The Waco economy finds itself in a tailspin of sorts, with spending, employment, construction activity and home sales all declining in August and causing the Greater Waco Economic Index to slide for the second straight month, according to a report released this week.
“General economic activity and indeed the index itself have clearly flattened in 2017, and that remains the case in the third quarter of the year,” said Amarillo-based economist Karr Ingham, who prepares a monthly snapshot of local trends for the First National Bank of Central Texas and Tribune-Herald using data dating to 2000.
Raw numbers show the GWEI declined in August for the sixth time in the last 10 months, falling to 125.1 last month from 125.5 in July. Despite recent slides, the index remained higher than the 124.1 in August of last year.
Still, Kris Collins, senior vice president for economic development at the Greater Waco Chamber of Commerce, pointed out silver linings during a discussion of the GWEI results with business leaders.
“The 52 permits issued for new home construction is the largest for a month since we began our tracking,” Collins said.
The chamber also “has a strong pipeline of companies just waiting to pull the trigger” on announcing a move to Waco that would further stimulate the economy, she said.
The Texas Central Industrial District is brimming with plants that have posted help-wanted signs and need to fill well-paying technical positions but are struggling to find people with the needed skills, Collins said.
August employment dropped by an estimated 800 jobs compared to August of last year, marking the first year-over-year decline since June of 2012, Ingham said. The “leisure and hospitality” sector was the loss leader, experiencing an estimated drop of 400 jobs in the past year.
“That category has seen tremendous growth, but I guess it reached its peak,” Collins said. “All the new hotels probably are settling in and have streamlined their staffing for efficiency reasons.”
Revenues generated by local lodging establishments continues to swell, hitting $4.5 million last month, a 14 percent increase from August 2016.
Consumers in Greater Waco continue to pinch pennies, with retail spending in August sliding 0.5 percent to $314 million compared to the same month a year earlier. For the year through August, spending has increased a modest 0.4 percent to $2.3 billion, Ingham said.
“The general spending picture is not terrible. The total through August is actually a record for the first eight months of the year. But the rate of growth in 2017 has slowed to a crawl,” Ingham wrote in his summary.
Even car dealers are feeling the pinch. Spending on new and used motor vehicles dropped by more than 13 percent in August after strong performances in June and July, Ingham said.
For the year through August, spending on vehicles has reached $401 million, a modest 1.5 percent increase from the first eight months of 2016.
Discussing trends, Claire Kultgen, a vice president at Bird-Kultgen Ford, said car sales are slumping but SUVs have regained their popularity. She credited falling gasoline prices for creating the change in buying habits.
“Our biggest challenge is finding technicians. We just hired two from out of state who were interested in moving to Waco because of the ‘Fixer Upper’ show,” Kultgen said, referring to the Waco-based home renovation reality show on HGTV that stars Chip and Joanna Gaines.
She said technicians can make as much as $100,000 a year.
The number of homes sold in Greater Waco hit 247 in August, an almost 15 percent drop from the 290 that changed hands in August 2016. After a hot start to the year, home sales now are running 3 percent behind sales for the first eight months of 2016, according to Ingham.
“The market is becoming more stable,” said Pam Tucker, a residential sales specialist with Coldwell Banker Jim Stewart Realtors. “Homes are selling in two weeks or two months, not in two hours as we had been seeing. Personally, I like the change. It reduces the pressure on potential buyers, makes it more likely they will make an informed decision.”
Tucker said there remains a shortage of inventory in the Greater Waco housing market, noting that 793 single-family residences have appeared on the Multiple Listing Service since January.
“We used to see more than a thousand” during that time period, Tucker said.
The average price for a home sold locally in August hit $205,662, a 13 percent increase from the $181,384 norm the same month in 2016, according to Ingham. His report shows that the average price of a home sold in August of the 2000 base year was $97,773.
Several business owners discussed trends they are observing during a roundtable discussion of the GWEI held at First National Bank of Texas following the presentation by Collins.
Raynor Campbell, a commercial real estate specialist with the Reed-Peevey Company, said real estate downtown remains a hot commodity. He said he has two prospects from outside Waco poised to lease space in Waco’s central city, but finding available space has become a challenge.
Hurts Donut Co. wants a downtown location, but nailing down a site “has been quite a process,” Campbell said.
Lease space on University Parks Drive is fetching $28 a square foot, comparable to the rates for fast-food restaurants near downtown and Interstate 35 where development is booming.
Woodway City Manager Yost Zakhary said residential building permits are up 30 percent in the Waco suburb, “and I’m seeing a lot of remodels valued at $100,000 to $150,000. People pay $600,000 for a home in Badger Ranch and then spend that much more on a remodeling job.”
Jake Dahms, owner of Sic’em Delivery, said he employs 80 drivers but needs 100 to 125 to expand his delivery offerings. He said demand is growing in Hewitt, Woodway and West Waco.
“I’m now testing the possibility of alcohol delivery, partnering with local liquor stores,” Dahms said.
Kent Bounds, at Brazos Masonry, said his company performed $40 million worth of masonry work on commercial buildings in 2016. This year started well, but he has seen a lull in commercial construction,” Bounds said.
“Austin is going crazy, and Houston and Dallas-Fort Worth are doing great,” he said. “Maybe Waco will follow their lead. I’m hearing rumors of big projects in the near future and I hope they come to pass.”