2008 Conference
Dr. James P. Gaines Dr James P Gaines
Research Economist Real Estate Center at Texas A&M University College Station, Texas
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at TEXAS A&M UNIVERSITY Mays School of Business f
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Happy New Year! The staff of the Real Estate Center wish you and yours a happy and prosperous new year! This year marks the 35th anniversary of the Real Estate Center. In 1971, Gov. Preston Smith signed legislation creating the Texas Real Estate Research Center and placed it at Texas A&M University. Instructor Training Courses, May 18-19, College Station, Texas. The Legal Update and Ethics instructor training courses include i l d credit f th required 3 h dit for the i d 3-hour L Legal l Update course and the required 3-hour Ethics course. In addition, each instructor training course will include a brief orientation to the teacher’s manuals for each course as 2 well as a discussion of training issues.
Topics for Today Topics for Today
• U S Economic Overview U. S. Economic Overview • Chaos in the Mortgage and Capital Markets Capital Markets • Texas Economy • Demographic Trends and Outlook hi d d l k
3
Uncertain Economy 2008 Uncertain Economy 2008
• Definite Economic Slowdown: Definite Economic Slowdown:
– Recession? – Something More or Less? Something More or Less?
• Soft Housing Market • Interest Rates and Capital Markets • Inflation • Consumer Spending • Corporate Spending Corporate Spending
4
The Evolution of Democracies
The quotation below is attributed to Sir Alex Tytler Tytler, Lord Woodhouselee (1742-1813) a professor of Universal History at Edinburgh University in the late 18th century.
"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship dictatorship.
5
Overview: National Economy
• Real GDP 4Q07 = 0.6% vs. 4.9% 3Q; 3.8% 2Q06 • Annual GDP in 2007 grew 2.5% vs. 2006 3.4% vs. 3.2% in 2005 – 2008 probably around 1.5% or less 2005 2008 b bl d 1 5% l • 2007 overall inflation was 2.8% vs. 3.2% in 2006 : energy, transportation, medical care & food main increases – 2008 transportation medical care & food main increases 2008 expected to be around 2.5%, but maybe not! • 2007 Core CPI up 2 3% vs 2 5% in 2006 ‐ most of the 2007 Core CPI up 2.3% vs. 2.5% in 2006 most of the decline attributed to housing and apparel – 2008 expected to be between 2.2% and 2.5% • Employment grew 1.1% in 2007, adding average of 95,000 jobs per month. January 2008 had ‐17,000, essentially flat – 2008 expected to be around 0.8% to 0.9% 2008 expected to be around 0 8% to 0 9%
6
Percent Growth in Real GDP Since 1990
(Percent Change From Previous Quarter) 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 ‐1.0 ‐2.0 ‐3.0 ‐4.0
7.3 6.7 6.2 5.5 4.7 4.2 3.9 4 6.2 6.4 7.5
5.3 4.8 4.8
5.1 4.5 4.7 4.8 4.5 3.8 3.1 2.8 2.5 2.4 2.1 4.8
4.9
4.5 4.1 3.3 33 3 2.9 2.6 1.9 1.9 2 2.1 2.3 3.4 3.1 3
3.4 3.4 2.7 2.1 1.6 2.7 2.2 2.4
3.5 3 2.7
3.5 3.6
1 0.5 0
1.1 0.7
1
1.2
1.2
1.2
1.1 0.6 0.6
0.2
‐0.5
‐0.5
‐1.4 ‐2 2
