Dr. James P. Gaines Chief Economist recenter.tamu.edu
REC s Economic Crystal Ball 2
Newton s Law #1: Inertia and Motion An object at rest stays at rest. An object in motion stays in motion, with the same speed and direction, unless some other force intervenes.
U.S. Outlook Uncertain impact of Tax Cut and Jobs Act Rising GDP growth 8 years avg. 2.2%; 2018 2.5%-3% Interest rates likely to rise maybe! Inflation 2% - 2.5% Industrial production and manufacturing positive but little help on employment Housing improving still not fully recovered Jobs expand 1.5% - 2%; Unemployment rate ~4.0% Incomes show more robust increase 4
The Future Rising interest rates Inflation and monetary policies (create more $s) Rising debt, especially sovereign debt around the world, consumer debt, local area government debt Jobs disappearing and new jobs invented Qualified labor availability Energy change from fossil fuels to renewables: the demise of the internal combustion engine? Major asset price moves: RE, stocks & bonds 5
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018p Texas and U.S. Economic Growth Annual Percent Change in Real GDP 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% Texas US 6.2% 6.2% 5.7% 5.1% 4.8% 4.9% 4.5% 4.7% 4.5% 4.1% 4.1% 3.9% 3.8% 3.6% 3.7% 3.6% 3.3% 3.3% 2.8% 2.6% 2.7% 2.6% 2.5% 2.6% 2.9% 2.8% 2.3% 2.2% 2.3% 1.8% 1.8% 1.5% 1.6% 1.7% 1.5% 1.0% 0.8% 0.6% 0.4% -0.3% -0.6% -2.8% Sources: BEA; Real Estate Center at Texas A&M University 6
Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Thousands of Jobs, SA Monthly Change in Total Nonfarm U.S. Employment 600 400 200 0-200 -400-600 Six-month moving average -800-1,000 Average of ~197,000 jobs per month since October 2010 Sources: BLS; Haver Analytics; Real Estate Center at Texas A&M University
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Inflation Remains Relatively Low 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% Consumer Price Index for All Urban Consumers: All Items; Y/Y % change in index -3.0% Source: BLS 8
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Consumer Confidence Index 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 Texas U.S. Source: The Conference Board (1985=100); Haver Analytics 9
Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 NFIB Small Business Optimism Index (Overall Index SA 1986 = 100) 110 108 106 104 102 100 98 96 94 92 90 88 86 84 Source: National Federation of Independent Businesses; based on ten survey indicators
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Expected Interest Rate on a 30-Year, Fixed-Rate Mortgage in 2018 7.0 6.5 6.0 30-Year FRM rate is projected to rise in 2018 by 25bp to 100bp; thru Feb. 22 +40bp 7.0 6.5 6.0 5.5 5.0 Apr-10 5.10 +100bp 5.5 5.0 4.5 4.0 3.5 3.0 Jan 03 Jan 07 30-Yr. FRM averaged 6% +50bp 4.5 +25bp 4.0 3.5 3.0 Source: FHLMC; Real Estate Center at Texas A&M University 11
Texas Economy 2017 Recovery Year A Very Good Year 2018: Probably Better 12
REC s Economic Crystal Ball: Texas Economy 13
