One might say Waco residents generally are pinching pennies until they squeal, as the saying goes, but they are having no second thoughts about buying or building new homes, a West Texas economist is reporting.
Amarillo-based Karr Ingham described local spending in January and February as “weak,” noting that inflation-adjusted tallies from the Texas Comptroller’s Office reveal a 1.8 percent decline in general outlays last month and a 2.7 percent dip since Jan. 1 compared to the same periods last year.
Looking on the bright side, Ingham said that for the 12 months through February, retail spending was up 1.7 percent compared to the previous 12-month period. He analyzes sales tax receipts from Bellmead, Beverly Hills, Hewitt, Lacy Lakeview, McGregor, Robinson, Waco, West and Woodway.
It is not unusual for consumers to stumble entering a new calendar year as they pay off holiday debt, said Kris Collins, senior vice president for economic development at the Greater Waco Chamber of Commerce, who presented Ingham’s findings to several invited business leaders. The First National Bank of Central Texas’ Valley Mills Drive location hosted the forum sponsored by the bank and the Waco Tribune-Herald. Ingham tracks economic trends dating to the year 2000 to create the Greater Waco Economic Index.
Collins said the performance of the index has steadily improved since bottoming out in 2012, with home construction and sales, tourism, job creation and general construction usually leading the monthly surge. Raw figures show the index increased slightly to 130.1 in January before dipping fractionally to 130 in February, an increase of 2.5 percent compared to the revised February 2018 GWEI of 126.9, according to Ingham.
Of note in February was the quickening pace of home sales. A total of 202 residences changed ownership, a 9 percent leap from the 185 sold in February last year. The 371 homes sold in January and February represent an almost 17 percent increase from the same months last year.
“The inflation-adjusted total dollar volume of residential real estate sales is up by a whopping 38 percent in early 2019 compared to year-ago levels,” Ingham reported.
Homes sold for an average of $196,735 in February and $203,396 for the year, increases of 12 and 21 percent, respectively, according to the report.
Roman Novian, a residential real estate agent with Coldwell Banker Apex in Waco, did not quarrel with the figures, but said his impression is that sales have slowed somewhat from last year. He said he noticed a cooling after August, which is typical as families and the market settle down after the summer break from school, but he has not sensed a return to form evident in recent years.
Novian said a lack of inventory continues to plague local agents and potential buyers, especially first-time lookers with limited budgets.
The current inventory stands at 2.9 months, he said, meaning it would take about three months to sell every home on the market locally at the current sales pace.
That is a seller’s market, according to the Zillow homebuying guide, which defines a balanced market that favors neither buyer nor seller as having a 5- to 7-month inventory, while anything below 5 is a seller’s market.
Help could arrive soon, as 88 permits had been issued through February for construction of single-family homes, a 4.8 percent increase from February last year. Consider that in the GWEI base year of 2000, only 29 permits were issued to build new homes in the cooler months of January and February.
Some job growth
Ingham’s economic barometer included updates from the Texas Workforce Commission. The commission reported the Waco Metropolitan Statistical Area, which includes Falls and McLennan counties, probably had 200 fewer jobs in 2017 than previously estimated, while the economy created 800 fewer jobs last year than previously thought. There was job growth, but not as much as previously thought.
“The revisions were not terribly severe, but they do suggest employment growth was less robust last year than the original data indicated, and the general pace of employment growth fell to below 1 percent in 2018 compared to 2017,” Ingham wrote.
That being the case, he adjusted the December GWEI downward, from 130.2 to 129.7, and the GWEI’s all-time high of 130.7 in November was revised to 130.2, Ingham said in his report.
Despite the adjustments, the number of people working in the Waco MSA grew by about 1,900 year-over-year, Collins said.
Ingham also tweaked revenues in the hotel sector but inflicted little damage. He said inflation-adjusted lodging revenue last year was 15 percent ahead of 2017 and is up more than 10 percent so far this year.
“Occupancy rates are on the rise, and new properties, which command significantly higher room rates, are replacing older hotels as the city’s travel and tourism component continues to strengthen thanks to the extraordinary contribution of the various Magnolia enterprises, increased college-related activity, and other factors,” Ingham wrote in his report.
View from Magnolia
Magnolia spokesman John Marsicano said Magnolia Market at the Silos brought about 80,000 visitors to Waco during the recent spring break, a stretch that included the Spring at the Silos event.
“Lodging in Waco is very strong, but frankly, it is strong all over Texas, which is enjoying tremendous economic growth,” said Kari Lalani, an executive with Waco-based Lalani Lodging.
The company opened a 111-room Hilton Garden Inn last year in Waco, where it also operates a Homewood Suites.
Auto sales and more
Auto sales are stalling, with sales of new and used vehicles declining 7 percent through last month compared to the first two months a year earlier, Ingham reported. February spending was off “by a sharp 16.4 percent” from February last year, which was down 17 percent from February 2017.
Ted Teague, general manager at the Allen Samuels Dodge Chrysler Jeep Ram Fiat dealership in Waco, acknowledged the troubling trend. He said price increases have forced consumers to rely more on long-term financing, 72 to 84 months, “which is not good for personal budgets or the industry as a whole.” Consumers are choosing not to burst their family budgets.
Collins also mentioned two economic development projects creating jobs in Greater Waco, including Coca-Cola’s decision to spend $30 million expanding its juice plant, a move securing 358 existing jobs and creating 20 new ones. Coke will open a research and development venue in Waco.
Also, Oceans Healthcare will open a behavioral hospital in Waco, near Baylor Scott & White Hillcrest Medical Center, that will employ about 90 people.