‐3
1Q1 1990
3Q1 1990
1Q1 1991
3Q1 1991
1Q1 1992
3Q1 1992
1Q1 1993
3Q1 1993
1Q1 1994
3Q1 1994
1Q1 1995
3Q1 1995
1Q1 1996
3Q1 1996
1Q1 1997
3Q1 1997
1Q1 1998
3Q1 1998
1Q1 1999
3Q1 1999
1Q2 2000
3Q2 2000
1Q2 2001
3Q2 2001
1Q2 2002
3Q2 2002
1Q2 2003
3Q2 2003
1Q2 2004
3Q2 2004
1Q2 2005
3Q2 2005
1Q2 2006
3Q2 2006
1Q2 2007
Source: Bureau of Economic Analysis
7
3Q2 2007
0.5
1.0
2.0
2.5
3.0
‐1.5 0.0 1.5 15
‐1.0
‐0.5
Jan‐00 Apr‐00 Jul‐00 Oct‐00 Jan‐01 Apr‐01 Jul‐01 Oct‐01 Jan‐02 Apr‐02 Jul‐02 Oct‐02 Jan‐03 Apr‐03 Jul‐03 Oct‐03 Jan‐04 Apr‐04 Jul‐04 Oct‐04 Jan‐05 Apr‐05 Jul‐05 Oct‐05 Jan‐06 Apr‐06 Jul‐06 Oct‐06 Jan‐07 Apr‐07 Jul‐07
‐2.0 20
U. S. Employment Growth Rate U. S. Employment Growth Rate
Source: BLS, Texas Workforce Commission
8
Oct‐07 Jan‐08
0.0
Source: Bureau of Labor Statistics
1.0
2.0
3.0
4.0
5.0
6.0 60
7.0
Overall Inflation Rate
Yr/Yr Rate of Change in the Monthly Index, US Urban, All Items
9
Jan-8 86 Jul-8 86 Jan-8 87 Jul-8 87 Jan-8 88 Jul-8 88 Jan-8 89 Jul-8 89 Jan-9 90 Jul-9 90 Jan-9 91 Jul-9 91 Jan-9 92 Jul-9 92 Jan-9 93 Jul-9 93 Jan-9 94 Jul-9 94 Jan-9 95 Jul-9 95 Jan-9 96 Jul-9 96 Jan-9 97 Jul-9 97 Jan-9 98 Jul-9 98 Jan-9 99 Jul-9 99 Jan-0 00 Jul-0 00 Jan-0 01 Jul-0 01 Jan-0 02 Jul-0 02 Jan-0 03 Jul-0 03 Jan-0 04 Jul-0 04 Jan-0 05 Jul-0 05 Jan-0 06 Jul-0 06 Jan-0 07 Jul-0 07 Jan-0 08
Percent Change From Previous Quarter in Business Spending: Non‐Residential Fixed Investment in Structures and Equipment S dE i
5.0 4.0 40 3.0 2.0 20 1.0 0.0 ‐1.0 ‐2.0
‐2.3 0.6 0.3 0 ‐0.1 ‐0.2 ‐1 ‐1.3 1.4 1.1 0.6 0.3 0.1 0.7 0 1.4 1.1 2.4 2.5 2.4 1.9 1.6 1.3 1.2 2 1.9 4.5 4.6 3.9
2.8
‐0.4
‐0.6
‐3.0
1Q20 000 2Q20 000 3Q20 000 4Q20 000 1Q20 001 2Q20 001 3Q20 001 4Q20 001 1Q20 002 2Q20 002 3Q20 002 4Q20 002 1Q20 003 2Q20 003 3Q20 003 4Q20 003 1Q20 004 2Q20 004 3Q20 004 4Q20 004 1Q20 005 2Q20 005 3Q20 005 4Q20 005 1Q20 006 2Q20 006 3Q20 006 4Q20 006 1Q20 007 2Q20 007 3Q20 007 4Q20 007
10 Source: BEA
Challenging Outlook
2008 very challenging environment Political uncertainty – t P liti l t i t taxes Financial uncertainty – across the globe “Wait and see” attitude especially in housing • $3.00+ gas sucking the life out of the consumer • Our government is in complete denial publicly of what s going on publicly of what’s going on • • • •
11
What to Expect
• Look for the Fed to cut interest rates further in spite of inflation f i fl i • Oil should fall to $65‐70 a barrel but probably won’t • Look for a massive federal bailout of the banks and financial institutions labeled as being for American consumers • In the long run, higher inflation and higher taxes are on the horizon on the horizon • 2008‐2009: “Stagflation” ‐ high inflation, low economic growth, job losses economic growth job losses
12
As income tax time approaches, A i t ti h did you ever notice: When you put the two words "The" and "IRS" together, it spells g p
“THEIRS”
13
Is This Where We Are Going?
“The way to crush the The way to crush the bourgeoisie is to grind them between the h b h millstones of taxation and inflation.”
