

Ma

r-16

Ma

y-1

6

Ju

l-1

6

Sep

-16

No

v-1

6

Ja

n-1

7

Ma

r-17

Ma

y-1

7

Ju

l-1

7

Sep

-17

No

v-1

7

Ja

n-1

8

Ma

r-1

8

Ma

y-1

8

Ju

l-1

8

Sep

-18

No

v-1

8

Ja

n-1

9

Ma

r-19

Ma

y-1

9

Ju

l-1

9

Sep

-19

No

v-1

9

Ja

n-2

0

Ave

rag

e M

on

thly

Pri

ce

Cushing Spot Price

6-Month Futures

12-Month Futures

2-Year Futures

Sources: EIA; Haver Analytics; Real Estate Center at Texas A&M University 13

Monthly Texas Oil Production & Price of WTI

14

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

$110.00

$120.00

$130.00

$140.00

$150.00

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

Ja

n-9

0

Ja

n-9

1

Ja

n-9

2

Ja

n-9

3

Ja

n-9

4

Ja

n-9

5

Ja

n-9

6

Ja

n-9

7

Ja

n-9

8

Ja

n-9

9

Ja

n-0

0

Ja

n-0

1

Ja

n-0

2

Ja

n-0

3

Ja

n-0

4

Ja

n-0

5

Ja

n-0

6

Ja

n-0

7

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Ja

n-1

5

Ja

n-1

6

Ja

n-1

7

Ja

n-1

8

Ja

n-1

9

Ja

n-2

0

Th

ou

san

ds o

f B

arr

els

pe

r D

ay

Tx Oil Production (left)

WTI Price (right)

Source: EIA; RE Center at Texas A&M University

Texas Annual Jobs

15

7,125,7007,204,7007,300,1007,514,500

7,786,6008,059,000

8,292,200

8,643,700

8,973,1009,189,500

9,462,0009,545,0009,447,4009,401,8009,527,700

9,772,900

10,098,900

10,429,60010,643,100

10,341,30010,375,300

10,605,400

10,914,600

11,240,900

11,592,60011,864,800

12,013,60012,227,70012,503,400

12,753,468

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

11,000,000

12,000,000

13,000,000

14,000,0001990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019p

Sources: Texas Workforce Commission, Real Estate Center at Texas A&M University

2014-2018 +1,262,200 jobs;

average 252,440/year

2015 +2.4%

2016 +1.2%

2017 +1.8%

2018 +2.3%

2019p ~2.0%

Texas Annual Jobs

16

9,000,000

9,500,000

10,000,000

10,500,000

11,000,000

11,500,000

12,000,000

12,500,000

13,000,000

13,500,000

14,000,0002005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023


2014-2018 +1,262,500 jobs; average

252,500/year, 2.15%/year

2015 +2.4%

2016 +1.2%

2017 +1.8%

2018 +2.3%

2019-2023 +1,166,600 jobs;

average 233,300/year, 1.8%/year

Texas Annual Employment

17

201813,314,202

202314,520,689

7,000,000

8,000,000

9,000,000

10,000,000

11,000,000

12,000,000

13,000,000

14,000,000

15,000,0001990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023


2014-2018 +1,262,000; average

252,300/year +2.0%/year

2014 +2.7%

2015 +2.4%

2016 +1.2%

2017 +1.8%

2018 +2.3%

2019-2023 +1,206,500; average

241,300/year +1.75%/year

Texas Growth

Year

Jobs, NSA

(Dec-Dec)

Population

(July-July)

2010 216,200 439,887

2011 236,200 402,776

2012 373,300 433,903

2013 300,800 400,952

2014 420,900 475,157

2015 151,800 500,444

2016 150,000 449,982

2017 253,900 399,734

2018 276,100 379,128

2019-2023 1,166,600 2,456,703

19Sources: US Census Bureau; Texas Workforce Commission;


