Tandy On Real Estate

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Economic

Chamber Report on High Tech

This week, the Austin Chamber of Commerce published a report on the High Tech Industry: https://www.austinchamber.com/blog/06-05-2018-high-tech-industry

• Nearly 6,500 employers in the Austin metro area are in high tech industries.
• Jobs in Austin’s tech industries total over 138,500, or 14.1% of all jobs, compared to 7.0% nationally.
• In 2017, jobs in Austin’s high tech industries grew by 4.3%, surpassing the metro’s 3.2% total job growth.

Annual average employment in high tech industries in the Austin MSA in 2017 was 138,544, up 4.3% from 2016. That’s a stronger gain than the 3.2% increase for employment across all industries. High tech jobs represent 14.1% of all Austin area jobs in 2017 and 18.5% of the year’s net new jobs. Nationally, high tech accounts for 7.0% of all jobs.

This is important to Austin and to the Real Estate community overall because of the quality of the these jobs.  For all industries, the average annual salary in Austin is $59,742, up 4.3% from 2016, while the average salary for high tech jobs is $112,771, up 6.2%.

Average Annual Salary Austin MSA

Average Annual Salary Austin MSA

High Tech Jobs Austin MSA

High Tech Jobs Austin MSA

Housing Affordability

A dramatic shift has taken place over the last 7 years in housing affordability.  Home prices in Travis County under $150,000 have dropped from 27% to 2.6% of all sales.  In Williamson County, the drop has been more dramatic going from 36.5% to 2.2%.  And in Hays County, still more so, A dramatic shift has taken place over the last 7 years in housing affordability.  Home prices in Travis County under $150,000 have dropped from 27% to 2.6% of all sales.  In Williamson County, the drop has been more dramatic going from 36.5% to 2.2%.  And in Hays County, still more so, going from 42.3% to 3.2%.
In the $150,000 to $250,000 range, home prices also decreased 30.2% to 24.2% and 43% to 37.4% in Travis and Williamson respectively.  The percentage of homes in this price range increased in Hays County going from 31.1% to 44.7%.

Travis County Stats

Travis County Stats

Williamson County Stats

Williamson County Stats

Hays Stats

Hays Stats

Source: Real Estate Center at Texas A&M

Texas Economy From Federal Reserve Bank of Dallas

Three recent charts from Dallas Fed regarding the Texas Economy. Texas continues to hit on all cylinders for 2018.

Energy indicators improved in the first half of April, with oil prices rising the week of April 20 to highs last seen in 2014. The drilling rig count also continued to pick up, reaching a three-year high of 509.


The Texas Business-Cycle Index, a composite of state payroll employment, the unemployment rate and gross state product, is an aggregate measure of underlying economic activity in the state. The index increased at an annualized 5.4 percent in March, its fastest rate since November 2014 and well above last year’s pace of 4.4 percent.


The median price for Texas homes inched up slightly to a new high of $231,972 in February.  Home inventories across the state remain below the six months considered to be a balanced market. Existing-home sales increased slightly in February and remain near the all-time high set at the end of 2017.

State and Local Taxes Influence Homebuyer Migration

Overall taxation increasingly determines where people and companies choose to relocate. Last week Rob Chrisman talked about what makes homebuyers move in his daily newsletter. According to MarketWatch jobs are the determining factor for someone to relocate, second to state and local taxes.

ATTOM Data Solutions, national property database provider, released its 2017 property tax analysis for more than 86 million U.S. single family homes which shows that property taxes levied on single family homes in 2017 totaled $293.4 billion, up 6 percent from $277.7 billion in 2016 and an average of $3,399 per home — an effective tax rate of 1.17 percent.

For Daren Blomquist, Attom’s senior vice president, the story of national property taxes is the story of migration around the country. Blomquist told MarketWatch that taxes are “the icing on the cake” in areas that are seeing strong population inflows anyway.

“Among the counties that saw the biggest percentage of in-migration in 2017, according to Census data, all are in Texas, Florida, Georgia, or the Carolinas. Texas doesn’t have particularly low property taxes, but it has no personal income tax, making the overall tax burden much more manageable,” said Andrea Riquier of MarketWatch.

Texas is a pro-business state that continues to attract business and population.

Business Facilities Magazine ranked Texas as the top state in the nation for the Best Business Climate in the magazine’s 13th Annual Rankings Report. Out of all 50 states, Texas achieved the best overall performance in the 2017 State Rankings Report.

According to Texas Governor Abbott, “economic liberty is why Texas leads in job creation and in corporate expansion and relocations.  Restrained government, lower taxes, smarter regulations, right-to-work laws and litigation reform—these are the pro-growth economic policies that help free enterprise flourish and that attract business to Texas from states that overtax and overregulate.”

