Texas Housing Market Strong

How do High Prices Affect Eagle Ford Residents?
Texas Housing Market Strong

Texas Housing Market Strong

Housing markets in Texas remain strong remain strong despite an economic slump in the nation’s energy capital, but some worry about the high prices for a few Eagle Ford residents.

Related: Low Oil Prices and the Texas Economy

The decline in oil prices over the last year has caused a slowdown in employment growth and some job cuts, but homes sales remain strong. In May 2015, there were 28,088 sales of existing single-family homes, 1.66% percent more than in May 2014.

Lawrence Yun, the chief economist for the National Association of Realtors, said that home price increases in Texas are running at about twice national rates.

While increased home prices are a great thing for property owners, for many at the bottom of the wage pool, this represents a constant struggle to make ends meet.

“We need to tone down the price growth, because prices are rising too fast,” Yun said. “House prices nationally are now reaching back to 2006 levels,” before the recession.

Residents in some Eagle Ford counties are among the most vulnerable. UTSA just announced they will be conducting a study of the impact of oil-and-gas exploration on the affordability and adequacy of housing in Dimmit, La Salle and Zavala counties. The study, funded by the U.S. Department of Housing and Urban Development, will also address how federal, county and local policies affect the availability of rental housing, affordable housing and housing options for vulnerable populations.

Texas continues to lead the nation in consumer confidence. The Texas region’s consumer confidence index was 130.5 in May 2015, up 7.5 percent from April 2015 and compared to the national index of 95.4

Read more at texaseconomy.org

Texas Economic Index Down

Comerica Bank Announces Three Month Decline
Texas Economic Index 2015

Texas Economic Index 2015

Comerica Bank’s economic index showed a decrease in activity for the first three months of 2015. For January, the index was down to 106.3, a .9% decrease from December. Though this is the first three-month decline since June 2009, the index is still 34 points above the all-time low.

The report showed that five of the eight index components were down in January including exports, claims for unemployment insurance, housing starts, rig count and hotel occupancy. Other markets such payroll employment, house prices and sales tax continued to show positives numbers.

The Texas Workforce Commission reported that the state added 7,100 jobs in February, including 6900 oil and gas jobs. This was the smallest monthly job gain since October 2011. Read more here.

Low crude oil prices and a decline in drilling activity are at the center of this economic slowdown.

Robert A. Dye, Ph.D., Senior Vice President and Chief Economist at Comerica Bank stated “Obviously, the more than 50-percent drop in oil prices from mid-year 2014 to present is a significant drag on the Texas economy,” Dye said in a statement. “We know the payroll job growth for the state has slowed through February and the weekly rig count numbers have declined into March, so we expect to see more evidence of a downshift in the Texas economy in the months ahead.”

Read more at comerica.com

 

 

Low Oil Prices and the Texas Economy

Confidence is 4.7 Percent Higher Than One Year Ago
Texas State Flag

Texas State Flag

Since June 2014, the price of crude has dropped by over half, causing energy producers to tighten their belts, slash future budgets and reduce operating rig counts.

While this pricing environment has been good for consumers at the gasoline pump, it is predicted that several states will face a serious economic fallout from the drastic drop in prices.

Read more: Low Crude Prices Not Good for All

As the largest oil producing state in the country, Texas surely will feel the effects. But, exactly how are low oil prices affecting the Texas economy? As it turns out, Texas may not be as vulnerable as first imagined.

Analyst Robert Fitch (via Texas Monthly) believes that, “States that host large oil production operations but derive a modest share of revenue from oil production, like California, Colorado, and Texas, benefit from significant economic diversity and losses in oil revenue will likely be offset by boosts in consumer-driven tax revenue.”

In Texas, oil and gas taxes are only 9 percent of the state’s general fund, vastly lower than that of other energy states such as Alaska (79%) North Dakota (46%) and Wyoming (40%). The energy industry has always been a dominant force in Texas, but since a similar crisis in the 80s, we have worked to build a much more diverse economy that no longer relies solely on oil to thrive.

The following overview gives the latest statistics for how Texas compares to the rest of the country on some key economic indicators (updated 3/6/15).

Jobs

  • UNITED STATES: 257,000 nonfarm jobs added in January 2015 and the unemployment rate was 5.6%.
  • TEXAS: Nonfarm employment increased by 41,100 jobs during December 2014. During 2014 total nonfarm employment increased by 457,900 jobs or 3.886%t. Texas unemployment rate was 4.6% for December 2014, down from 6.0% in December 2013 and has been at or below the national rate for 96 consecutive months.

Confidence Index

  • The U.S. consumer confidence index was 96.4 in February 2015, down 7.1% from January 2015
  • The Texas region’s consumer confidence index was 117.0 in February 2015, up 0.3% percent from January 2015, and 4.7 percent higher than one year ago.

Taxes

  • Sales tax collections in fiscal 2015 through January were 11.2%  above collections for the same period in fiscal 2014.
  • Texas motor vehicle sales and rental tax collections for January 2015 were up 15.9% from January 2014

The statistics were updated on March 6, 2015. For more, visit texaseconomy.org

 

 

Low Crude Prices Not Good for All

Texas Among Eight States that May Suffer From Lower Oil Prices
Low prices impacts Texas economy

Impact of Lower Oil Prices

Texas gasoline prices are averaging under $2.00, the lowest we have seen in years. While this was a nice perk for consumers over the holiday season, it is still unclear how cheaper crude will impact the overall health of the Texas economy.

One Washington think tank has estimated that, though many parts of the country will experience a slight economic stimulus in 2015, the lower oil prices will bring a significant downturn in the economic health of energy dependent states.

Unprecedented production in the United States shale plays have contributed to an increase in worldwide oil supplies, resulting in gasoline prices plummeting to their lowest level in almost five years. This has proven to be an economic boom of sorts to American families who are pocketing an additional $25-$75 per month. An additional perk will come as reduced fuel costs will eventually affect the pricing of consumer goods and services.

Stephen Brown with Resources for the Future writes that, “The reduction in oil prices provides US consumers with what amounts to an annual increase in disposable income of $350 billion (about 2.0 percent of US GDP) through reduced prices for gasoline, diesel fuel, other petroleum products, and goods and services whose production uses petroleum products. The average US household will see a raw gain that amounts to $2,790 per year.”

The economic picture is not so rosy for everyone. Energy producers and states that are heavily invested in oil production will take a hit in 2015. Some companies have announced they will slash their budgets, with many predicting cuts in their exploration efforts. This will have a ripple effect that will impact local economies and support industries as tax revenues are reduced and layoffs are inevitable.

And Texas is not immune. The New york Times reports that Hercules Offshore has plans to lay off some 300 employees. This is in addition to the already 2,300 oil and gas jobs lost in Texas from October – November.

Download the entire report from rff.com.

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