2010-2018

+3,881,963

people

+2,379,200

jobs

Texas Real Per Capita Income

$26,000

$26,500

$27,000

$27,500

$28,000

$28,500

$29,000

$29,500

$30,000200

5

200

6

200

7

200

8

200

9

201

0

201

1

20

12

20

13

20

14

201

5

201

6

201

7

20

17

infl

atio

n a

dju

ste

d d

olla

rs

20Sources: ACS, US Census Bureau, 2017;


Texas Median HH Income

2008, $54,373

2017, $59,295

2013, $51,406

$40,000

$42,500

$45,000

$47,500

$50,000

$52,500

$55,000

$57,500

$60,000

$62,500200

5

200

6

200

7

200

8

200

9

201

0

201

1

20

12

20

13

20

14

201

5

201

6

201

7

20

17

infl

atio

n a

dju

ste

d d

olla

rs

2017 $s Nominal

21Sources: ACS, US Census Bureau, 2017;


Longer-Term Outlook• Population Growth Continues to Outpace U.S.;

Concentrated in Urban Triangle

• Infrastructure Trying to Keep Up with Growth: roads, water/sewer, utilities, schools• Water West of I-35 Major Limiting Factor for Growth

• Infrastructure Financing higher rates; bond market competition for capital; private vs. public financing; taxes