Texas Economic Outlook: 2018 Better Than 2017 Employment: +2.5% - 3.0%; Energy & Manufacturing, Healthcare, Business & Professional Services; Leisure & Hospitality GDP: 4.1% 2018 from 3.6% 2017 Energy sector downturn mostly over; oil prices $55 - $60/bl.+ Population expansion continues but at slower pace Local Growth Issues becoming more pressing, causing greater strain on state and local resources and causing some cost impacts on local housing Rebound from Harvey will contribute to economic growth in 2018; impact on property values in affected counties & neighborhoods ongoing 14
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018p Texas Annual Jobs 13,000,000 12,000,000 11,000,000 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 2011-2017 +1,851,000 jobs; average 264,429/year; +2.4% 8,642,700 8,291,400 8,058,700 7,786,100 7,515,100 7,125,700 7,204,600 7,301,200 9,461,200 9,543,900 9,189,400 8,973,700 9,446,400 9,400,700 9,771,800 9,527,700 11,241,200 10,914,400 10,642,400 10,604,200 10,428,200 10,341,100 10,374,500 10,098,300 2012 +2.9% +310,200 2013 +3.0% +326,800 2014 +3.1% +352,700 2015 +2.4% +272,300 2016 +1.3% +146,200 2017e +1.8% +213,300 2018P +2.8% +342,300 12,567,814 12,225,500 12,012,200 11,866,000 11,593,700 Sources: Texas Workforce Commission, Real Estate Center at Texas A&M University 15
1/7/2000 7/7/2000 1/5/2001 7/6/2001 1/4/2002 7/3/2002 1/3/2003 7/3/2003 12/31/2003 7/2/2004 12/31/2004 7/1/2005 12/30/2005 6/30/2006 12/29/2006 6/29/2007 12/28/2007 6/27/2008 12/26/2008 6/26/2009 12/23/2009 6/25/2010 12/22/2010 6/24/2011 12/22/2011 6/22/2012 12/21/2012 6/21/2013 12/20/2013 6/20/2014 12/19/2014 6/19/2015 12/18/2015 6/17/2016 12/16/2016 6/16/2017 12/15/2017 6/15/2018 Weekly Active Texas Rig Count & Price of WTI 1,000 950 900 850 800 750 700 650 600 550 500 450 400 350 300 250 200 150 100 Rig Count (left) Rig Count up 309, +179% since May 2016 11/21/2014, 906 6/27/2014, $106.69 WTI $/bl. (right) 2/12/2016, $28.14 5/20/2016, 173 $180 $170 $160 $150 $140 $130 $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Source: Baker Hughes; EIA; RE Center at Texas A&M University 16
San Antonio Economy
San Antonio 2017 Employment by Industry Government, 16.5% Mining, Logging and Construction, 5.7% Manufacturing, 4.7% Other Services, 3.6% Trade, Transportation, and Utilities, 17.5% Leisure and Hospitality, 12.9% Information, 2.0% Financial Activities, 8.6% Education and Health Services, 15.5% Professional and Business Services, 13.0% Sources: Texas Workforce Commission; Real Estate Center at Texas A&M University
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Annual Employment Growth Rates for US, Texas and San Antonio 5.0 4.0 3.0 2.0 1.0 0.0-1.0-2.0-3.0-4.0-5.0-6.0 Texas US San Antonio Source: BLS, Real Estate Center at Texas A&M University 19
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018p San Antonio Annual Jobs 1,200,000 1,100,000 1,000,000 900,000 800,000 700,000 600,000 Average 2.6% increase per year since 2010 2016 +2.9%; 2017 +2.3%; 2018p +2.8% 753,900 762,500 768,900 735,700 713,000 691,400 665,000 647,100 620,300 594,800 571,200 547,500 553,400 821,300 954,600 922,600 893,600 863,600 855,000 1,068,400 1,039,300 1,016,400 987,500 500,000 400,000 Sources: Texas Workforce Commission; Real Estate Center at Texas A&M University 20