– Vladimir Lenin
14
Chaos in the Mortgage and Capital Markets
15
Total HH Home Mortgage Borrowing
1,100 1,000 900 800 700
$Billions
$0.5 trillion in home mortgages between 1972 and 1979; $1.5 trillion in home mortgages between 1980 and 1989; $2.12 trillion in home mortgages between 1990 and 1999; $2 12 illi i h b 1990 d 1999 $6.15 trillion in home mortgages between 2000 and 2007
709
986 954
998
856
753
600
507
500 400 300 200 100
34 40 37 40 86 58 106 117 127 90 67 47 105 180 199 222 216 225 199 174 171 157 167 154 206 216 379 386
302
0
3Q2007 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: Federal Reserve, Flow of Funds, D‐2, 12/6/2007 SAAR 16
$Billions
11,000
10,000
2001 1Q1
4,922 2.5 5,072 2.6 5,20 09.7 5,32 24.9 5,4 482.3 5, ,648.5 5 5,833.7 6,034.1 6,219.6 6,464.8 6,696.6 6,882.4 7,087.5 7,338.3 7,599.9 7,851.3 8,048.7 9 8,315.9
2001 1Q2 2001 1Q3 2001 1Q4 2002 2Q1 2002 2Q2 2002 2Q3 2002 2Q4 2003 3Q1 2003 3Q2 2003 3Q3 2003 3Q4 2004 4Q1 2004 4Q2 2004 4Q3 2004 4Q4 2005 5Q1 2005 5Q2 2005 5Q3 2005 5Q4 2006 6Q1 2006 6Q2 2006 6Q3 2006 6Q4 2007 7Q1 2007 7Q2 2007 7Q3
17 Source: Federal Reserve Bank, Flow of Funds, SAAR
8,584 4.9 8,83 36.8 9,1 133.9 9 9,411.5 9,633.9 9,834.4 10,026.6 10,226.6 10,399.4
3,000
Total Home Mortgage Debt Outstanding increased 112% between 1Q2001 and 3Q2007
5,000
6,000
7,000
8,000
9,000
4,000 4 000
Total Home Mortgage Debt
11
10
12
13
14
15
Debt Service Payments
as a Percent of Disposable Personal Income as a Percent of Disposable Personal Income
Source: Federal Reserve Board
18
1Q19 980 3Q19 980 1Q19 981 3Q19 981 1Q19 982 3Q19 982 1Q19 983 3Q19 983 1Q19 984 3Q19 984 1Q19 985 3Q19 985 1Q19 986 3Q19 986 1Q19 987 3Q19 987 1Q19 988 3Q19 988 1Q19 989 3Q19 989 1Q19 990 3Q19 990 1Q19 991 3Q19 991 1Q19 992 3Q19 992 1Q19 993 3Q19 993 1Q19 994 3Q19 994 1Q19 995 3Q19 995 1Q19 996 3Q19 996 1Q19 997 3Q19 997 1Q19 998 3Q19 998 1Q19 999 3Q19 999 1Q20 000 3Q20 000 1Q20 001 3Q20 001 1Q20 002 3Q20 002 1Q20 003 3Q20 003 1Q20 004 3Q20 004 1Q20 005 3Q20 005 1Q20 006 3Q20 006 1Q20 007
The Residential Mortgage Market Chaos Mortgage Market Chaos
Subprime Stop p Alt‐A Stop Piggyback Stop Hybrids Stop Jumbos ?? Prime ?? Global Banks Sovereign Nations The Conduits ?? Hedge Funds Pensions/Insurance Endowments
• • •
Moody’s S&P Fitch Fi h
Bond Rating R i Services
Money Mkt Accts ??
19
The Fed’s Moral Hazard
• Increase Rates
– Wreck the banking system the stock market Wreck the banking system, the stock market, the housing market and cause a recession.
• Cut Rates Cut Rates
– Oil, gold and commodities go through the roof – Makes US investments look cheap Makes US investments look cheap – Increases the risk of future inflation – Return to “Greenspan Put” or “Helicopter Ben” p p
• Ultimately, the Fed will have to cut rates to p y g y restore profitability to the banking system and allow homeowners to refinance.
20
Residential Foreclosure Situation
• Sub‐primes are not the only iceberg in the choppy waters • $515B in ARMs reset in 2007 • $680B in ARMs reset in 2008 • The foreclosure pressure will continue to p increase into mid‐2010 and then drop off dramatically • Look for an extraordinary bailout of the residential market to limit foreclosures
21
Conclusions
• Great time to buy or refinance a house if interest rates start going up in next couple i t t t t t i i t l of years • Homebuilding needs to fall even further Don t panic when you hear bad news • Don’t panic when you hear bad news about financial institutions, that will actually be the sign of the bottom actually be the sign of the bottom
22
TEXAS
23
Texas Economy
• Running Ahead of US Economy Running Ahead of US Economy • Employment Steady Increase • Low Unemployment • Personal Income Growth Personal Income Growth • Population Growth • Housing market still relatively strong
