Builders itching to erect new homes and a sizable jump in the average price of a home sold in Greater Waco helped push the July economic index prepared by Amarillo-based economist Karr Ingham into record territory, continuing a trend of month-over-month increases.
The 47 permits issued last month for construction of new homes in Waco is the highest ever for July and represents a 160 percent increase from July a year ago. The showing pulled home construction out of the doldrums, as the total number of permits issued through July is down 3.7 percent from the first seven months of 2015.
Ingham prepares his monthly overview of local economic trends using data dating to 2000 on behalf of the First National Bank of Central Texas and the Waco Tribune-Herald. Most of his findings relate to Waco and its suburbs, but permits issued for single-family and commercial construction apply only to the Waco city limits.
Ron Nelson, a senior vice president at First National who specializes in real estate and home construction lending, said 2016 has been a good year for both.
“What we’re continuing to see is solid activity in all areas of residential construction,” Nelson said, noting that areas around Waco have been hot for most of the year. “The builders we deal with certainly are not being overly aggressive. They’re not overbuilding, just keeping up with demand, and right now there is a lot of demand.”
He said Waco is joining the fun now that Fort Worth-based D.R. Horton has begun acquiring permits to fill Park Meadows, a 1,500-home subdivision it plans on 300 acres just off Ritchie Road in Waco, near Hewitt and Woodway. D.R. Horton would build the homes over several years as demand dictates.
“I’m betting that a good portion of those 47 permits are the first phase of what D.R. Horton plans for that area, which has been in the news,” Nelson said.
Scott Bland, president of the Heart of Texas Builders Association, said D.R. Horton is erecting homes in Park Meadows but also in the next phase of construction in the Twin Rivers subdivision, adjacent to the Twin Rivers Golf Club off U.S. Highway 84 between Waco and McGregor.
“The last time I was in that area, I counted at least 12 slabs already poured or about to be poured,” Bland said in a phone interview.
Bland said builders also are eager to secure permits before Sept. 1, when new city of Waco building codes go into effect that aim to improve energy efficiency in new homes. These new requirements could add $1,500 to $6,000 to the cost of a new home, “so I think you’ll see a lot of permits issued in August, as well.”
Existing home sales in July were down 11 percent from those in July of last year, according to revised figures from the Real Estate Center at Texas A&M University, which is a centralized source for Texas home sales data. But the sales total through July of 1,583 homes is 1 percent above the 1,567 through July of 2015.
The average existing home sales price in July stood at $196,344, which is 13.3 percent higher than the $173,227 in July a year earlier.
“The Texas A&M Real Estate Center typically is the source of data used to calculate the Greater Waco Economic Index, and the revisions to Real Estate Center processes should generally mean more accurate data going forward,” said Ingham, who applied the new benchmarks in arriving at the July score.
He said those revisions served to lower the GWEI in recent months, but only slightly. The June index dipped from 122.7 to 122.5, while the July tally hit a new record of 122.7, which is 2.9 percent higher than the 119.3 in July of last year. The index reflects activity in construction, spending and employment.
The Waco Metropolitan Statistical Area, which includes McLennan and Falls counties, added an estimated 2,700 jobs during the past year for an employment growth rate of 2.3 percent. That ranks ninth among the state’s 26 metropolitan areas, and the jobless rate of 4.6 percent was the 10th-lowest statewide.
Waco’s jobless rate has been dropping for more than five years, Ingham said, adding July was the first month since November 2011 it did not fall from the previous year.
Retail spending in July totaled $250 million, which was 1.3 percent less than the $253 million spent in July 2015. For the year through July, consumers locally have shelled out $1.93 billion, which is 1.8 percent more than the $1.89 billion they spent during the first seven months of last year.
Spending is calculated using sales tax figures from Waco, Bellmead, Beverly Hills, Hewitt, Lacy Lakeview, Lorena, McGregor, Robinson, West and Woodway.
Auto sales slump
Auto sales this year have been blowing the doors off the index for most of 2015, but the category experienced a slump locally and nationally in July.
“Spending on new and used motor vehicles was off by 8.4 percent compared to July of a year ago, marking only the second time in the last 12 months that activity was down compared to year-ago levels,” Ingham said, adding that spending for the year has hit few potholes but remains up by 9 percent.
Building permits were issued in July for nonresidential projects valued at $22.4 million, a 6 percent increase from July of last year.
“That was the first year-over-year increase in that category in three months,” Ingham said. “The total for the year-to-date is up by over 9 percent compared to the January-July 2015 total. Again, though, building permit activity declined fairly significantly in 2014 and 2015 and is making up some of that ground in 2016.”
Several business owners were asked during a news conference Wednesday to discuss their perspective on Waco’s economy. The following is a sampling of comments:
Dan Henderson, owner of the popular Uncle Dan’s Barbecue locations, said he and others in the restaurant industry “are having a tough time finding entry-level workers.” Henderson said he raised his hourly wage by 15 percent with little change, “and I was not paying the minimum wage” of $7.15 an hour.
Henderson said his main location on Lake Air Drive operates 5.5 miles from Magnolia Market at the Silos, Sixth Street and Webster Avenue, “but it still affects us.” He said he recently had visitors from as far as away as Oregon and Washington who found Uncle Dan’s on Google after visiting Magnolia Market.
Camille Johnson, a longtime residential specialist at Coldwell Banker Jim Stewart Realtors, has received her broker’s license and will open her own agency called The Camille Johnson Group. Her team will include her daughter, Kristin Clements, and daughter-in-law, Anna Johnson, Clements said Wednesday.
Clements said homes for sale are spending an average of 96 days on the market this year, down from about 120 days last year.