With winter holidays on the horizon, and the National Retail Federation predicting that spending will increase 4% in November and December, locals apparently are leaning toward ditching the Scrooge act.
Retail spending in Greater Waco topped $321 million in September, an 11.4% increase from September 2018, according to a wrapup of local economic trends prepared by Amarillo-based economist Karr Ingham for the First National Bank of Central Texas and the Tribune-Herald. He uses data dating to 2000 to prepare his synopsis, which considers home and general construction, employment, hotel revenue and automobile sales.
Spending is a key factor, says Ingham, whose research of sales tax receipts shows spending locally increased a modest 1.8% during the three-month quarter through September, the double-digit increase in September notwithstanding. Year to date, spending remains sub-par, 0.1% less than during the first nine months of last year, Ingham reported.
The increase in spending coincides with a booming housing market. A total of 65 permits were issued in September to build single-family homes in Waco, a 30% increase from the 50 issued in September last year. For the quarter, 161 permits were issued, a 26% increase. And for the year through September, 472 permits have been issued, a 6.1% jump.
“The 472 permits issued through September beat the previous record of 445 from last year,” Ingham said in the summary accompanying his report.
The bottom line, Ingham concluded, is that the Greater Waco Economic Index set another record in September, attaining a raw score of 132.4, up from 131.9 a year earlier.
“The Greater Waco economy clearly remains a growth economy through the third quarter 2019. It remains a bit of a mixed bag of results, and as always higher employment growth rates would help to round out the growth picture considerably,” Ingham wrote in his report.
He said the local economy created a modest 900 jobs the past year, a growth rate of less than 1%.
The Greater Waco economy has grown 92 consecutive months “and is hopefully headed for the eight-year mark in January 2020,” he wrote.
On the housing front, homebuilder Jason Peavy, president of the Heart of Texas Builders Association, said he sees no pitfalls ahead.
“I don’t see the market slowing in the near short-term,” Peavy said by phone. “My company is extremely busy right now, as are pretty much all the builders. There is plenty of demand. Younger families are looking at school districts, which is why we’re building a lot of homes in China Spring and just off the Highway 84 corridor. Subdivisions like Chapel Ridge, Creekside and Twin Rivers, which is almost built out, continue to attract attention.”
He said he is receiving interest in homes ranging in price from the upper $200,000s to $470,000. He said he continues to receive inquiries from prospects planning a move to Central Texas from outside the state.
Peavy, 41, grew up in Waco but launched his homebuilding career in Belton and Temple before entering the local arena about 10 years ago.
“I would say we’re getting into the best time for home construction I’ve seen since I’ve been here,” he said. “Obviously, I can’t speak for second-generation guys whose families have been building homes 30 years.”
The sale of existing homes also is breaking records, Ingham reported.
Through September, 2,437 single-family residences had changed hands, an 8.4% increase from September last year. In September and the third quarter, sales increased 3% and 7.7%, respectively.
Accordingly, the average home sales prices is climbing, hitting $220,256 in September, a 9.5% increase from September last year.
In comparison, the average price for a home sold locally in September 2000 was $101,163, according to statistics Ingham provided.
“We’re seeing not only increased material costs, but also increases in labor costs and lot costs,” Peavy said. “At the same time, you can buy a lot more house in Waco for the price than in Austin, Dallas or Houston.”
General construction, which includes commercial and industrial projects, increased almost 80% in September, to $34 million.
K. Paul Holt, president and CEO of the local office of Associated General Contractors of America, said local subcontractors are getting work related to the more than $30 million upgrade to the Heart O’ Texas Fair complex, a project of Waco’s John W. Erwin General Contractor.
“No doubt that all of the commercial construction for coffee shops, restaurants and retail has contributed to the retail spending increase,” Holt said by email. “With more places to sip expensive coffee and have boutique meals and places to stay, there are more people filling those seats and beds.”
“The Magnolia effect continues, and seems to grow as well,” he added.
Elsewhere in the September report from Ingham:
- Vehicle sales were off slightly in September, down fractionally from the same month last year, which was up 7.3% from September 2017.
- Fueled by Waco’s growth as a tourist attraction, hotel and motel revenue continues to increase. “Third-quarter hotel/motel activity was up by a solid 4%, again coming on top of big numbers from last year,” Ingham wrote. Year-to-date, hotel spending is up 5.4%, “which in turn was up by over 15% compared to the previous year.”