San Antonio Employment Change Industry 2016 2017e Change % Total Nonfarm 1,016,517 1,042,167 25,650 2.5% Construction 51,425 55,083 3,658 7.1% Mining and Logging 6,842 7,325 483 7.1% Education and Health Services 156,933 167,425 10,492 6.7% Transportation, Warehousing, and Utilities 29,250 30,642 1,392 4.8% Professional and Business Services 130,708 134,975 4,267 3.3% Manufacturing 47,750 48,983 1,233 2.6% Other Services 36,992 37,883 892 2.4% Government 170,100 172,967 2,867 1.7% Leisure and Hospitality 128,842 130,333 1,492 1.2% Financial Activities 87,425 87,925 500 0.6% Retail Trade 114,050 113,900-150 -0.1% Wholesale Trade 35,025 34,283-742 -2.1% Information 21,175 20,442-733 -3.5% Sources: Texas Workforce Commission NSA; Real Estate Center at Texas A&M University
Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 San Antonio Monthly Jobs 1,100,000 1,050,000 1,000,000 950,000 900,000 850,000 800,000 750,000 700,000 Sources: Texas Workforce Commission, SA, Real Estate Center at Texas A&M University 22
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e San Antonio Unemployment Rate 8 7 6 6.9 6.5 6.2 5.4 5.7 6.1 5.6 6.7 7.2 7.1 6.3 5.8 5 4.6 4.4 4.3 4.5 5 4.6 4.6 4.6 4 4 3.7 3.2 3.9 4 3.8 3.7 3.6 3 2 1 0 23
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 San Antonio MSA Per Capita Personal Income $50,000 $48,000 $46,000 $44,000 $42,000 $40,000 $38,000 $36,000 $34,000 $32,000 $30,000 $28,000 $26,000 $24,000 $22,000 $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 Average 3.8% per year growth 2016 +0.4% 2000 $26,803 2010 $35,661 2016 $44,284 Source: BEA; Real Estate Center at Texas A&M University
Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 420.0 400.0 380.0 360.0 340.0 320.0 300.0 280.0 260.0 240.0 220.0 200.0 180.0 160.0 San Antonio Business-Cycle Index Average annual 3.5% growth since 2008 Source: Dallas Federal Reserve 25
1Q2000 3Q2000 1Q2001 3Q2001 1Q2002 3Q2002 1Q2003 3Q2003 1Q2004 3Q2004 1Q2005 3Q2005 1Q2006 3Q2006 1Q2007 3Q2007 1Q2008 3Q2008 1Q2009 3Q2009 1Q2010 3Q2010 1Q2011 3Q2011 1Q2012 3Q2012 1Q2013 3Q2013 1Q2014 3Q2014 1Q2015 3Q2015 1Q2016 3Q2016 1Q2017 3Q2017 1Q2018 Millions of 3Q2017 dollars, SA San Antonio Real Retail Sales $12,500 $12,000 $11,500 $11,000 $10,500 $10,000 $9,500 $9,000 $8,500 $8,000 $7,500 $7,000 $6,500 Source: Federal Reserve Bank of Dallas 26
Texas Demographics 27
Alternative Projections Texas Population 2010-2050 60,000,000 50,000,000 40,000,000 From 1970 to 2010 (40 years), Texas added 13.9 million people 54,369,297 47,386,428 2000-2010 Scenario 2010-2015 Scenario 60,000,000 50,000,000 40,000,000 30,000,000 25,145,561 40,502,749 30,000,000 20,000,000 50% 2000-2010 Scenario 20,000,000 10,000,000 From 2010 to 2050 (40 years), Texas will add between 22 and 30 million people 10,000,000 0 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2015 2020 2025 2030 2035 2040 2045 2050 0 Sources: U.S. Census Bureau, Texas State Demographer 2014 Projections 28
Estimated Population Change, Texas Counties, 2010 to 2016 El Paso Hudspeth -2,010-0 1-1,000 1,001-20,000 20,001-100,000 100,001-497,469 Dallam Sherman OchiltreeLipscomb Hansford Hutchinson Hartley Moore RobertsHemphill Oldham Potter Carson Gray Wheeler Deaf Smith Randall DonleyCollingsworth Armstrong Parmer Castro Briscoe HallChildress Swisher Hardeman Bailey Lamb Hale Floyd Wilbarger Motley Cottle Foard Wichita Clay Lamar Crosby King Knox Baylor Archer Cooke GraysonFannin Red River CochranHockley Dickens Montague Bowie Lubbock Delta Kent Jack Titus Yoakum Terry Lynn Garza Haskell Young Wise