Austin continues to attract businesses, and is a hub for corporate and regional headquarters, including AMD, Apple, Bazaarvoice, Cirrus Logic, Dell, Dimensional Fund Advisors, eBay, Facebook, Freescale, General Motors, Hanger, Hewlett-Packard, HomeAway, Home Depot, IBM, LegalZoom, National Instruments, Oracle, Whole Foods, and Visa. Check out the  Austin Chamber of Commerce Austin’s major employers map.

Best and worst business climates.

24/7 Wall Street ranked best and worst business climates looking at nearly 50 measures of doing business, including economic conditions, business costs, state infrastructure, the availability and skill level of the workforce, quality of life, regulations, technology and innovation, and cost of living.

Massachusetts ranked No. 1 with a well-educated population that is a boon for state businesses. Such a population presents a more flexible and skilled talent pool for employers. Also, people with college educations tend to have higher incomes, which means they have more disposable income to spend. A nation-leading 42.7% of Massachusetts adults have a bachelor’s degree, compared to 31.3% of adults nationwide. The typical state household earns $75,297 a year, the fourth highest median income of any state and over $17,000 greater than the national median.

And, Louisiana ranked last. Working-age Louisianans are less likely than working-age Americans to have the qualifications for higher-skilled, higher-paying jobs. Just 23.4% of adults in the state have a bachelor’s degree, nearly the lowest percentage of all states. Unlike most states, Louisiana’s working-age population is also declining. In the Census’ American Survey of Entrepreneurs, 46% of state businesses reported unpredictable conditions having a negative impact on their business, and 48% reported slow business or lost sales, each among the highest shares in the country.

Texas ranked among the top states at No. 13.

  • 1-yr. real GDP change: -0.3% (7th largest decrease)
  • salary: $53,838 (12th highest)
  • Adults w/ bachelor’s degree: 28.9% (tied — 22nd lowest)
  • Patents issued/100,000 people: 35.7 (18th most)
  • Working-age population change, 2020-2030: -14.9% (4th largest growth)

According to USAToday, “like North Dakota and a few other oil-producing states, Texas’ economy has taken a beating from the more-than-three-years-long stretch of depressed crude oil prices. However, the state’s economy is more diverse than that of North Dakota, and GDP has contracted by just 0.3% in the most recently reported year. Credit agencies Moody’s and Standard & Poor’s clearly recognize the state’s stability and rate its debt a perfect AAA and Aaa, respectively, with a stable outlook. The state’s businesses not only benefit from a stable economy, but also from a growing labor force. Texas’ working age population is projected to grow by 14.9% between 2020 and 2030, the fourth most of any state.”

Austin MSA stands out with 42.8% having a bachelor’s degree or higher, as compared to 28.9% in Texas, and 31.3% in the United States. And, WalletHub ranked Austin-Round Rock No. 9 in the Most & Least Educated Cities of America.

SOURCE: U.S. Bureau of the Census, American Community Survey

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SOURCE:
http://www.robchrisman.com/daily-mortgage-news-commentary/page/2/
https://www.marketwatch.com/story/americas-new-great-migration-in-search-of-lower-property-taxes-2018-04-05
https://www.attomdata.com/news/market-trends/home-sales-prices/attom-2017-property-tax-data-analysis/
https://gov.texas.gov/news/post/texas-ranked-top-state-for-business-climate-by-business-facilities-magazine
https://businessfacilities.com/2017/07/business-facilities-13th-annual-rankings-report/
https://www.austinchamber.com/upload/files/ed/MajorEmployersMap.pdf
https://www.usatoday.com/story/money/business/2018/03/05/economic-climate-best-and-worst-states-business/376783002/
https://www.austinchamber.com/economic-development/austin-profile/population#Educational%20Attainment
https://wallethub.com/edu/most-and-least-educated-cities/6656/

Austin Ranks No. 1 on Nation’s Best Places to Live

Two years running Austin is number one on the nation’s Best Places to Live according to U.S. News and World Report. For those of us who are Austinites and who are working in real estate, we know this to be true.

Austin took the lead again in the magazine’s 2018 edition of its Best Places to Live in the U.S. list, which ranks 125 major metro areas in four categories including desirability, value, job market, quality of life and net migration.

Check out the Top 10 cities.

2018 Top 10 “Best Places to Live”

  1. Austin
  2. Colorado Springs, Colorado
  3. Denver
  4. Des Moines, Iowa
  5. Fayetteville, Arkansas
  6. Portland, Oregon
  7. Huntsville, Alabama
  8. Washington, D.C.
  9. Minneapolis-St. Paul, Minnesota
  10. Seattle

“When deciding on a place to settle down, it’s important to understand that where a person lives can impact their well-being,” said Kim Castro, executive editor at U.S. News. “U.S. News created the Best Places to Live to highlight areas across the country that have the characteristics residents are looking for, including steady job growth and affordability. The top-ranked places are areas where citizens can feel the most fulfilled socially, physically and financially.”