• Land and land resources & government regulatory actions

• Money Capital & Money Markets: debt, inflation and interest rates

22

Texas Demographics

23

Pecos

Brewster

Webb

Hudspeth

PresidioTerrell

Culberson

Reeves

Val Verde

Crockett

Hill

Duval

Harris

Frio

Bell

Kerr

Kenedy

Starr

Polk

Clay

Edwards

Irion

Hall

Ellis

Jeff Davis

Sutton

Uvalde

Bee

Hale

Dallam

Leon

Bexar

Gaines

Hidalgo

Upton

Hartley

King

Erath

Jack

Kinney

Kent

Zavala

Brazoria

Tyler

GrayOldham

Dimmit

CassLynn HuntWise

Kimble

Lamb

Medina

Floyd

Terry

Coke

Llano

Ector

Andrews

Milam

Travis

Knox

Falls

Ward

Collin

Jones

Nolan

Potter

Nueces

Taylor

Real

Bowie

Young

Lamar

Martin

Garza

DallasFisher

Moore

Kleberg

Cameron

Cooke

Hardin

Schleicher

Gillespie

Foard

Wood

Menard

La Salle

Rusk

LibertyLee

Mills

Smith

Burnet

Cottle

Zapata

Coryell

Matagorda

Brown

Motley

Reagan Houston

Maverick

Jasper

Coleman

BaylorArcher

Scurry

Tom Green

Mason

Parker

Castro

Navarro

Brooks

Bailey

Deaf Smith

DeWitt

Lavaca

Donley

Hays

Goliad

Atascosa

Denton

BosqueEl Paso

Fannin

Tarrant

Wharton

CraneConcho

Carson

Runnels

Fayette

Crosby

Borden

Haskell

Calhoun

Newton

Live Oak

Randall

ShelbySterling

Jefferson

Briscoe

McMullen

Parmer

Jim Hogg

Mitchell

Wilson

Victoria

Trinity

Roberts

PanolaHoward

Walker

Bastrop

Grayson

San Saba

Midland

Hockley

Dickens

Swisher

Gonzales

Winkler Anderson

Dawson

Willacy

Grimes

Wheeler

Cherokee

Harrison

Colorado

Eastland

Lubbock

Karnes

Red River

Refugio

Austin

Hemphill

Williamson

Jackson

Blanco

Ochiltree

McCulloch

Loving

Sherman

Wilbarger

Hansford

Callahan

McLennan

Yoakum

Angelina

Hopkins

Lipscomb

StephensPalo Pinto

Stonewall

Hamilton

Montague

Bandera

Cochran

Jim Wells

Limestone

Kaufman

Fort Bend

Titus

Comal

Armstrong

Kendall

Freestone

Comanche

Glasscock

Johnson

Galveston

Henderson

Montgomery

Wichita

Brazos

Van Zandt

Chambers

Robertson

Waller

Sabine

Upshur

Hood

Hutchinson

Shackelford

Childress

Burleson

Nacogdoches

Lampasas

Collingsworth

Hardeman

Throckmorton

Guadalupe

Caldwell

Aransas

Marion

San Patricio

Madison

San Jacinto

Delta

WashingtonOrange

Rains

Gregg

Morris

San Augustine

Franklin

Somervell

Rockwall

Estimated Population Change, Texas Counties, 2010 to 2017

24Source: U.S. Census Bureau, 2017 Vintage Population Estimates;

Texas State Demographer’s Office

87% E

of I-35

67% in

Urban

Triangle

91 counties lost population over the 7 year period.

tl_2017_us_county

NumCh10-17

-2,139 - 0

1 - 1,000

1,001 - 20,000

20,001 - 100,000

100,001 - 560,521

Texas Population 1910-20502018 Population Projection & 2017 Texas Water Plan

11,196,730

54,369,297

25,145,561

47,342,417

41,928,264

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

2015

2020

2025

2030

2035

2040

2045

2050

25

From 1970 to 2010 (40 years),

Texas added 13.9 million people

From 2010 to 2050 (40 years),

Texas will probably add ~17- 30

million people

Sources: U.S. Census Bureau; Texas State Demographer’s Office 2018

Projection & 2000-2010 Scenario; Real Estate Center at Texas A&M University

2017 Texas

State Water

Plan

Revised 2018

Projection

(2010-2015

Rate)

2000-2010

Projection

Projected Population Change, Texas Counties, 2010-2050

26

Source: Texas State Data Center 2012

Population Projections . 2000-

2010 Migration Scenario

Legend

tl_2010_48_county10

F6

-6,200 - 0

1 - 2,000

2,001 - 10,000

10,001 - 100,000

100,001 - 1,000,000

1,000,001 -3,480,000

90%+ in the

Urban Triangle

http://en.wikipedia.org/w/index.php?title=File:I-35.svg&page=1

Chief Economist

Dr. James P. Gaines

28

Texas Housing

Market

2018 Key Housing Measures

29

Sales

Average

Price

Median

Price

Months

Inventory

Median

Price/sf

Texas 1.7% 3.7% 4.5% 3.3 5.0%

Austin 1.4% 4.2% 3.9% 2.3 3.9%

DFW -2.4% 4.1% 3.9% 2.5 5.7%

Houston 3.4% 2.7% 3.1% 3.5 4.2%

San

Antonio 2.9% 4.2% 5.2% 3.1 5.5%

Source: TAR Data Relevance Program; Real Estate Center at Texas A&M University

2019 Home Market SlowdownFactors that may create a drag on home-buying demand

• Limited inventory availability

• Higher prices - affordability

• Increasing interest rates

• Concerns about general economy –fear of recession or jobs

• Stock market volatility

• Negative press coming off record year(s)