Denton Collin Hunt Hopkins MorrisCass Stonewall Throckmorton Franklin Rockwall Rains Gaines Scurry Fisher Jones Parker Tarrant Dallas Wood Marion Upshur DawsonBorden Stephens Shackelford Palo Pinto KaufmanVan Zandt GreggHarrison Hood Smith Andrews Martin Eastland Johnson Mitchell Ellis Nolan Taylor Erath Panola Howard Callahan Somervell Henderson Rusk Navarro Hill Loving Glasscock Ector Comanche Winkler Midland Coke Bosque Shelby Sterling AndersonCherokee RunnelsColemanBrown Hamilton Freestone Nacogdoches Culberson Ward Mills McLennanLimestone Crane San AugustineSabine Reeves Upton Reagan Tom Green Coryell Irion Leon Houston Angelina Concho Falls San SabaLampasas Trinity McCulloch Bell RobertsonMadison Schleicher Burnet Polk Tyler Jeff Davis Pecos Menard Milam Walker Jasper Newton Crockett Mason Llano Williamson Brazos Grimes San Jacinto Sutton Kimble Burleson Hardin Gillespie Travis Lee Montgomery Terrell Blanco Washington Orange Presidio Liberty Edwards Kerr Hays Bastrop Waller Kendall Jefferson Val Verde Fayette Austin Harris Brewster Real Comal Caldwell Chambers Bandera Guadalupe Colorado Fort Bend Bexar Gonzales Kinney Uvalde Medina Lavaca Galveston Wharton Brazoria Wilson DeWitt Jackson Zavala Frio Atascosa Karnes Victoria Matagorda Maverick Goliad McMullen Dimmit Bee Calhoun La Salle Live Oak Refugio Webb San Patricio Aransas Jim Wells Duval Nueces Kleberg Zapata Brooks Jim Hogg Kenedy 96 counties lost population over the 6 year period. Starr Willacy Hidalgo Cameron Source: U.S. Census Bureau, 2016 Vintage Population Estimates; Texas State Demographer s Office 29
Projected Population Change, Texas Counties, 2010-2050 Legend tl_2010_48_county10 F6-6,200-0 1-2,000 2,001-10,000 10,001-100,000 100,001-1,000,000 1,000,001-3,480,000 Source: Texas State Data Center 2012 Population Projections. 2000-2010 Migration Scenario 30
Percent Change from 2010 to 2050 by Age Groups in the Texas Population 300% 250% 262.9% 200% 150% 100% 116.2% 79.6% 105.1% 112.5% 50% 0% ALL <18 18-44 45-64 65+ Sources: Texas State Demographer s Office 2014 Projections 2000-2010 Scenario; Real Estate Center at Texas A&M University 31
San Antonio MSA Population Atascosa, Bandera, Bexar, Comal, Guadalupe, Kendall, Medina, & Wilson Counties 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 796,775 500,000 2010-2050 100% increase 1,154,819 1,711,703 2,635,183 2,384,075 2,142,508 3,182,644 3,735,981 4,294,232 0 1960 1970 1980 1990 2000 2010 2015 2020 2025 2030 2035 2040 2045 2050 Source: U.S. Census Bureau; Texas State Demographer s Office 2014 Projection; 2000-2010 Scenario 32
Bandera County Population 35,000 30,000 2010-2050 56% increase 29,059 31,255 31,965 25,000 20,000 20,485 25,100 15,000 10,000 10562 5,000 4,747 0 1970 1980 1990 2000 2010 2015 2020 2025 2030 2035 2040 2045 2050 Source: U.S. Census Bureau; Texas State Demographer s Office 2014 Projection; 2000-2010 Scenario 33
Comal County Population 350,000 300,000 2010-2050 182% increase 305,977 250,000 252,268 200,000 199,936 150,000 100,000 78021 128,347 108,472 150,366 50,000 36446 19,844 0 1960 1970 1980 1990 2000 2010 2015 2020 2025 2030 2035 2040 2045 2050 Source: U.S. Census Bureau; Texas State Demographer s Office 2014 Projection; 2000-2010 Scenario 34
