The spirit of giving was not necessarily lacking in December, but retail spending was nothing to write Santa Claus about, according to a report Amarillo-based economist Karr Ingham released Wednesday that showed the Greater Waco Economic Index declined in December for the first month all year.
Sluggish employment growth and new home construction contributed to the lackluster results. But overall in 2015, the local economy performed well, setting records for home sales and home prices and giving the jobless rate reason to fall to an annual average of 4.1 percent, the lowest in years.
Despite the lure of holiday sales and Black Friday bargains, retail spending in December declined one-tenth of 1 percent.
Whitney Richter, business development and marketing manager for the Greater Waco Chamber of Commerce, said increased use of online sites to buy merchandise may have contributed to the slip.
Waco and its neighbors do not always receive sales tax rebates on purchases made by local residents using the Internet.
Richter presented the results of Ingham’s monthly economic snapshot during a news conference Wednesday at the First National Bank of Central Texas, which sponsors the report with the Waco Tribune-Herald. She also discussed quarterly and annual findings with several representatives of the business community.
Ingham said despite the disappointing results in December, Greater Waco’s economy made an impressive showing in 2015.
“This marks the fourth straight year of solid economic improvement in which growth in the index surpassed 4 percent,” Ingham said.
His summary showed the GWEI registering 121.5 in December, down from 121.7 in November but well above the 116.7 in December of the previous year.
Local residents may have pinched their wallets and purses in December, but sales tax receipts show that retail spending for all of 2015 exceeded that of 2014 by 4.1 percent, and spending in 2014 eclipsed that of 2013 by 5.6 percent.
Richter said the growing number of retail and restaurant options in Greater Waco has contributed to the uptick in spending, as has the improving employment rate, which means more people have disposable income.
In the fourth quarter, auto spending improved more than 9 percent from the fourth quarter of 2014, which was up 14 percent from the same quarter in 2013.
David Rhoten, new car sales manager at Allen Samuels Dodge Chrysler Jeep Ram, said several factors contributed to a good year for dealers.
“Obviously, improvements in technology have contributed to the popularity of vehicles. We’ve seen a surge in SUV sales, and Jeep has been a great product for us,” Rhoten said.
Sales of both new and used cars increased about 17 percent in 2015 from the previous year at his dealership, Rhoten said.
“A lot more people have jobs, which is really the bottom line,” he said. “The job market is more competitive, and employers have to pay a little more.”
Richard Karr at Richard Karr Motors, which sells Buick, Cadillac and GMC products in a dealership that relocated in 2014 from Valley Mills Drive to Waco’s Motor Mile on West Loop 340, said he has seen his sales volume increase significantly, though he declined to provide exact numbers.
“I think manufacturers have been aggressive in providing incentives, and folks are enjoying buying cars,” Karr said.
Low interest rates, including discounted rates that are part of dealer and manufacturer incentives, have buyers clamoring for products such as the GMC Yukon, he said.
Since the recession year of 2009, auto spending has grown by about 54 percent, an average of about 9 percent per year.
The Waco residential real estate market last year established new records for the number of homes sold and the annual average price of those homes.
A total of 2,725 homes changed hands over the year, a 9.3 percent increase from the previous year’s 2,493 and substantially more than the 1,875 sold in 2000, the base year for Ingham’s report.
Meanwhile, the average home sales price for the year reached $166,983, nearly 11 percent more than the $150,825 of the previous year.
Kathy Schroeder, a relocation specialist at Coldwell Banker Jim Stewart Realtors, said job growth has given would-be buyers and sellers confidence to pursue transactions.
Ingham reported that an estimated 4,700 jobs have been added to the Waco metropolitan area since 2011, with 1,000 of those added in 2015.
“Business growth is bringing more executives to Waco, and that includes our two hospitals. And people who watch ‘Fixer Upper’ on HGTV want to buy a little house on 5 acres for $50,000 that Chip and Joanna Gaines can fix up,” Schroeder said, referring to the popular cable show that has made stars of the Gaineses and put Waco in the spotlight.
Schroeder said sales have been so brisk that home inventory is becoming scarce in the Waco area, especially in the higher price range. She said national-name builders, such as Fort Worth-based D.R. Horton, are making inroads into the Central Texas market and are generally developing subdivisions with homes priced between $250,000 and $350,000.
With national brands gobbling up lots, few are left for local custom builders and others who may build to suit more expensive tastes.
D.R. Horton’s website indicates it has been involved in developing 18 subdivisions in the Waco, Temple and Killeen areas.
Hewitt City Manager Adam Miles said D.R. Horton controls about 1,500 lots “just outside our city limits.”
He said a 260-unit apartment complex going up at Ritchie Road and Hewitt Drive is the first multi-family development in Hewitt in more than a decade.
Trammell Kelly, a residential sales specialist at Kelly Realtors, said brisk home sales “are due to a perfect real estate storm that includes a robust economy, low interest rates, plentiful homes in select price ranges and a growing job market, all of which are creating a positive situation.”
He said some agents have wondered if home sales would level off with the arrival of a new year, as January historically is a slow month.
‘Off to the races’
“But if it continues as it has started, it is going to be absolutely fantastic. We are off to the races,” Kelly said. “I’m seeing everything: first-time homebuyers and people moving up in the marketplace. I’m begging people, telling them that if they’re contemplating selling their home, they should do it now.”
Kelly, like Schroeder, said Greater Waco needs more inventory “because homes are just flying out the door.”
For all of 2015, 379 homes were built in Waco, down from 382 a year earlier, and 94 were built in the fourth quarter, a drop from 109 in the fourth quarter of 2014.
“That decline can be blamed, in part, on the scarcity of lots on which to build inside the Waco city limits,” Richter said.
“Housing has fared well in recent years, the last two years in particular, but is one of the few components of the Greater Waco Economic Index that is not in record territory for 2015, continuing to lag behind the annual totals over each of the five years from 2004 to 2008,” Ingham said in his report.
Permits issued for construction of commercial and manufacturing facilities declined in 2015 for the second straight year.
Richter said that should not create concern because 2013 was a record year for construction activity due to the $266 million spent to build Baylor University’s McLane Stadium.
“If not for that rare occurrence, building permit activity in Waco in 2014 and 2015 would have been the highest ever,” Ingham said.
Hotel tax receipts continue to make strides in Greater Waco, reaching more than $2.7 million in 2015, up from $2.47 million in 2014.
Summarizing his findings, Ingham said it is possible that economic growth rates in 2016 may moderate.
“First, the pace of expansion observed over the last four years may not be an indefinitely sustainable pace,” he said. “And second, the general economy of the entire state may weaken a bit in 2016 due to the impact of low crude oil prices and the resulting sharp contraction in oil and gas industry activity and payrolls. That weakness may well find its way into the Greater Waco metro area economy and that of other metro economies in Texas.”