24
0.0
1.0
2.0
3.0
4.0
‐1.0
Jan‐00 Apr‐00 Jul‐00 Oct‐00 Jan‐01 Apr‐01 Jul‐01 Oct‐01 Jan‐02 Apr‐02 Jul‐02 Oct‐02 Jan‐03 Apr‐03 Jul‐03 Oct‐03 Jan‐04 Apr‐04 Jul‐04 Oct‐04 Jan‐05 Apr‐05 Jul‐05 Oct‐05 Jan‐06 Apr‐06 Jul‐06 Oct‐06 Jan‐07 Apr‐07 Jul‐07
‐2.0 20
Texas
Annual Employment Growth Rates for US and Texas R f US d T
Source: BLS, Texas Workforce Commission
US
25
Oct‐07 Jan‐08
Top Job Creating States in 2007 Top Job‐Creating States in 2007
300 250 200 150 100 50 0 ‐50 ‐100 California Florida Arizona Illinois Georgia ‐62 North h Carolina Washington
26
Thousands of jobs created in 2007 185.7 119.4 76 66.2 85.8 85 8 49.7 80
230.5
58.9
Michigan
Source: BLS
New York
Texas
Top Job Creating Markets in 2007 Top Job‐Creating Markets in 2007
100 90 80 70 60 50 40 30 20 10 0 Thousands of jobs created in 2007 Thousands of jobs created in 2007
78.8 78 8 60.6 42.2 33.5 47.3 45.5 47.9 45.8 81.9 74
Atlanta
San n Francisco
Seattle
Phoenix
Wash hington DC
Ne ew York‐NJ
L Los Angeles
Houston
Chicago
Source: BLS
27
Dallas
Job Growth Past 12 Months
Ending December, 2007
McAllen Tyler Austin Brownsville Midland Lubbock L bb k Houston Dallas Texarkana
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0
28
8.0
Source: Texas Workforce Commission
Job Growth Past 12 Months
Ending December, 2007 Ending December, 2007
Sherman San Antonio Beaumont San Angelo Ft. Worth Abilene Laredo Waco Wichita Falls
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 29 4.0
Source: Texas Workforce Commission
Job Growth Past 12 Months
Ending December, 2007 Ending December, 2007
El Paso Odessa Amarillo Victoria Corpus Christi Longview Bryan/CS Killeen
-3.0 -2.0 -1.0 0.0 1.0 2.0
30
3.0
Source: Texas Workforce Commission
2.0%
4.0%
6.0%
8.0%
‐4.0% 0.0%
‐2.0%
Monthly Job Growth in Austin
Source: BLS
31
Jan‐99 Mar‐99 May‐99 Jul‐99 Sep‐99 Nov‐99 Jan‐00 Mar‐00 May‐00 Jul‐00 Sep‐00 Nov‐00 Jan‐01 Mar‐01 May‐01 Jul‐01 Sep‐01 Nov‐01 Jan‐02 Mar‐02 May‐02 Jul‐02 Sep‐02 Nov‐02 Jan‐03 Mar‐03 May‐03 Jul‐03 Sep‐03 Nov‐03 Jan‐04 Mar‐04 May‐04 Jul‐04 Sep‐04 Nov‐04 Jan‐05 Mar‐05 May‐05 Jul‐05 Sep‐05 Nov‐05 Jan‐06 Mar‐06 May‐06 Jul‐06 Sep‐06 Nov‐06 Jan‐07 Mar‐07 May‐07 Jul‐07 Sep‐07 Nov‐07
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
‐4.0%
‐3.0%
‐2.0%
‐1.0%
Monthly Job Growth in Dallas‐Ft Worth
Source: BLS
32
Jan‐99 Mar‐99 May‐99 Jul‐99 Sep‐99 Nov‐99 Jan‐00 Mar‐00 May‐00 Jul‐00 Sep‐00 Nov‐00 Jan‐01 Mar‐01 May‐01 Jul‐01 Sep‐01 Nov‐01 Jan‐02 Mar‐02 May‐02 Jul‐02 Sep‐02 Nov‐02 Jan‐03 Mar‐03 May‐03 Jul‐03 Sep‐03 Nov‐03 Jan‐04 Mar‐04 May‐04 Jul‐04 Sep‐04 Nov‐04 Jan‐05 Mar‐05 May‐05 Jul‐05 Sep‐05 Nov‐05 Jan‐06 Mar‐06 May‐06 Jul‐06 Sep‐06 Nov‐06 Jan‐07 Mar‐07 May‐07 Jul‐07 Sep‐07 Nov‐07
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
‐2.0%
‐1.0% 1 0%
Monthly Job Growth in Houston
Source: BLS
33
Jan‐99 Mar‐99 May‐99 Jul‐99 Sep‐99 Nov‐99 Jan‐00 Mar‐00 May‐00 Jul‐00 Sep‐00 Nov‐00 Jan‐01 Mar‐01 May‐01 Jul‐01 Sep‐01 Nov‐01 Jan‐02 Mar‐02 May‐02 Jul‐02 Sep‐02 Nov‐02 Jan‐03 Mar‐03 May‐03 Jul‐03 Sep‐03 Nov‐03 Jan‐04 Mar‐04 May‐04 Jul‐04 Sep‐04 Nov‐04 Jan‐05 Mar‐05 May‐05 Jul‐05 Sep‐05 Nov‐05 Jan‐06 Mar‐06 May‐06 Jul‐06 Sep‐06 Nov‐06 Jan‐07 Mar‐07 May‐07 Jul‐07 Sep‐07 Nov‐07
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
‐2.0%
‐1 0% 1.0%
Monthly Job Growth in San Antonio
Source: BLS
34
Jan‐99 Mar‐99 May‐99 Jul‐99 Sep‐99 Nov‐99 Jan‐00 Mar‐00 May‐00 Jul‐00 Sep‐00 Nov‐00 Jan‐01 Mar‐01 May‐01 Jul‐01 Sep‐01 Nov‐01 Jan‐02 Mar‐02 May‐02 Jul‐02 Sep‐02 Nov‐02 Jan‐03 Mar‐03 May‐03 Jul‐03 Sep‐03 Nov‐03 Jan‐04 Mar‐04 May‐04 Jul‐04 Sep‐04 Nov‐04 Jan‐05 Mar‐05 May‐05 Jul‐05 Sep‐05 Nov‐05 Jan‐06 Mar‐06 May‐06 Jul‐06 Sep‐06 Nov‐06 Jan‐07 Mar‐07 May‐07 Jul‐07 Sep‐07 Nov‐07
Texas Homes Appreciate ! Texas Homes Appreciate !