Kendall County Population 100,000 90,000 2010-2050 165% increase 88,689 80,000 70,000 60,000 58,229 73,221 50,000 44,958 40,000 30,000 33,410 20,000 14589 10,000 6,964 0 1970 1980 1990 2000 2010 2015 2020 2025 2030 2035 2040 2045 2050 Source: U.S. Census Bureau; Texas State Demographer s Office 2014 Projection; 2000-2010 Scenario 35
Guadalupe County Population 450,000 400,000 2010-2050 210% increase 407,388 350,000 300,000 321,869 250,000 246,038 200,000 150,000 100,000 89023 182,526 155,621 131,533 50,000 46708 29,017 0 1960 1970 1980 1990 2000 2010 2015 2020 2025 2030 2035 2040 2045 2050 Source: U.S. Census Bureau; Texas State Demographer s Office 2014 Projection; 2000-2010 Scenario 36
Median Household Income, Texas Counties, 2011-2015 Median HH Income 2011-2015 $53,207 tl_2010_48_county10 MedHHInc15 El Paso $22,741.00 - $35,000.00 $35,000.01 - $45,000.00 $45,000.01 - $55,000.00 $55,000.01 - $65,000.00 $65,000.01 - $89,152.00 Hudspeth Dallam Hartley Oldham Hansford Lipscomb Sherman Ochiltree Moore Roberts Hutchinson Hemphill Potter Carson Gray Wheeler Randall Collingsworth Deaf Smith Armstrong Donley Swisher Parmer Hall Childress Castro Briscoe Hardeman Lamb Motley Cottle Wilbarger Bailey Hale Floyd Foard Wichita Montague Lubbock Dickens Grayson Cochran Clay Lamar Red Crosby King Knox Baylor Archer Cooke Fannin Hockley River Bowie Stonewall Throckmorton Delta Franklin Yoakum Terry Lynn Garza Haskell Young Jack Wise Denton Collin Kent Hunt Hopkins Titus Cass Borden Shackelford Morris Palo Rockwall Rains Wood Gaines Dawson Scurry Fisher Jones Parker Stephens Tarrant Pinto Dallas Van Upshur Marion Howard Kaufman Harrison Nolan Hood Taylor Johnson Zandt Ellis Smith Eastland Gregg Andrews Martin Mitchell Erath Callahan Somervell Henderson Rusk Winkler Midland Sterling Coke Runnels Comanche Hill Navarro Cherokee Panola Loving Ector Bosque Anderson Shelby Glasscock Coleman Brown Hamilton McLennan Freestone Ward Nacogdoches Upton Culberson Crane Reagan Tom Concho Mills Coryell Irion Limestone Leon Houston San Augustine Reeves Green McCulloch San Lampasas Falls Angelina Sabine Saba Bell Robertson Trinity Schleicher Burnet Jasper Menard Milam Madison Pecos Mason Crockett Polk Jeff Davis Llano Brazos Walker Tyler Williamson Newton Sutton Kimble Blanco BurlesonGrimes San Jacinto Gillespie Travis Lee Washington Montgomery Hardin Terrell Presidio Kendall Hays Bastrop Orange Val Verde Edwards Kerr Waller Liberty Fayette Brewster Real Austin Harris Bandera Comal Caldwell Guadalupe Colorado Chambers Jefferson Kinney Uvalde Medina Bexar Gonzales Fort Bend Lavaca Galveston Wilson Wharton DeWitt Brazoria Maverick Karnes Jackson Zavala Frio Atascosa Matagorda Goliad Victoria La Calhoun Dimmit Live Refugio Salle Bee Oak McMullen San Aransas Jim Wells Patricio Webb Zapata Duval Nueces Kleberg Jim Brooks Hogg Kenedy Starr Willacy Hidalgo Cameron tl_2010_48_county10 Source: U.S. Census Bureau, 2015 American Community Survey, 5-Year Samples; Texas State Demographer s Office
Texas Housing Market 38
REC s Economic Crystal Ball: Housing Market 39