31

March 2019 Residential Sales Slowed Down; Price/Sq. Ft. Still Up

32

Sales 0.7% YTD

Price +3.4% YTD

Source: TR Data Relevance Program; Real Estate Center at Texas A&M University

MOI 3.6


103,344102,789110,830

120,749126,525

126,279

142,940

151,861

177,179

191,189195,568

204,084209,438

224,215

250,380

277,649

304,762

286,778

241,666

221,768211,640213,968

247,680

287,833297,623

309,274

323,661

338,178343,833

347,271

$50,000

$70,000

$90,000

$110,000

$130,000

$150,000

$170,000

$190,000

$210,000

$230,000

$250,000

$270,000

$290,000

$310,000

$330,000

$350,000

$370,000

$390,000

50,000

70,000

90,000

110,000

130,000

150,000

170,000

190,000

210,000

230,000

250,000

270,000

290,000

310,000

330,000

350,000

370,000

390,000

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

p

Sales Avg Price Md Price

2018

Sales 1.7% Prices ~4%

2019p

Sales ~1%, Prices ~3.5%

Annual Texas Home Sales & Prices

33

2010-2018

Sales +64%,

Average Price +49%,

Median Price +59%

Texas Home Sales per 1,000 Households

17.016.617.5

18.819.4

18.9

20.921.8

24.9

26.326.527.327.7

29.4

32.1

34.8

37.6

34.8

28.7

26.0

24.224.1

27.5

31.532.0

32.833.9

35.1

10

12

14

16

18

20

22

24

26

28

30

32

34

36

38

40

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

Source: TAR Data Relevance Program; US Census Bureau;


1990-2000 Average 20.8

2001-2017 Average 30.6

Texas Median Home Prices Continue to Climb

$68,470$71,656

$75,525$78,396$80,294$81,851

$86,462$90,879

$96,063$100,952

$111,642$118,808

$123,725$127,017$128,883

$135,788$141,905

$146,105$145,613$144,633$146,417$147,000

$156,800

$170,000

$182,500

$195,372

$210,000

$223,000

$233,000

$241,155

$50,000$60,000$70,000$80,000$90,000

$100,000$110,000$120,000$130,000$140,000$150,000$160,000$170,000$180,000$190,000$200,000$210,000$220,000$230,000$240,000$250,000

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9p

35

2017 +6.2%;

2018 +4.5%

2019p +3.5%

2012-2018p +49%


Texas Median HH Income & Median Home Price Indexed to 1989

60

80

100

120

140

160

180

200

220

240

260

280

300

320

340

360

60

80

100

120

140

160

180

200

220

240

260

280

300

320

340

360

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Sources: U.S. Census Bureau; Haver Analytics; Real Estate Center at Texas A&M University

2017 Adjusted HH Income +20%

Nominal HH Income +129%

Median Home Price +226%

1989 Median Price = 2.65 x Median HH Income

2017 Median Price = 3.76 x Median HH Income

Texas Months’ Inventory Still Quite Low

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Ja

n-0

1

Ju

l-0

1

Ja

n-0

2

Ju

l-0

2

Ja

n-0

3

Ju

l-0

3

Ja

n-0

4

Ju

l-0

4

Ja

n-0

5

Ju

l-0

5

Ja

n-0

6

Ju

l-0

6

Ja

n-0

7

Ju

l-0

7

Ja

n-0

8

Ju

l-0

8

Ja

n-0

9

Ju

l-0

9

Ja

n-1

0

Ju

l-1

0

Ja

n-1

1

Ju

l-1

1

Ja

n-1

2

Ju

l-1

2

Ja

n-1

3

Ju

l-1

3

Ja

n-1

4

Ju

l-1

4

Ja

n-1

5

Ju

l-1

5

Ja

n-1

6

Ju

l-1

6

Ja

n-1

7

Ju

l-1

7

Ja

n-1

8

Ju

l-1

8

Ja

n-1

9

Ju

l-1

9

“Balanced”

Market

Mo. Inventory = Current month’s total listings / 12 mo. moving avg. of monthly sales

Source: Real Estate Center at Texas A&M University (New & Used Homes Sold thru MLS’s)