Abilene 2.09% Fort Worth 2.89% San Antonio 8.25% Amarillo 5.25% Houston 4.79% Sherman ‐0.77% Austin 7.95% Killeen 6.35% Tyler 3.67% Beaumont 7.31% Laredo 7 31% Laredo 9.31% Victoria 8.84% 9 31% Victoria 8 84% Brownsville 3.87% Longview 3.14% Waco 10.14% College Station 0.96% Lubbock 0.34% Wichita Falls 4.01% Corpus Christi 5.15% C Ch i i % McAllen ll 2.13% 2 3% Dallas 2.95% Midland 12.31% El Paso 6.86% Odessa 19.08%
Source: OFHEO, 4Q2007
35
Top 20 Metropolitan Statistical Areas With Highest Rates of House Price Appreciation 2007
MSA
Wenatchee, WA Houma-Thibodaux, LA Grand Junction, CO Ogden-Clearfield, UT Bismarck, ND Provo-Orem, UT Salt Lake City, UT Logan, UT-ID Idaho Falls, ID San Antonio, TX Austin-Round Rock, TX Billings, MT Asheville, NC Lafayette, Lafayette LA Huntsville, AL Longview, WA Beaumont-Port Arthur, TX Scranton-Wilkes-Barre, PA S t Wilk B Spokane, WA El Paso, TX
1‐Year
13.67 12.15 12.03 10.8 10.72 10.46 9.68 8.75 8.58 8.25 7.95 7.94 7.89 7.55 7 55 7.34 7.32 7.31 7.2 72 7.12 6.86
Quarter
0.54 5.43 0.85 0.95 4.27 0.77 0.49 1.55 0.28 1.36 0.33 2.57 0.94 2.95 2 95 2.73 4.6 1.87 1.71 1 71 0.53 0.22
5‐Year
77.93 49.4 66.15 41.95 46.17 51.51 59.84 31.98 48.42 39.59 28.88 51.04 54.93 40.95 40 95 33.66 57.02 32.9 41.08 41 08 68.84 51.95
36
Source: OFHEO, 4Q2007
Home Price Appreciation Rates Across the U. S.
Rank
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Utah Wyoming North Dakota Montana Alaska Washington New Mexico Texas Oklahoma North Carolina N th C li South Dakota Idaho Alabama Tennessee Louisiana Mississippi Oregon South Carolina Arkansas Kentucky West Virginia Pennsylvania Iowa Georgia Kansas
State
1-Yr.
9.3 93 8.3 7.9 6.9 6.0 5.4 5.4 5.2 5.1 4.9 49 4.8 4.6 4.5 4.1 4.1 4.1 3.9 3.8 3.6 3.5 3.0 2.8 2.7 27 2.6 2.5
Qtr.
0.6 06 0.3 1.9 1.2 -0.2 0.6 0.8 0.7 0.8 0.9 09 1.2 0.4 1.1 0.6 0.6 0.6 0.2 1.6 0.6 1.2 0.3 0.4 0.6 06 0.8 0.1
5-Yr.
54.3 54 3 64.5 41.1 62.3 51.1 66.9 56.2 25.2 27.0 32.1 32 1 33.0 63.0 33.1 31.1 39.8 32.0 67.4 33.4 31.4 23.5 33.0 48.0 21.8 21 8 24.7 21.7
Since 1980 Rank
293.6 293 6 189.6 161.0 294.6 185.4 413.9 245.6 128.9 110.1 247.9 247 9 197.7 258.0 196.7 213.8 153.0 165.7 372.4 222.3 164.1 195.4 135.6 313.2 155.2 155 2 248.1 147.9 36 37 38 39 40 41 42 43 44 45 46 47 48 49 26 27 28 29 30 31 32 33 34 35
State
Missouri Nebraska Vermont Hawaii Illinois Delaware Wisconsin Maine Indiana Colorado C l d United States Connecticut Virginia y Maryland New York New Jersey Ohio New Hampshire Minnesota Massachusetts Arizona Rhode Island Michigan Florida Nevada
1-Yr.
2.5 25 2.5 2.4 2.0 2.0 2.0 1.9 1.9 1.5 1.4 14 0.8 0.8 0.8 0.8 0.7 -0.3 -0.4 -0.6 -1.2 -2.2 -2.4 -2.6 -4.3 43 -4.7 -5.9 -6.7
Qtr.