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018p Annual Texas Home Sales 370,000 350,000 330,000 310,000 290,000 270,000 250,000 230,000 210,000 190,000 170,000 150,000 130,000 110,000 90,000 70,000 50,000 Since 2011 Sales + 58% Average Price + 42% Median Price + 52% 2018p sales +6-7% Prices +4% 126,525 120,749 126,279 110,830 103,344 102,789 177,179 151,861 142,940 Sales Avg Price Md Price 209,438 204,084 195,568 191,189 224,215 286,778 277,649 250,380 304,762 241,666 247,090 221,768 211,640 213,396 309,518 296,828 287,235 323,607 336,502 358,375 $370,000 $350,000 $330,000 $310,000 $290,000 $270,000 $250,000 $230,000 $210,000 $190,000 $170,000 $150,000 $130,000 $110,000 $90,000 $70,000 $50,000 Source: TAR Data Relevance Program; Real Estate Center at Texas A&M University 40
2017 Change in Home Sales and Median Prices by Metro Areas Austin 3.2% 5.4% Dallas El Paso 3.6% 3.5% 9.1% 9.4% Fort Worth 3.1% 12.6% Houston San Antonio 2.6% 3.8% 4.3% 4.2% Texas 4.0% 6.7% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% Median Sales Price Sales Volume Source: Real Estate Center at Texas A&M University
Texas Sales by Price Distribution Percent Distribution Price Range 2011 2012 2013 2014 2015 2016 2017 $0 - $69,999 15.1 12.7 9.2 7.2 6.1 5.0 4.2 $70,000 - $99,999 12.5 11.3 9.5 8.2 6.8 5.6 4.8 79% 58% $100,000 - $149,999 23.6 22.8 21.9 20.2 17.7 15.2 12.9 $150,000 - $199,999 17.5 18.5 19.7 20.3 20.7 20.6 19.7 $200,000 - $249,999 9.8 10.8 11.7 12.8 14.1 15.6 16.6 $250,000 - $299,999 6.9 7.6 8.3 9.1 10.2 11.3 12.2 $300,000 - $399,999 7.1 7.9 9.3 10.5 11.8 13.0 14.5 21% $400,000 - $499,999 3.0 3.6 4.5 5.1 5.6 6.2 6.7 40% $500,000 - $749,999 2.7 3.0 3.6 4.2 4.6 4.9 5.4 $750,000 - $999,999 0.9 1.0 1.1 1.2 1.3 1.3 1.4 $1,000,000 + 0.9 0.9 1.1 1.2 1.2 1.2 1.4 Source: ABOR; TAR Data Relevance Project; Real Estate Center at Texas A&M University
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018p Texas SF Building Permits 180,000 160,000 1990-2016 average 95,529/year 151,384 166,203 163,032 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 46,209 38,233 59,543 69,964 70,452 70,421 83,132 82,228 122,913 111,915 108,782 99,912 101,928 137,493 2015 +2.3% 2016 +1.0% 2017e +10.4% 2018p +11% 120,366 81,107 68,230 68,170 81,926 115,262 127,941 106,511 105,448 103,045 93,478 67,254 Source: US Census Bureau; NAHB; Real Estate Center at Texas A&M
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 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e Texas SF Building Permits per 1,000 New Households 2,300 2,100 1,900 1,700 1,500 1,300 2008-2016, added 1.33 million HHs. Would have built 1.1 million SF homes at average/year; actually built 776k. About 315,000 units short. 1,339 1,191 1,550 2,018 1995-2015 average 820/year 1,242 1,100 900 700 739 645 580528 689 851 719 648 585592 714699 809 970 888 894 646 602 679 668 619 731 688 745 500 300 401 316 347 398 435 435 455 324 100 Source: US Census Bureau, Real Estate Center at Texas A&M 44
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018p Texas MF Building Permits 80,000 70,000 1995-2016 average 45,444/year 69,995 67,319 60,000 50,000 40,000 30,000 32,237 34,684 35,720 43,794 56,918 44,716 32,620 42,409 43,081 44,431 39,796 38,427 53,894 58,542 49,897 32,260 56,406 56,644 59,342 56,854 55,149 20,000 10,000 8,962 10,298 9,514 15,545 17,375 21,504 0 Source: US Census Bureau, Real Estate Center at Texas A&M
Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Texas Residential Construction Leading and Coincident Indexes Jan 2000=100 180 160 140 Coincident Index Total Housing Permits (12-MMA) 180 160 140 120 120 100 100 80 60 Leading Index 80 60 40 40 Source: Real Estate Center at Texas A&M University 46
