The housing sector, including home sales and home construction, created the most good news for the Waco economy during 2016, a year that also saw a sizable increase in spending on automobiles and on stays in local lodging establishments, according to Amarillo-based economist Karr Ingham in his December snapshot of local trends.
A total of 2,721 existing homes changed hands last year, a 5 percent increase from 2015, and builders took out 409 permits to erect new homes in Waco, an 8 percent jump from the year before, Ingham said. He prepares a monthly report for the First National Bank of Central Texas and the Tribune-Herald using data dating to 2000.
The report he released this week includes totals for the year, the quarter and the month of December. He said the local economy finished the year “on an uptick” from November, with the raw index number reaching 124.1, up from 123.9 in November and up 2.8 percent from the 120.7 in December of 2015.
“It was a solid year of growth in the greater Waco metro area general economy, with a 2.8 percent increase in the Greater Waco Economic Index for the year,” Ingham said.
But the increase fell below the average annual norm of 4.6 percent during the period between 2011 and 2015.
Retail sales sluggish
December, when holiday spending typically peaks, was not a month to write home about for retailers. Spending totaled $251 million, which is 2 percent lower than the $256 million in December the previous year, though it rose 3.3 percent during the fourth quarter and 1.7 percent for the year, totaling $3.4 billion.
Whitney Richter, a spokeswoman for the Greater Waco Chamber of Commerce who presented Ingham’s findings to invited members of the business community Wednesday, said she could not pinpoint the cause for the slight drop in taxable December spending. Growth in online sales is a possibility, Richter said.
The Magnolia factor continued to create good news for local lodging establishments. Spending totaled more than $4.1 million, up 26 percent from almost $3.2 million in December of 2015. Magnolia Market at the Silos continues to attract thousands of visitors every week, adding to demand for hotels. Spending jumped 17 percent to $47.8 million in 2016.
Richter said Greater Waco added 296 new hotel rooms during 2016 to keep pace with activity, and another 346 are scheduled for completion this year.
“The hospitality industry continues to create more jobs than just about any other employment category,” Richter said.
Local spending on automobiles took a plunge in December but increased 6.9 percent for the year, to $583 million, Ingham reported.
“Auto sales activity set a new record in 2016, with inflation-adjusted spending on new and used motor vehicles up by nearly 7 percent compared to the 2015 annual total, which was the record then and was up by 6.6 percent compared to the previous year,” Ingham said.
On the housing front, the dollar volume of homes sold in Waco last year totaled $495 million, which is 8.2 percent more than the total value from the previous year. The average home sales price reached $173,276 in December and $180,370 for the year, which was 5 percent more than the average for the previous year.
“The number of new single-family residence permits issued by the city of Waco surpassed 400 for the first time since 2008 and was up by nearly 8 percent compared to 2015,” Ingham said. “The 43 permits issued in December is a record for the month of December and was up by some 43 percent compared to the December 2015 monthly total.”
Waco needs to see the arrival of new housing stock, as the Real Estate Center at Texas A&M University reports that the inventory in Waco has dwindled to 2.6 months, the lowest since the center started to report that information in 2004. The figure has fallen steadily since reaching 10 months in June 2011.
That inventory rate means it would take less than 3 months to sell all existing homes on the market at the current rate of monthly deals.
While permit activity for construction of new homes is setting records, permits issued for general construction are slumping. December flashed a glimmer of recovery, but for the year, the $360 million value of permits was down almost 8 percent from the $390 million for all of 2015.
Ingham said the dip in 2016 is not necessarily shocking since it occurs in the wake of intense construction activity in 2012, 2013 and 2014, a period that included the completion of Baylor University’s $266 million McLane Stadium, development at South Valley Mills Drive and Bagby Avenue that included the arrival of Gander Mountain and several new restaurants and a hotel, and construction of a new H-E-B at South Valley Mills Drive and the Interstate 35 frontage road.
Construction has continued on pockets of retail, restaurant and multi-family projects in and near downtown Waco, in the Legends Crossing mixed-use development at Interstate 35 and West Loop 340, and in Central Texas Marketplace, the sprawling retail center at West Loop 340, Interstate 35 and Bagby Avenue.
The Texas Workforce Commission reported the local economy created an estimated 3,000 jobs during 2016, with Ingham saying employment growth throughout the year averaged 2.2 percent, “which is the highest rate over the entire history of the Greater Waco Economic Index.”
The Waco chamber’s Richter, who also recruits industry, said Waco’s jobless rate of 3.9 percent in December represents a mixed blessing. More people apparently are finding work, but industrial prospects often express surprise at a jobless rate so low, she said.
“If our rate were in the mid-4s or the low-5s, we would show we have available labor and that industry moving here would not just be swapping employees,” she said.
During a question-and-answer session at First National Bank of Central Texas, business and community leaders mentioned issues in their fields:
Justin Lowry, president of J.P. Lowry Construction, said his biggest challenge is finding skilled labor, adding he “has more work than I can get to.”
Buddy Edwards, executive director at Caritas of Waco, which provides a range of services to the poor, said the community has made strides economically, “but 30 percent of local households continue to live in poverty.” He said Caritas has opened a new thrift store in Fairgate shopping center called Hidden Treasures.
Jimmy Banks and Lisa Monroe, who market Legends Crossing, said three restaurant prospects are considering the area, and all would be new to Waco. They said four of the five lots fronting the small lake at Legends Crossing “are under contract or letter of intent” for purchase by would-be developers. And a 15,000-square-foot strip for offices, stores or restaurants will go up next to Saltgrass Steak House.