1.1 11 0.4 -0.5 -0.8 0.6 0.4 0.8 0.9 0.3 0.3 03 0.1 0.3 -0.6 -0.2 0.6 -0.3 0.4 0.6 0.1 0.8 -1.2 0.1 0.2 02 -1.7 -3.0 -3.1
5-Yr. Since 1980
28.0 28 0 18.8 56.3 96.6 36.2 59.9 31.4 46.0 14.7 17.5 17 5 41.4 43.5 66.3 80.6 51.1 57.2 11.5 34.6 28.6 28.1 80.4 51.2 5.7 57 77.9 75.6 69.1 207.8 207 8 161.1 374.9 449.1 285.4 421.5 234.4 421.2 160.2 270.2 270 2 290.2 377.3 378.4 441.8 564.4 477.5 169.7 398.7 267.6 607.7 320.4 485.3 204.9 204 9 363.6 287.2 501.6
50 California Source: OFHEO, 4Q2007
37
Demographics
US Population Growth 2007-2012 2007-
Source: Global Insight, Inc.
39
Leading State Population Increases the Past Two Years
2005‐2006
Texas Florida California Georgia Arizona North Carolina
Total Population Increase Natural Foreign Immigration Domestic Immigration
579,275 321,697 303,402 231,388 213,311 184,046
Total Population Increase
235,558 58,566 325,333 73,623 52,904 48,596
Natural
125,770 99,754 266,295 37,451 31,662 31,907
Foreign Immigration
218,745 165,757 -287,684 120,953 129,987 104,133
Domestic Immigration
2006‐2007 2006 2007
Texas California Georgia Florida North Carolina Arizona
496,751 303,343 202,670 193,735 191,590 173,066
Source: U.S. Census Bureau
246,783 328,956 78,223 69,452 54,620 56,036
109,086 233,810 31,330 88,111 24,465 27,708
141,280 -263,035 94,004 35,301 111,963 90,402
40
Table 5. Estimates of the Components of Population Change for the United States, Regions, and States: July 1, 2005 to July 1, 2006, December 22, 2006 and December 27, 2007
Top and Bottom 10 States by Domestic Migration: 2000 to 2007
New York California Illinois New Jersey N J Michigan Louisiana Massachusetts Ohio Connecticut Kansas Virginia Washington Tennessee South Carolina Nevada Georgia North Carolina N th C li Texas Arizona Florida
‐1,449,169 ‐1,223,992 ‐551,311 ‐377,159 377 159 ‐359,758 ‐335,216 ‐305,690 ‐301,848 301,848 ‐78,064 ‐67,315 155,205 155,491 217,129 228,133 364,683 484,919 490,907 490 907 582,078 655,354 1,286,175
‐2,000,000
‐1,500,000
‐1,000,000
‐500,000
0
500,000
1,000,000
1,500,000
41
Sources: "Domestic Net Migration in the United States: 2000 to 2007," US Census Bureau; US Census Population Estimates Program
Total Population Increase
(2000 to 2006)
MSA Atlanta-Sandy Springs-Marietta, GA Dallas-Fort Worth-Arlington, TX Houston-Sugar Land-Baytown, TX Phoenix-Mesa-Scottsdale, Phoenix-Mesa-Scottsdale AZ Riverside-San Bernardino-Ontario, CA Los Angeles-Long Beach-Santa Ana, CA New York-Northern New Jersey-Long Island Washington-Arlington-Alexandria, DC-VA-MD-WV Miami-Fort Lauderdale-Miami Beach Miami Fort Lauderdale Miami Beach, FL Chicago-Naperville-Joliet, IL-IN-WI
Natural + International + Domestic
890,211 842,449 824,547 787,306 787 306 771,314 584,510 495,154 494,220 455,869 455 869 407,133
42
2005 Texas Metropolitan Area Population Estimates i
MSA 2005 Population (millions) Percent of Total State Population
Austin A i Dallas-Ft. Worth Houston San Antonio Total 4 MSAs Total All MSAs Texas
1.5 5.8 5.4 1.9 14.6 19.9 22.9
Source: U.S. Census Bureau
6.6 25.3 23.6 8.3 63.8 86.9 100.0
43
Projected US and Texas Population (millions) ( ll )
2005 US Texas 50% Immigration* 100% Immigration* 2000-2004 Average 295.5 22.9 2010 308.9 24.6 2015 322.4 26.6 2020 335.8 28.6 2025 349.4 30.9 2030 363.6 33.3 U.S. Census Bureau
Texas State Demographer 22.6 23.3 22.9 22.9 24.3 26.1 25.1 25.2 26.2 29.2 27.6 27.7 28.0 32.7 30.3 30.3 29.9 36.7 33.2 33.2 31.8 41.1 36.3 36.4
Average Texas Increase Since 2005
2.4
4.9
7.5
10.4
13.6
44
* Projections are from the 2000 Census, thus 2005 is a projected population for the 50% and the 100% scenarios. All others are based on U. S. Census Bureau annual estimates.