The San Antonio Market 47
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018p San Antonio Annual Home Sales, Average & Median Price 38,000 36,000 34,000 32,000 30,000 28,000 26,000 24,000 22,000 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 Sales Average Price Median Price Sales: 2016 +8.8% 2017 +3.8% 2018p +6.2% 6,3226,431 6,8957,4507,375 7,117 13,563 10,872 11,388 15,275 15,802 16,497 16,204 18,149 20,869 24,530 26,736 24,450 19,709 19,040 18,755 18,752 20,863 24,469 26,109 28,766 32,489 31,289 34,503 $305,000 $290,000 $275,000 $260,000 $245,000 $230,000 $215,000 $200,000 $185,000 $170,000 $155,000 $140,000 $125,000 $110,000 $95,000 $80,000 $65,000 $50,000 Source: SABOR; Real Estate Center at Texas A&M University 48
San Antonio Sales by Price Distribution Price Range Percent Distribution 2011 2012 2013 2014 2015 2016 2017 $0 - $69,999 13.3 12.1 8.9 6.6 4.7 3.7 2.6 $70,000 - $99,999 11.2 10.5 9.5 8.2 6.5 5.2 4.0 80% 64% $100,000 - $149,999 24.6 23.3 22.2 20.3 18.2 15.4 13.6 $150,000 - $199,999 20.1 19.8 21.3 23.4 23.8 24.5 24.9 $200,000 - $249,999 10.7 11.6 12.6 13.6 15.2 17.3 18.7 $250,000 - $299,999 6.9 7.5 8.6 9.5 10.5 11.8 12.4 $300,000 - $399,999 7.3 8.8 9.1 10.2 11.5 12.1 13.0 $400,000 - $499,999 2.6 3.2 3.9 4.1 4.9 5.5 5.9 20% 36% $500,000 - $749,999 2.2 2.3 2.7 3.0 3.3 3.4 3.6 $750,000 - $999,999 0.5 0.6 0.8 0.7 0.8 0.7 0.8 $1,000,000 + 0.4 0.4 0.4 0.4 0.5 0.5 0.5 Source: SABOR; TAR Data Relevance Project; Real Estate Center at Texas A&M University
El Paso 2017 Sales and EoY Months Inventory by Price Sales 10,000 8,000 6,000 4,000 2,000 0 January 3.0 MOI 0.0 5.0 10.0 15.0 20.0 25.0 855 2.6% $0 - $69,999 1.8 1,307 4.0% $70,000 - $99,999 2.4 4,407 13.6% $100,000 - $149,999 1.9 8,068 24.8% $150,000 - $199,999 1.7 6,086 18.7% $200,000 - $249,999 2.4 4,022 12.4% $250,000 - $299,999 3.5 4,217 13.0% $300,000 - $399,999 4.2 1,902 5.9% $400,000 - $499,999 4.5 1,171 3.6% $500,000 - $749,999 7.2 0.8% 262 $750,000 - $999,999 10.3 0.5% 175 $1,000,000 + 20.5 Sources: SABOR; Real Estate Center at Texas A&M University 50
Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 San Antonio Median Home Price 12MMA $230,000 $210,000 $190,000 Average 5.3% monthly y/y since January 2012 Jan-18 $211,799 $170,000 $150,000 $130,000 Jan-12 $150,251 $110,000 $90,000 $70,000 Source: SABOR; Real Estate Center at Texas A&M University 51
2011 2012 2013 2014 Source: SABOR; TAR Data Relevance Project; Real Estate Center at Texas A&M University 2015 2016 2017 Comal Co. Home Sales & Median Price 3,500 3,000 2011-2017 Sales +124% Median Price +37% 2,923 3,232 $285,000 $270,000 2,500 2,000 1,500 1,445 1,606 1,942 2,288 +18% 2,490 +9% +17% +11% $255,000 $240,000 $225,000 1,000 +11% +21% $210,000 500 $195,000 0 $180,000
2011 2012 2013 2014 Source: TAR Data Relevance Project; Real Estate Center at Texas A&M University 2015 2016 2017 Guadalupe Co. Home Sales & Median Price 4,000 3,500 2011-2017 Sales +90% Median Price +37% $230,000 $220,000 3,000 2,500 2,265 2,617 2,868 +10% 2,967 +4% $210,000 $200,000 2,000 1,500 1,000 1,561 1,638 +5% 1,923 +17% +18% +16% $190,000 $180,000 $170,000 500 $160,000 0 $150,000
