Why Texas Won’t Get Busted Again By Low Oil Prices

JTF - Tx Oil Prices 1This time is different, and not by accident.  Oil prices have fallen by more than half since last summer, prompting cuts in energy jobs and rig counts. That is stoking fears of a deep downturn in the state’s economy.  But Texas is less vulnerable to the kind of oil shock that derailed the state in the 1980s, and that’s by design.  Almost 30 years ago, when the oil industry collapse put the state in a fiscal crisis, political and business leaders set out to diversify the economy and its tax base.  They launched economic development programs and recruited a wide range of employers, an aggressive approach that’s been refined and copied elsewhere. They expanded the sales tax base to more products and business services. Licenses, fees and the lottery became more important contributors.  A rainy day fund was created to siphon off future gains from oil and gas and provide a safety net for the next emergency. Now, the fund has $8.5 billion, and the comptroller projects it will grow to $11 billion in two years.   All these initiatives helped diversify the Texas economy and make it less dependent on oil. In 1982, taxes on oil and gas production accounted for almost 18 percent of state revenue. Last year, the share was 5.5 percent.  Last week, the comptroller projected 3 percent growth for 2015. That’s down from a 3.7 percent gain in real gross state product last year. He cited the decline in oil prices and possibility of a slowdown in global growth.  While the energy business is under pressure, other sectors are growing fast. Local governments, which lost workers for almost two years, have been adding teachers, cops and firefighters at a rapid clip.  If he’s right, the state economy will roll on, even as the oil and gas industry pulls back. Decades ago, that’s exactly how Texas leaders envisioned it.

          – Dallas Morning News, January 19, 2015

 

Oil Patch Declines Won’t Stifle U.S. Housing Markets, Analysts Forecast

 JTF - Tx Oil Prices 2

Top housing economists don’t think an Oil Patch slowdown will result in a weaker national housing market.   Nationwide starts of single-family homes are expected to jump by 26 percent, according to the latest forecast from the National Association of Home Builders.  Dave Crowe, a top economist,  thinks the positive impact of lower energy costs will far outweigh any negatives that the drop in oil prices brings.  And even in Texas, the housing analysts predict that any cutbacks from the oil sector shakeout will be concentrated in specific markets.  “If the decline in energy values remains for a sustained period of time it will have effects on the Texas economy — not throughout Texas but in parts of Texas,” said Frank Nothaft, chief economist with mortgage giant Freddie Mac. “When you have a drop in energy price that’s sustained, it has the same beneficial impact as a tax cut would,” Nothaft said. “Your average person sees more cash in their pocket at the end of the day.”   He is forecasting that overall home sales across the country will rise about 4 percent in 2015.  “That will be the best year for home sales since 2007 — the best in eight years,” Nothaft said. “We are expecting home prices to continue to rise in 2015 maybe a nudge lower — 3.5 to 4 percent.”   Crowe said a stronger overall economy, more employment gains and an easing of mortgage requirements in 2015 will give the housing recovery more lift.

– Dallas Morning News, January 20, 2015

 

Texas Added More Residents Than Any Other State

Texas was the third-fastest growing state in the nation over the past year as a percentage but it added more people than any other, according to new state-level population data released by the U.S. Census Bureau Tuesday.  Texas grew by 1.7 percent from July 2013 to July 2014, behind Nevada, which grew by 1.71 percent and North Dakota, whose oilfield boom fueled a 2.16 percent growth in its population.  Texas remains the No. 2 most-populous state overall, with a population of 26.9 million. That’s behind California’s 38.8 million-strong population but ahead of Florida’s 19.8 million population. Florida surpassed New York to become the 3rd-most-populous state in America.  However, Texas did have the largest numeric increase in its population, which rose by 451,321 overall, ahead of California, which added 371,107 new residents last year.

– Austin Business Journal, December 23, 2015


4 Reasons to Buy Before Spring

Winter home fireplace woman relax red armchair

The holiday season is behind us, time to focus on what exciting new experiences 2015 can bring! If you are planning on becoming a homeowner, or moving up to the home of your dreams in 2015, here are four great reasons to consider buying a home now, instead of waiting until spring.

1. Prices Will Continue to Rise

The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report projects appreciation in home values over the next five years to be between 15.1% (most pessimistic) and 32.8% (most optimistic).

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense. 

2. Mortgage Interest Rates Are Projected to Increase

Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by the end of 2015.

An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3. Either Way You are Paying a Mortgage

As a paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But, what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

– Keeping Current Matters; 7 January 2015


Where will Mortgage Rates be Headed in 2015?

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We finished 2014 with the 30 year fixed mortgage rate at 3.87% as per Freddie Mac. This is very close to the historic lows in the spring of 2013.

