Homebuyers in the Waco area have been blinking for more than a year in their staring contest with sellers.
Despite a report released this week showing local home sales on a record pace last year, at least a few observers said the trend could be turning.
More than 2,900 homes were sold last year, almost 7 percent more than 2017, Amarillo-based economist Karr Ingham reported in his monthly Greater Waco Economic Index, prepared for the First National Bank of Central Texas and the Tribune-Herald. The average home sales price hit $208,589 for December, up almost 11 percent year over year, and hit $202,985 for all of last year, up more than 4 percent from 2017, Ingham reported.
The Waco market “set new records for the number of closed sales, the price of those sales, and the inflation-adjusted dollar volume of those sales,” Ingham wrote.
He uses data dating to 2000 in compiling his review. Raw numbers show the Greater Waco Economic Index slipped fractionally to 130.3 in December, from an all-time high of 130.7 in November. Still, the index has grown more than 30 percent since 2012, after the 2008-09 recession, for an average of 4.5 percent annual growth, according to the report.
“And consider the national economy is considered tremendous if growth reaches 3 percent,” said Kris Collins, who recruits industry for the Greater Waco Chamber of Commerce. Collins gave presentation Thursday on Ingham’s report to invited business leaders.
At that meeting, Amanda Cunningham, who markets upscale homes at Coldwell Banker Apex Realtors, said home sales are “normalizing.”
“What I’m seeing personally is that move-in-ready homes are bringing good prices,” Cunningham said. “Those not move-in-ready may not bring what the seller is asking. If you, as a seller, are not willing to spend to make repairs, to make your home more attractive and presentable, you may not even get appraised value. You may end up selling to an investor for whatever you can get.”
She said 92 percent of homebuyers shop online, and properties not presented well in photos are quickly passed over by prospective buyers.
She said inventory in Greater Waco stands at just shy of three months, meaning homes now on the market would all be sold in fewer than three months at the current pace.
“But our agents in Dallas are telling me the inventory there is five to six months, and what goes on in that market usually makes its way to Waco,” Cunningham said. “As I said, our market is beginning to normalize. It’s not tanking. It’s still good. Power remains in the hands of the seller, if the approach is right. We continue to have an impressive number of people from out of state looking to buy in Waco. But there is a difference.”
Jeff Stubbs, founder and CEO of Hewitt-based Custom Integrators, said he agrees with Cunningham’s assessment and has noticed a “softening.” His company specializes in designing and installing security, energy-management and entertainment systems to create “smart homes.”
But Chuck Sivess, CEO of American Guaranty Title, said he believes the housing market continues to purr and may never look back.
“We have developments left and right to sell homes priced at $150,000 to $250,000,” Sivess said. “Since 1988, Waco has had no huge swings in the market, and I believe we may have reached a tipping point. I’m not sure we will ever go back down.”
He said American Guaranty Title experienced a seasonal softening late last year, “but so far this year, our activity has been strong.”
Spending on general construction totaled $305 million last year, a 6 percent dip from the previous year. Constructino spending in December plummeted almost 20 percent.
Retail spending eclipsed $300 million locally in December, a 13 percent year-over-year increase, and local retailers heard registers ring to the tune of $3.6 billion throughout the year, an almost 3 percent increase.
“Hotel/motel activity in Waco was nothing short of spectacular in 2018, with stratospheric growth in spending on lodging in the city,” Ingham wrote. “Hotel/motel tax data was higher in 11 of the 12 months of the year compared to 2017, and was up by double-digit percentage points in nine of those months.”
Waco’s jobless rate remained at 3.3 percent in December, the same as November, and averaged 3.6 percent last year. The local economy added about 1,600 jobs throughout the year, and its year-over-year growth rate stood at 1.3 percent. That places the Waco Metropolitan Statistical Area, which includes Falls and McLennan counties, 18th among the 26 metropolitan areas monitored by the Texas Workforce Commission, Ingham reported.
“Labor is the No. 1 driver of economic development,” Collins said. “Land and buildings can be found in most markets. People are the key. They are needed immediately, and business and industry also want plenty in the pipeline.”
She said efforts continue to keep local college graduates in Waco, and Baylor University has created a position to promote local opportunities.
Spending on vehicles topped $617 million last year, a more than 6 percent increase from 2017. And buyers shelled out $48 million in December.
Ralph Rickey, a partner in Waco’s new Volkswagen dealership, said sales have increased steadily since the store opened in mid-November.
“What I’m hearing most from customers is they are glad not to have to travel to Temple or beyond to buy or service a Volkswagen,” Rickey said.