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 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018p San Antonio SF Building Permits 16,000 14,000 14,706 13,841 12,000 10,000 8,000 6,000 4,000 2,000 4,276 3,742 3,836 6,031 6,213 5,946 95-17 Average 8,169 4,322 3,065 1,942 1,706 1,807 2,198 3,720 5,102 7,185 7,101 6,538 6,638 8,899 9,085 9,529 8,789 12,634 10,982 10,484 9,350 6,010 5,486 5,144 5,103 4,410 5,828 6,222 6,478 6,464 7,836 7,513 0 Source: Census Bureau; Real Estate Center at Texas A&M University
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 San Antonio MF Building Permits 8,000 7,500 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 70 31 365 1,258 3,136 1,697 2,688 2,133 1,064 4,982 2,063 3,412 2,535 2,236 4,538 7,294 5,382 3,637 4,377 358 1,645 2,684 2,760 177 3,878 1,186 5,430 4,611 Source: U.S. Census Bureau; Real Estate Center at Texas A&M University 56
1Q2001 1Q2002 1Q2003 1Q2004 1Q2005 1Q2006 1Q2007 1Q2008 1Q2009 1Q2010 1Q2011 1Q2012 1Q2013 1Q2014 1Q2015 1Q2016 1Q2017 1Q2001 1Q2002 1Q2003 1Q2004 1Q2005 1Q2006 1Q2007 1Q2008 1Q2009 1Q2010 1Q2011 1Q2012 1Q2013 1Q2014 1Q2015 1Q2016 1Q2017 11% 10% 9% 8% 7% 6% 5% 4% 3% San Antonio & U.S. Apartment Cap Rates San Antonio U.S. San Antonio & U.S. Apartment Avg. Price per Unit $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 San Antonio U.S. Source: Real Capital Analytics; Real Estate Center at Texas A&M University
1Q2006 3Q2006 1Q2007 3Q2007 1Q2008 3Q2008 1Q2009 3Q2009 1Q2010 3Q2010 1Q2011 3Q2011 1Q2012 3Q2012 1Q2013 3Q2013 1Q2014 3Q2014 1Q2015 3Q2015 1Q2016 3Q2016 1Q2017 3Q2017 San Antonio Overall Office Market 92 Occupancy % Office Base Rent Overall $22.00 91 $21.00 90 $20.00 89 $19.00 88 $18.00 87 $17.00 86 $16.00 85 $15.00 Source: CoStar Group; Real Estate Center at Texas A&M University 58
1Q2006 3Q2006 1Q2007 3Q2007 1Q2008 3Q2008 1Q2009 3Q2009 1Q2010 3Q2010 1Q2011 3Q2011 1Q2012 3Q2012 1Q2013 3Q2013 1Q2014 3Q2014 1Q2015 3Q2015 1Q2016 3Q2016 1Q2017 3Q2017 San Antonio Retail Market 96.0 95.5 95.0 94.5 Occupancy All Service Type Rent Overall $15.75 $15.50 $15.25 $15.00 $14.75 94.0 93.5 93.0 $14.50 $14.25 $14.00 $13.75 92.5 $13.50 92.0 91.5 $13.25 $13.00 $12.75 91.0 $12.50 Source: CoStar Group; Real Estate Center at Texas A&M University 59
1Q2006 3Q2006 1Q2007 3Q2007 1Q2008 3Q2008 1Q2009 3Q2009 1Q2010 3Q2010 1Q2011 3Q2011 1Q2012 3Q2012 1Q2013 3Q2013 1Q2014 3Q2014 1Q2015 3Q2015 1Q2016 3Q2016 1Q2017 3Q2017 San Antonio Industrial Warehouse Market 95 Occupancy % NNN Rent Overall $6.00 94 $5.75 93 $5.50 92 $5.25 91 $5.00 90 $4.75 89 $4.50 88 $4.25 87 $4.00 Source: CoStar Group; Real Estate Center at Texas A&M University 60
1Q2005 1Q2006 1Q2007 1Q2008 1Q2009 1Q2010 1Q2011 1Q2012 1Q2013 1Q2014 1Q2015 1Q2016 1Q2017 1Q2005 3Q2005 1Q2006 3Q2006 1Q2007 3Q2007 1Q2008 3Q2008 1Q2009 3Q2009 1Q2010 3Q2010 1Q2011 3Q2011 1Q2012 3Q2012 1Q2013 3Q2013 1Q2014 3Q2014 1Q2015 3Q2015 1Q2016 3Q2016 1Q2017 3Q2017 12% 11% 10% 9% 8% 7% 6% 5% 4% 3% San Antonio & U.S. Hotel Cap Rates San Antonio U.S. San Antonio & U.S. Hotel Avg. Price per Unit $220,000 $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 San Antonio U.S. Source: Real Capital Analytics; Real Estate Center at Texas A&M University
So What Does Your Crystal Ball Say? 62
Dr. James P. Gaines Chief Economist recenter.tamu.edu