However, the Mortgage Bankers Association projects mortgage rates to be about 5% by the end of 2015. The website Investopedia agrees and gives some perspective on the 5% rate:

“Barring another financial and housing market implosion, and if the economy continues to improve, expect interest rates to rise in the latter half of 2015. If they do jump to the 5% range it will be a modest hike when compared to historical averages. Rates will still be far below the approximately 8.5% 30-year fixed-rates mortgages have averaged since 1971 when Freddie Mac started tracking them. Rates averaged 6% in the years leading up to the recession.”

Here are the latest 2015 mortgage rate projections from Fannie Mae, Freddie Mac, the Mortgage Bankers’ Association and the National Association of Realtors:

Interest-Rates-2015

– Keeping Current Matters; January 6, 2014


Nebraska Furniture Mart “Grandscape” – Restaurants/Hotels

Nebraska Furniture Mart

Nebraska Furniture Mart Inc. officially has made its foray into the development world, signing hotels and restaurants to its $1.5 billion, 433-acre Grandscape project — even as it stocks shelves with furniture, appliances and electronics.  This is the first time the 77-year-old Omaha, Nebraska-based furniture retailer has developed its 1.9 million-square-foot furniture showroom and distribution center as well as the entire “entertainment destination” surrounding the furniture store at the southeast corner of the Sam Rayburn Tollway and Plano Parkway in The Colony.  “We had a chance to be thoughtful in how we recruited tenants for that area and how we will continue to recruit tenants,” Jeff Lind, chief strategy and development officer with Nebraska Furniture Mart and president of Grandscape told the Dallas Business JournalLind and other city officials held a press conference on Tuesday to announce the new retail tenants of Grandscape, which include Hampton Inn & Suites, Homewood Suites, Cheddar’s Casual Cafe, Hard Eight BBQ, Mi Cocina and Rock & Brews.  The Nebraska Furniture Mart is expected to be one of the largest grossing retail stores on the planet, which is why the developer is being particular when selecting tenants for Grandscape.  Construction is underway on the infrastructure that will support Grandscape’s new tenants. Cheddar’s and Rock & Brews plans to open in summer of 2015, with Hampton Inn, Hard Eight and Mi Cocina following in the fall. Homewood Suites plans to open in late 2016The Nebraska Furniture Mart showroom and distribution center is on pace to open in spring 2015.

  • Dallas Business Journal, October 28, 2014

FedEx Office Kicks Off New Headquarters at Legacy West

Fed Ex and Legacy West in Plano

 

Dallas-based development firm KDC kicked off its second major corporate campus Monday afternoon — the first double-header groundbreaking in company history, located at Sam Rayburn Tollway (121) and Legacy Pkwy.  “This is a huge consolidation of FedEx Office’s corporate offices,” Toby Grove, president of KDC, told the Dallas Business Journal.“Right now, they are located in several facilities and this will help them in creating a corporate culture.”  FedEx Office and KDC executives officially broke ground on the 21-acre corporate campus site, formerly owned by Plano-based retailer J.C. Penney Co.   FedEx Office’s corporate campus and Toyota’s corporate campus will have a lot in common. The two headquarters will feature a tie into the $2 billion Legacy West project, which will be an extension of the Shops at Legacy and the development to the east side of the Dallas North Tollway.  “The idea is to incorporate the corporate campuses into a cohesive development with retail and multi-family components,” Grove told me. “This will all be tied together in a walkable community. … It will be developed to the highest of standards.”

      –      Dallas Business Journal, July 21, 2014

 


3 Companies Announce Relocation to Allen

3 Companies Announce Relocation to Allen

With increased business moves to North Texas, Allen a city of more than 90,000, is appearing more often on corporate radar screens.   In fact three businesses have announced relocations to the city – coming from California, New Jersey and Illinois – all looking for lower taxes and a can-do business climate in Texas.

·        CVE Technology Group Inc., a New Jersey-based electronics company, has just announced relocation of its headquarters to Allen’s Enterprise Business Park.    By next year, CVE plans to have 1,200 workers in Allen, making it the city’s largest employer. 

·        Kone Americas’ is consolidating its regional operations in Allen.   Work is starting on a new office and research facility for Kone on the east side of U.S. 75. The company will be lead tenant in a 102,000-square-foot office building.   As part of the new project in Allen, a seven-story test facility will be built.

·        MonkeySports, Inc in Corona, Caifornia announced in May that it was relocating to Allen.    The online retailer of hockey equipment also plans to open a sporting goods superstore. MonkeySports said it’s trading California for Texas in a search for a more favorable business climate.  The sporting goods firm plans to hire an additional 150 workers in Allen this year.

–          Dallas Morning News

DFW Home Prices Up 5.2%

Dallas-Fort Worth home prices were up 5.2 percent in the second quarter from a year ago, according to the latest Realtor survey.   Nationwide, prices were up 4.4 percent, the smallest increase since 2012, according to the National Association of Realtors.  Analysts have been forecasting a slower rate of home price growth this year.  DFW home prices have cooled dramatically from the 9 percent rise in the first quarter.

          Dallas Morning News