Projected Texas Population 2000 ‐ 2030
(000s)
45,000 45 000
40,000
At 50% 1990-2000 rate of immigration At 2000-2004 rate of immigration At 100% 1990 2000 rate of i 1990-2000 t f immigration i ti
36,682
41,118
36,333
35,000
32,737 32 737 33,158 31,831 30,253 29,897
30,000
26,157
29,214 27,581 26,059 25,106 24,331 23,508 22,518 21,762 20,952 28,006
25,000
20,000
15,000
2000 2001 2002 2003 2004 2005 2006 2010 2010 2010 2015 2015 2015 2020 2020 2020 2025 2025 2025 2030 2030
45
Source: U.S. Census Bureau, Texas State Demographer
2030
...
Averaging the projections results in an increase of 13.6 million people by 2030. increase of 13 6 million people by 2030
Over the next 25 years, equivalent of adding: another 12-county Dallas-Ft. Worth metropolitan area, plus another 10-county Houston 10metropolitan area, plus area another 8-county San Antonio 8y metropolitan area, plus another Corpus Christi
46
Percent Anglo and Hispanic Reverse by 2030
60%
Anglo
49.5%
Black
Hispanic
Other
% 51.3% 32.5% 10.0% 9.5% 6.1%
50% 40%
53.1 1%
45.9%
42 2.4%
1.9% 41
38.6%
39.0% %
45.1%
20% 10% 0% 2000
11.6%
32.0%
30%
11.4%
35.3%
11.2%
10.8%
10.5%
35.7%
48.2%
3.3%
3.8%
4.3%
4.9%
2005
2010
2015
2020
5.4%
2025
2030
47
Source: Texas State Data Center and Demographer, Average of Projections
6.7%
Austin MSA Population
3,500,000
Austin MSA: Bastrop, Caldwell, Hays, Travis & Williamson Counties Austin MSA: Bastrop Caldwell Hays Travis & Williamson Counties Between 815,000 and 2 million more people by 2030
3,447,414
3,000,000
2,771,772
2,500,000
2,154,682
2,447,957 2,269,254
2,000,000
1,655,883
1,892,114
1,500,000 1 500 000
1,264,739
1,454,706 1 454 706
1,000,000
585,051
851,898
500,000
0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2010 2010 2010 2015 2015 2015 2020 2020 2020 2025 2025 2025
48
Source: US Census Bureau, Texas State Data Center and Demographer
2030 2030 2030
Collin, Dallas, Delta, Denton, Ellis, Hunt, Kaufman, Rockwall & Johnson, Parker, Tarrant, Wise Counties , , , , , , , , , ,
D‐FW MSA Population
13,000,000 12,000,000 11,000,000 11 000 000 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000
5,161,544 5,823,043 6,570,840 7,482,956 8,566,960 9,862,210
12,522,171
Between 2.8 and 6.7 million more people by 2030
11,397,571
8,648,782 8 648 782
5,000,000 4,000,000 3,000,000 2,000,000
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2010 2010 2010 2015 2015 2015 2020 2020 2020 2025 2025 2025
3,017,230 3,989,294
49
Source: US Census Bureau, Texas State Data Center and Demographer
2030 2030 2030
FW‐Arlington MSA Population
Johnson, Parker, Tarrant, Wise Counties , , ,
4,000,000 3,500,000 3 500 000
Between 664,000 and 1.675 million more p p y people by 2030
3,011,049
3,601,723 3,430,871
3,000,000
2,590,494
2,500,000
2,272,887
2,000,000
1,551,044
1,926,352
1,500,000
1,000,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2010 2010 2010 2015 2015 2015 2020 2020 2020 2025 2025 2025 2030 2030
50
Source: US Census Bureau, Texas State Data Center and Demographer
2030
Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, San Jacinto & Waller , , , , , , y, g y,
Houston MSA Population
11,000,000 10,000,000 9,000,000
8,161,880
Between 2.1 and 4.7 million more people by 2030
10,002,593
9,071,791
8,000,000
7,321,728 7,402,101
7,000,000 6,000,000 , ,
5,352,569 5,849,380
6,548,555
5,000,000 4,000,000 4 000 000
3,147,640 3,792,007 3 792 007
4,742,031
3,000,000 2,000,000 2 000 000
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2010 2010 2010 2015 2015 2015 2020 2020 2020 2025 2025 2025
51
Source: US Census Bureau, Texas State Data Center and Demographer
2030 2030 2030
Atascosa, Bandera, Bexar, Comal, Guadalupe, Kendall, Medina, Wilson Counties , , , , p , , ,
3,500,000
San Antonio MSA Population
Between 425,000 and 800,000 more people by 2030
3,000,000
2,741,919 2,584,700 2,469,455 2,335,858 2,188,288 2,030,892 2,368,499
2,500,000
2,000,000
1,719,415
1,889,797
1,500,000 1 500 000
1,154,819
1,410,902 1 410 902
1,000,000
500,000
0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2010 2010 2010 2015 2015 2015 2020 2020 2020 2025 2025 2025