And, Austin is not stopping it’s growth, according to the Austin Business Journal Austin’s population keeps growing. In fact, there were 151 additions to the population a day in 2017, down only slightly from 159 in 2016.

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SOURCE:
https://www.cnbc.com/2018/04/10/us-news-world-report-the-10-best-places-to-live-in-the-us-in-2018.html
https://realestate.usnews.com/places/texas/austin
https://www.bizjournals.com/austin/news/2018/04/10/austin-no-1-again-on-revered-best-places-to-live.html?ana=e_ae_set1&s=article_du&ed=2018-04-10&u=CuOUKGCJY978Qy2wnhw9SA0f338830&t=1523397950&j=80955401
https://www.bizjournals.com/austin/news/2018/03/22/austins-population-keeps-popping-heres-how-many.html

US Becoming the Number One Crude Oil Producer in the Near Future

Soaring Texas and US production will result in the US becoming the number one crude oil producer in the near future, possibly in 2018 with Texas providing about 40% of the total US production.

Last year, the U.S. pumped out more than 10 million barrels a day for the first time since the early 1970s, boosted by a rapid ramp-up in shale-oil output. US production has continued to rise this year: It reached 10.2 million barrels a day in January and is forecast to top 11 million by the end of 2018, according to the U.S. Energy Information Administration.

US Monthly Crude Production
Due to new technologies for drilling in shale formations, the increase in Texas oil production since 2010 has been dramatic and continues to grow.  Texas Oil and gas production increased for the sixth quarter in a row.

Texas Crude Oil ProductionAccording to the Federal Reserve Bank of Dallas average prices to profitably drill a new well for the Permian Basin rose to $50 per barrel this year from $48 last year.

With the average price of crude oil ranging between $60 and $65, Texas oil producers have strong incentives to drill and produce more.

Dallas Fed Energy Survey
The bottom line: Texas remains a strong energy driven state. While Texas did not suffer as strong of a downturn with the drop in the price of oil after 2014 as it would have in the past with a similar drop in price, the economy has greatly benefited from the growth in oil production. With a projected oil price in the $60+ range for the rest of the year, the Texas energy sector will continue to boost the overall Texas economy. The risks of a drop in price from supply exceeding demand are offset by continued efforts from OPEC/Russia to limit production levels past 2018 and increasing concerns over the collapse of production from Venezuela.

Sources:
http://www.worldoil.com/news/2018/3/8/oil-and-gas-economy-up-25-according-to-texas-petro-index
https://uk.reuters.com/article/uk-energy-iea/u-s-to-overtake-russia-as-top-oil-producer-by-2019-at-latest-iea-idUKKCN1GB0C4?rpc=401&
https://www.marketwatch.com/story/us-set-to-become-worlds-largest-oil-producer-as-early-as-2018-iea-says-2018-02-27
https://www.dallasfed.org/research/surveys/des/2018/1801.aspx
https://www.dallasfed.org/-/media/Documents/research/econdata/energycharts.pdf?la=en
http://money.cnn.com/2018/02/12/news/economy/venezuela-oil-production/index.html
https://www.investors.com/news/opec-wants-long-term-russia-oil-production-pact/

Corporations Relocating to Texas and Austin

Here are some great articles highlighting the continued trend of corporations relocating to Texas and the Austin area:

Today, Ray Perryman reports that Texas again wins of Site Selection Magazine’s “Governor’s Cup” competition: Another Win for Texas – This award goes to the state with the most major corporate location and expansion projects in a year. The 2017 win is the sixth in a row for Texas. Lone Star State also won in 2004, 2005, and 2010 (and was a close second in several of the years between).  Last year, Texas had 594 projects with a capital investment of at least $1 million, 20 or more new jobs, or 20,000 square feet of new construction. Texas has resources corporations need: a large and growing population, oil and gas, a coastline favorable to shipping, abundant land, a relatively moderate climate, and a central location, among others.

Greater Austin Chamber of Commerce reports on Relocations and Expansions: 2016-2017 RELOCATIONS & EXPANSIONS LOG – note the large number of Headquarters that are expanding.

Other tech companies moving to Austin: Texas takeover: Why 5 tech companies relocated their headquarters to Austin – Great article which highlights the many reasons why companies want to relocate to Austin.

San Francisco article: Tech pipeline to Texas: Tax money, people flow out of Bay Area – which highlights the struggles of keeping companies in the bay area vs. moving to Austin for the labor they need to grow and expand.  This is a 2016 article but highlights the ongoing trend of companies moving from other states, particularly California, to Austin.

Links to articles:

The multi-faceted Millennial

In the Consumer Housing Trends Report 2016 the Zillow® Group covered the multi-faceted Millennial.

