Robust home sales and home construction in June gave the local economy a boost, counteracting sluggish showings in spending and general construction, according to a snapshot of local trends that Amarillo-based economist Karr Ingham released Wednesday.
Using data dating to the year 2000, Ingham prepares a monthly and quarterly report for the First National Bank of Central Texas and the Tribune-Herald. His Waco Economic Index for June showed the continuation of growth over more than four years, with the raw figure coming in at 122.7, up from 122.6 in May and 119.3 in June of last year.
Home sales have established new records for the month, quarter and first half of 2016, Ingham said.
“The number of closed sales was up by over 6 percent in June, and the 297 closed sales is a record for the month of June,” Ingham said. “The second-quarter sales total was up by nearly 10 percent compared to year-ago levels, and sales through the month of June were up by just over 3 percent compared to the first six months of a year ago.”
Increased demand creates higher sales prices, with the June average of $199,851 nearly 14 percent above the $175,612 in June of 2015.
“Interest rates are still extremely low, in the low 3s, and inventory is very low, so if a property is priced properly and in good condition, buyers are jumping all over it,” said Doug Eastland at Doug Eastland Group, Weichert Realtors. “The average number of days on the market is way down. We’re talking days and weeks instead of months.”
Eastland said most of his agency’s business involves local buyers moving up or laterally in acquiring their homes.
“But I have been working with several buyers coming from out of state. Most are trying to get away from California and the high taxes out there,” Eastland said. “We seem to be a little more tax-friendly in Texas, and you get a lot more money for your dollar here than on the East Coast or West Coast.”
Listings with reasonable prices are getting responses within hours, said Don Griffin, an agent with Keller Williams Realty in Waco.
“Some of our homes are getting sold before they ever hit the Multiple Listing Service,” Griffin said. “If a property is priced at current market value, meaning in line with other properties in the market, it could be only a matter of hours before we begin getting offers.”
He said homes marked at less than $200,000 are moving very well, while those priced higher may take slightly longer to sell.
Griffin said Waco finds itself in the middle of a hot housing market “that stretches along the I-35 corridor south to Austin and north to Dallas.”
Indeed, 10,857 pre-owned homes were sold in the North Texas-Dallas area in June, a 7 percent increase from the same month last year, according to the North Texas Real Estate Information System. Sales of existing homes in the city of Austin through June totaled 4,465, a 3.4 percent increase over last year.
Much of Central Texas is suffering from a shortage of housing inventory, said Jim Gaines, chief economist for the Texas A&M University Real Estate Center.
“That’s still true in Waco, but I think the situation is about to change,” said Kathy Schroeder, a residential specialist at Coldwell Banker Jim Stewart Realtors.
D.R. Horton, the largest homebuilder in the United States, plans to build 1,500 homes on 300 acres along Ritchie Road in Waco, near Hewitt and Woodway, Schroeder said. Meanwhile, John Houston Custom Homes reportedly is buying “leftover” lots in subdivisions along U.S. Highway 84 on which to build.
Ingham reported that Waco issued 41 permits in June for construction of new homes, only the second month this year that exceeded the total for the month last year.
Waco also may issue a lot of permits in July and August as contractors seek to proceed with projects before a new city building code becomes effective Sept. 1 that requires homes to be built with greater energy efficiency, said Waco builder Scott Bland, president of the Heart of Texas Builders Association.
Bland said some in the construction industry have estimated the new rules will add $1,500 to $2,000 to the cost of each new home.
Auto sales remained stout through June, with inflation-adjusted spending on new and used vehicles up 13 percent compared to the first six months of 2015.
Hotel and motel activity “has exploded in 2016, with real spending on lodging in the city of Waco up by a whopping 15 percent midway through the year,” Ingham said. “Second-quarter spending on lodging was even more impressive, logging a 16.6 percent increase compared to the second quarter of a year ago.”
Officials said the “Fixer Upper” phenomenon and the popularity of the Magnolia Market at the Silos near downtown were major contributors to the growth. Between 25,000 and 35,000 people a week visit the Silos, many from outside Texas, according to local economic development officials.
Construction activity not related to housing dropped in value for June and for the quarter but remains high year-to-date, Ingham said.
“The January-to-June total actually is the second-highest on record, behind only the first six months of 2013, the year in which the $250 million permit was issued for the new Baylor football stadium,” Ingham said.
Building permits reflecting work valued at $212 million have been issued through June, Ingham reported.
The local economy created an estimated 3,000 jobs the past 12 months, and the Waco metro area jobless rate remains lower compared to its year-ago level. Ingham said the slight increase in the jobless rate between May and June “is a seasonal occurrence and is no cause for concern.”
Teachers and students begin their summer vacation and enter the job market, creating a seasonal bump in the unemployment rate, according to the Texas Workforce Commission.
Local spending reached $1.68 billion during the first six months of the year, an increase of 2.3 percent from last year. The cities for which sales taxes are aggregated and analyzed include Waco, Bellmead, Beverly Hills, Hewitt, Lacy Lakeview, Lorena, McGregor, Robinson, West and Woodway.
Spending in June actually dipped fractionally between 2015 and 2016, from $260 million last year to $258 million this year.