Seller’s Market Since

June, 2012

11,879

14,270

38,706

64,530

60,366

44,992

53,004

24,626

19,602

5,197

5,087

80,000 60,000 40,000 20,000 0

2018 Sales

Texas 2018 Sales and Months Inventory by Price

38

3.6

3.2

2.4

2.2

2.7

3.4

3.9

4.5

5.3

7.5

10.3

0.0 2.0 4.0 6.0 8.0 10.0 12.0

$0 - $69,999

$70,000 - $99,999

$100,000 - $149,999

$150,000 - $199,999

$200,000 - $249,999

$250,000 - $299,999

$300,000 - $399,999

$400,000 - $499,999

$500,000 - $749,999

$750,000 - $999,999

$1,000,000 +

Current Mos. Inventory


3.5%

4.2%

11.3%

18.9%

17.6%

13.1%

15.5%

7.2%

5.7%

1.5%

1.5%

About 61% of

sales in $100k

to $300k range

Very Tight

Inventory

to $300k

Texas SF Building Permits

38,233

46,209

59,543

69,96470,45270,421

83,13282,228

99,912101,928108,782

111,915

122,913

137,493

151,384

166,203163,032

120,366

81,107

68,230

68,170

67,254

81,926

93,478

103,045105,448

106,511

116,766123,772

127,485

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8p

201

9p

Source: US Census Bureau; NAHB; Real Estate Center at Texas A&M

2015 +2.3%

2016 +1.0%

2017 +9.6%

2018e +6%

2019p +3%

1995-2017 average

104,854/year

Texas SF Building Permits per 1,000 New Households

40

316

401

739

645580

528

1,339

689

347

851

398435

648719

435

585592

714699

809

1,191

1,550

2,018

970

888

1,242

894

455

646

324

602

679668619

731688

745

100

300

500

700

900

1,100

1,300

1,500

1,700

1,900

2,100

2,300

198

1

198

2

198

3

198

4

198

5

198

6

198

7

198

8

198

9

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7e

Source: US Census Bureau, Real Estate Center at Texas A&M

1995-2015 average

820/year

Texas MF Building Permits

8,96210,2989,514

15,545

32,23734,68435,720

43,794

56,918

44,716

32,620

38,427

42,40943,081

39,796

44,431

53,894

58,542

49,897

17,375

21,504

32,260

56,40656,644

67,319

69,995

59,34258,34656,596

54,898

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8e

201

9p

Source: US Census Bureau, Real Estate Center at Texas A&M

1995-2016 average 45,444/year

2017 -1.7%; 2018p -3%

Texas Residential Construction Leading and Coincident Indexes

Jan 2000=100

40

60

80

100

120

140

160

180

40

60

80

100

120

140

160

180

Jan

-00

Ju

l-00

Jan

-01

Ju

l-01

Jan

-02

Ju

l-02

Jan

-03

Ju

l-03

Jan

-04

Ju

l-04

Jan

-05

Ju

l-05

Jan

-06

Ju

l-06

Jan

-07

Ju

l-07

Jan

-08

Ju

l-08

Jan

-09

Ju

l-09

Jan

-10

Ju

l-10

Jan

-11

Ju

l-11

Jan

-12

Ju

l-12

Jan

-13

Ju

l-13

Jan

-14

Ju

l-14

Jan

-15

Ju

l-15

Jan

-16

Ju

l-16

Jan

-17

Ju

l-17

Jan

-18

Ju

l-18

Jan

-19

Ju

l-19

Jan

-20

Source: Real Estate Center at Texas A&M University

Leading Index

Coincident Index

Total Housing

Permits (12-MMA)

42

Texas Single-Family Housing Markets Expected to Slow Down in 2019

43Source: Real Estate Center at Texas A&M University

Texas (2018 (%) 2019 (%) 1991-2018 (%)Housing Permits 5.7 2.1 5.4

Sales 1.8 0.9 4.6

Price per square foot 4.4 4.0 4.8

Austin

Housing Permits 9.6 0.2 11.4

Sales 2.3 2.8 6.1


DFW


Sales -2.2 0.3 5.0


Houston


Sales 3.5 1.1 3.9


San Antonio


Sales 2.3 -1.0 6.8


dr. james p. gainesdr. james p. gaines. ... shelby sterling jefferson briscoe mcmullen parmer jim...

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