I found the report enlightening, debunking some of the myths about millennials, and uncovering that I may be a Millennial at heart.

Zillow stressed the importance of home and community for millennials. According to the report millennials under the age of 25 see their home “as a reflection of themselves rather than a financial investment”. This is unlike the older Baby Boomer generation who sees their home as a financial investment and avenue to build wealth for the future and for their family. In addition, more than 55 percent see themselves as involved in their community. They are active in their neighborhoods and the surrounding areas, not so much unlike my Baby Boomer friends.

Zillow confirmed that millennials are “delaying many life milestones that precede home ownership.” They are completing their education, marrying and starting a family later in life, and as a result renting

Further into their adulthood. Here are the stats Zillow revealed:

  • Two-thirds of millennial buyers concurrently consider renting while shopping for a new home.
  • One in three Millennials seriously consider renting.
  • When Millennials buy they “leapfrog the traditional “starter home” and jump into the higher end market by choosing larger properties with higher prices, similar to homes bought by older buyers.”
  • They pay a median price of $217,000 – more than Baby Boomers and 11 percent less than Generation X.
  • The Millennial median home size is 1,800 square feet – similar in size to what older generations buy.

The report also debunked the myth that Millennials are only urban dwellers. According to the report:

  • One quarter of Millennial homeowners live in an urban area.
  • Nearly half of all Millennials live in suburban communities.
  • 8 in 10 adults under 25 living outside an urban core.

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SOURCE:
Zillow® Group Consumer Housing Trends Report 2016

 

Tax relief for victims of Hurricane Harvey

The IRS has provided tax relief to victims of Hurricane Harvey. Those in Texas who have been affected by the storm have until January 31, 2018, to file certain individual and business tax returns and make certain tax payments. This includes an additional filing extension for taxpayers with valid extensions through October 16, and businesses with extensions through September 15.

Currently, the IRS has said individuals who reside or have a business in Aransas, Bee, Brazoria, Calhoun, Chambers, Fort Bend, Galveston, Goliad, Harris, Jackson, Kleberg, Liberty, Matagorda, Nueces, Refugio, San Patricio, Victoria, and Wharton Counties may qualify for tax relief. For up-to-date information, please see IRS News Release: Tax Relief for Victims of Hurricane Harvey in Texas.

REQUIREMENTS FOR POSTPONEMENT OF 1031 EXCHANGE TIME PERIODS
If the taxpayer is considered an “affected taxpayer,” then additional guidance concerning their 1031 exchange is provided in Revenue Procedure 2007-56. Section 17 of Revenue Procedure 2007-56 provides postponement provisions specific to 1031 exchange deadlines that apply in the case of Presidentially-declared disasters. Section 17 extends the 45- and 180-day periods in forward and reverse exchanges that fall on or after the date of a Presidentially-declared disaster by the later of 120 days or the date specified in the relevant IRS News Release, but not beyond the due date for filing the tax return for the year of the transfer.

To qualify for an extension of the IRC Section 1031 deadlines, the relinquished property must have been transferred on or before the Presidentially-declared disaster, and the taxpayer is an “affected taxpayer” or has difficulty meeting the 45-day identification period or 180-day exchange deadline. For these purposes, “difficulty” generally includes, but is not limited to, the following:

  • The relinquished property or the replacement property is located in a covered disaster area;
  • The principal place of business of any party to the transaction (for example, a qualified intermediary, exchange accommodation titleholder, transferee, settlement attorney, lender, financial institution, or a title insurance company) is located in the covered disaster area;
  • Any party to the transaction (or an employee of such a party who is involved in the section 1031 transaction) is killed, injured, or missing as a result of the Presidentially-declared disaster;
  •  A document prepared in connection with the exchange (for example, the agreement between the transferor and the qualified intermediary or the deed to the relinquished property or replacement property) or a relevant land record is destroyed, damaged, or lost as a result of the Presidentially-declared disaster;
  • A lender decides not to fund either permanently or temporarily a real estate closing due to the Presidentially declared disaster or refuses to fund a loan to the taxpayer because flood, disaster, or other hazard insurance is not available due to the Presidentially-declared disaster; or
  • A title insurance company is not able to provide the required title insurance policy necessary to settle or close a real estate transaction due to the Presidentially-declared disaster.

Every taxpayer should be directed to their tax advisor to determine whether they are eligible for the relief and to obtain additional information with respect to their particular circumstances. Learn more @ https://apiexchange.com/tax-relief-victims-hurricane-harvey/.

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SOURCE:
IRS News Release: Tax Relief for Victims of Hurricane Harvey in Texas
https://www.irs.gov/irb/2007-34_IRB/ar13.html#ad83e14
https://apiexchange.com/tax-relief-victims-hurricane-harvey/

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