New homes are rising, existing homes are selling and improving job figures mean more people can afford them. These factors gave the Greater Waco Economic Index a jolt in August, pushing it into record territory, Amarillo-based economist Karr Ingham reported this week.
One of the few negatives appeared in general spending in Greater Waco, which slipped 2.7 percent compared to August 2015. Through August, spending is up a modest 1.1 percent from the first eight months of last year, Ingham said. He prepares a monthly snapshot of the local economy for the First National Bank of Central Texas and the Tribune-Herald.
Using data dating back to the year 2000, Ingham determined the GWEI rose to 123.2 last month, up from 122.7 in July and 119.9 in August a year ago.
The Waco Metropolitan Statistical Area, which includes McLennan and Falls counties, continues to see job growth, with the Texas Workforce Commission and Bureau of Labor Statistics reporting 2,300 positions were created in the 12 months between August of last year and last month.
“But the pace of growth slowed a bit according to the preliminary August data, which suggests a 2 percent rate of year-over-year employment growth,” Ingham said. “That compares to a rate of growth of 2.4 percent as recently as June of this year and 2.6 percent in March.”
Home construction is shifting into high gear, and the city of Waco issued 47 permits for the second straight month in August for construction of new single-family structures, Ingham said. That’s nearly three times more than the 16 permits issued in August of last year.
“The strong totals in the last two months were sufficient to push the year-to-date total into positive territory for the first time in 2016,” Ingham said.
Greater Waco is enjoying strong construction activity in most sectors, said Ron Nelson, a senior vice president who specializes in real estate lending at First National Bank of Central Texas.
“Certainly everybody is busy, and we’ve had a good string of weather, which means weather-related holdups have not impacted the industry,” Nelson said. “Just in talking with various homebuilders we deal with, they were very encouraged about the market now and going forward.”
Nelson said a “good bit of activity has begun” on Ritchie Road in Waco, near Hewitt and Woodway, where Fort Worth-based D.R. Horton plans a 1,500-home subdivision called Park Meadows. China Spring “is really showing some strength,” and a source told him several lots sold recently in an existing subdivision there, he said.
Scott Bland, president of the Heart of Texas Builders Association, said he expected a run on building permits in July and August, and that has happened.
“Guys were trying to get in ahead of new codes that went into effect Sept. 1 because they don’t want to get hit with a lot of unexpected costs,” Bland said. “Nobody is trying to dodge the codes, but when you’ve been working on pricing a project since June, you don’t care to see new numbers.”
Those new guidelines are aimed at improving energy efficiency and could add $1,500 to $6,000 to the cost of a new home, Bland said.
He said D.R. Horton also is building upscale homes in the Twin Rivers subdivision, adjacent to the Twin Rivers Golf Club off U.S. Highway 84 between Waco and McGregor. Bland said D.R. Horton didn’t become the largest builder of homes in the United States “by being dumb,” and its interest in the Greater Waco market indicates it has completed studies showing McLennan County remains prime for residential construction.
Randy Childers, Waco’s chief building officer, said, “Everybody’s just busy,” and said he’s not buying the idea builders tried to beat the Sept. 1 code deadline.
Existing home sales continue to have local real estate agents marveling at how quickly they find buyers for properly priced single-family units.
The number of deals totaled 286 last month, which is 16 percent more than the 246 that transpired a year earlier.
“That is a record for the month, and the 1,860 sales through August is a record for the first eight months of the year,” Ingham said. “The price of those sales remains solidly on the rise as well, with the August monthly average home sale price up by over 5 percent compared to August of a year ago.”
Raw figures show the average for the month was $183,103, and the eight-month average stood at $181,023, which represents a 6 percent increase.
New and used car sales in August made a comeback from a dip in July, totaling $55.5 million, up from $51.6 million in August of 2015, according to the report.
Permits valued at $39 million were issued for general construction in August, the second-highest figure in the history of the index. Whitney Richter, with the Greater Waco Chamber of Commerce, said work includes building renovation in Central Texas Marketplace for a new Forever 21 store.
About a dozen local business people attended a session at First National Bank of Central on Thursday to offer their perspective on the local economy.
Clint Weaver, a certified financial planner and branch manager for Stifel Financial Corp., said he is seeing more clients “taking money from me and putting it into commercial real estate,” as they notice the development boom locally and elsewhere around the state. “That’s not good for me, but it’s good for them.”
Amanda Cunningham, a real estate agent with Coldwell Banker Jim Stewart Realtors, presented the McLennan County Housing Report. It showed the following: The median price for a home sold in August was up 12 percent to $161,395. The number of active listings stood at 568 in August, a drop of 19.8 percent. A home stayed on the market an average of 45 days, which was 22 days less than in August 2015. Sales totaled 276 homes in August, a 14.1 percent increase. Greater Waco has 2.7 months of home inventory, compared to 3.4 months in August 2015. Home inventory represents the number of months it would take to sell all homes on the market at the sales rate for a given month.
Cunningham said reasonably priced homes in prime areas can attract would-be buyers the day they hit the market. She said the area is poised to see a new trend of Woodway residents, perhaps those with no or grown children, moving into lofts in downtown Waco or to properties fronting Lake Waco.
Claire Kultgen McDonald, a vice president at Bird-Kultgen Ford, said large pickups priced at $40,000 and above are moving well, and she thinks lower gasoline prices are influencing buying decisions. She said historically the presidential election season casts a pall on vehicle buying, “and this year is no different.”
Randy Crook, owner of Salty Dog Sports Bar & Grill, the Crying Shame and The Dog House, said his dining and drinking establishments are holding their own financially despite the influx of chains and “big boxes.” Crook said revenue is up about 17 percent for the year, “and we set records in July and August.”
Wayne Bonner, with WB Computer Services, said he is seeing demand to install infrastructure for Wi-Fi service and to help businesses protect themselves against ransomware, which is malicious software designed to block access to company files until a ransom is paid.