52
Source: US Census Bureau, Texas State Data Center and Demographer
2030 2030 2030
Relocations and Relocations and Housing Affordability Housing Affordability
53
Texas Housing Affordability
Median 2005 HH income US = $46,242; Texas = $42,139 Median 2005 Home Value US = $167,500; Texas = $106,000 US Ratio Median Value/Median Income 3.62; Texas ratio 2.52 US Ratio Median Value/Median Income = 3.62; Texas ratio = 2.52
Median House Value to Median Household Income 1990 State Ratio Rank US Texas 2.48 2.18 41 2000 Ratio 2.85 2.76 State Rank 50 2005 Ratio 3.62 2.52 State Rank 44
54
Source: US Census Bureau, Real Estate Center at Texas A&M University
250 225 200 175 150 125 100 75
199 90
Divergent US Median HH Income and Median Home Prices d M di H Pi
1990=100
199 91
199 92
199 93
199 94
199 95
199 96
199 97
199 98
199 99
200 00
200 01
200 02
200 03
200 04
200 05
Source: US Census Bureau, NAR
200 06
Oklahoma Kansas Iowa Texas West Virginia Arkansas Mississippi Nebraska South Dakota Indiana Alabama Kentucky Louisiana South Carolina Ohio Tennessee Missouri Pennsylvania Wyoming North Carolina Michigan Georgia Wisconsin New Mexico Alaska Utah Idaho U.S. Montana Illinois Illi i Minnesota Maine Vermont New Hampshire Delaware Virginia Colorado Connecticut Arizona Florida Washington Oregon Maryland New Jersey Rhode Island New York Nevada Massachusetts D.C. Hawaii California
2006 Median Home Value/Median HH Income
2.44 2.52 2.53
2.54
2.56 2.57 2.57 2.62 2.63 2.66 2.76 2.82 2.92 2.98 3.04 3.05 3.08 3.14 3.14 3.22 3.25 3 25 3.35 3.35 3.48 3.59 3.67 3.82
Most Housing Affordable States
3.82
3.83 3.85 3 85 3.85 3.93 4.05 4.24 4.30 4.34 4.48 4.71 5.00 5.07 5.09 5.12 5.14
Least Housing Affordable States
5.69 5.71 5.90 5.95 6.18 8.44 8.66 9.46
0.00
1.00
2.00 3.00 4.00 5.00 6.00 Source: 2006 American Community Survey, U.S. Census Bureau
7.00
8.00
9.00
56
10.00
5.50 5.25 5.00 5 00 4.75 4.50 4.25 4 25 4.00 3.75 3.50 3 50 3.25 3.00 2.75 2 75 2.50 2.25 2.00 2 00
1989 1990
Median Home Prices to Median Household Income Household Income
US New Homes US Existing Homes
Texas Existing Homes
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Source: US Census Bureau, NAR; Real Estate Center at Texas A&M University
57
2005
US and Texas Median Home Price
$250,000 $225,000 $200,000 $175,000 $150,000 $125,000 $125 000 $100,000 $75,000 $50,000 ,
Texas is a housing bargain. The gap between the US and Texas median price has widened from around 25% to 33%.
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
58
Source: NAR; Real Estate Center at Texas A&M University
2007
Estimated New Home Prices 2007
Source: NAHB
59
Percent of Mortgaged Homeowners Spending 30 Percent or More of Household Income on Monthly Housing Costs in 2006 y g
United States: 36.9%
33.7%
60
Source: U.S. Census Bureau, 2006 American Community Survey
Median Monthly Housing Costs for Owner‐Occupied Housing Units With a Mortgage (Dollars): 2006 Mortgage (Dollars): 2006
United States: Estimate: 1,402 Dollars
1,309
61
Source: U.S. Census Bureau, 2006 American Community Survey
Wisconsin and Texas Rank 1 & 2 in Effective Property Tax Rate
US = 9.64
62
Percent of People Who Lived in a Different State One Year Ago: 2006
United States: 2.7 Percent or about 3.2 million households moved to another illi h h ld dt th state during 2006
82% of Texas households that lived in a different house 1 year ago, moved from another house within the e state. 18% moved to Texas from another state or country. t
2.7%; ~222,000 Households
63
Source: U.S. Census Bureau, 2006 American Community Survey
Percent of Households With Retirement Income: 2006
United States: Estimate: 17.4 percent
13.9%, 1,127,205 Households
64
Source: U.S. Census Bureau, 2006 American Community Survey
Percent of the Total Population Who Are 65 Years and Over: 2006
United States: Estimate: 12.4 percent
9.9%, 2,250,000 People
65
2008 Conference
Dr. James P. Gaines Dr James P Gaines
Research Economist Real Estate Center at Texas A&M University College Station, Texas