Ted C. Jones, PhD
Senior Vice President-Chief Economist
Stewart Title Guaranty Company

Summary of the University of Houston’s Institute for Regional Forecasting Symposium Held Nov. 8, 2011

Teflon (a non-stick coating from DuPont™) provides resistance to dirt, grime and friction across an array of applications from industrial, consumer and transportation. Ditto the Houston economy and real estate markets. Both perform better than the alternatives.

Teflon is not a perfect product as it is susceptible to scratches–just like the Houston real estate markets and economy.

There are numerous indicators of an improving national economy:

• Business and personal bankruptcy filings are down in 2011 compared to 2010.
• Bank failures have declined 36 percent from 157 in 2010 to a projected 101 in 2011.
• Household debt service as a percentage of disposable household income has dropped from 13.9 percent in 2007 to 11.2 percent in 2011—the lowest since 1994.
• Light-weight vehicle sales have recovered from a 2008 recession trough of 9.4 million units to a 12.4 million annualized pace today–although this still lags the typical 16 million cars and trucks sold each year from 1999 through 2007.
• Commercial real estate values have finally turned the corner and are showing increases.

Houston (and Texas) economies continue to outperform the U.S. in whole. But how do you get a non-stick coating to stick to things as does Teflon (and Houston)? Both use multiple layers to achieve results. Teflon, one of the largest molecules, is much like Houston (the fourth largest city in the U.S.). Teflon sticks because it has a layer of sticky coating between the Teflon and where it sits (consumer goods, medical products, transportation, marine applications, and industrial products). Houston grows because it has multiple layers of adhesive, ranging from the port, Medical Center, colleges and universities, oil and gas, industrial and manufacturing, trade (wholesale and retail), transportation and finance.

The Teflon qualities of the Houston economy have allowed it to slide ahead of most of the markets.  Jobs are everything to an economy.  In the latest 12 months, Houston added 68,200 jobs—a gain of 2.69 percent versus the U.S. average of 1.23 percent.

This recovery spans most of the economic landscape.  The latest 12 months has even seen job growth in construction.  In the various primary employment categories, the latest 12-month change-in-jobs is detailed:

Declines in employment occurred in the Transportation & Utilities segment (read that as job losses from Continental Airlines departure), Government (shrinking tax revenues impacting budgets) and the continued and ongoing off shoring by main street and corporate America of IT services.

The largest growth continues in the oil and gas (amazing what flirting with $100 per barrel oil does to an industry), and construction.  While construction posted a relatively large percentage increase (5.61 percent) and finally turned positive, construction makes up just 7 percent of the 2.6 million jobs across the Houston Metropolitan Statistical Area (MSA).

Retail and wholesale are driven by an improving U.S. and Houston economy in which consumer spending is finally growing again, though nationwide it is still four percent below the peak reached in September 2007.  A leading indicator of these segment’s recovery is 1.39 million loaded 20-foot-equivalent containers flowing in and out of the Port of Houston in the past 12 months.  At an average 11.4 tons of goods per container and with 63 percent of the containers being exports versus imports—that’s a lot of U.S. grown or manufactured goods.  One regional economic model estimates that the Ports in the area contribute more than 700,000 jobs in Texas.

The Houston Purchasing Managers is ranging in the highest levels seen since the slide began in 2008.  An index greater than 50 connotes growth in local business in the coming three to four months and currently runs at 60.8.

As jobs go, so goes housing, so goes commercial real estate.  In housing, Houston is not at all comparable to the U.S.  Sales of existing homes in the U.S. are running at a rate 11 percent less than the last normal period (2002, following the recession of 2001 and the subprime debacle of 2004), while Houston homes sales are up 4.3 percent in the same period.  Median prices nationwide are down 25.7 percent from the peak, but the 12-month moving average in Houston–at $152,250–is within $500 of the all-time record.

Important has been the minimal new construction of housing in Houston, with less than 25,000 new dwelling units permitted in the past 12 months.  While 1.25 to 1.5 new jobs per new dwelling unit is considered normal, Houston added 2.75 jobs.  As a result, rents (cash and effective) and home values will continue to climb as vacancy rates and housing inventories decline.  Houston’s real residential real estate market today can positively be described as normal.

The Texas State Data Center forecasts that the Houston MSA population will increase from six million in 2010 to almost 12 million in 2040 (based on an assumed similar net migration level seen in 2000 to 2007).  Driving that is the overall affordability to live in Houston.  While the median household income was approximately $50,000 in 2010, a comparison was made at $100,000 income to other cities (making a percentage comparison simple).  The following table compares Houston to 25 cities and shows just how affordable Houston is to live.  For other cities comparison click http://www.homefair.com/real-estate/cost-of-living.asp?cc=1.  This site also shows what a person in a similar job will make, and in almost every circumstance the job in the comparison cities do not a reach salary level needed to offset the increased cost of living.

From a commercial real estate perspective, now is a good time to over-weight into property.  The following chart shows the relative price performance in the U.S. since 2002 of the S&P 500, the Down Jones Industrial Average, Median U.S. Home Prices and the Commercial Real Estate (using NCREIF’s transaction index as a proxy).

Since 2002, the S&P 500 Index is up five percent, housing up 10 percent, the DJIA gained 16 percent, while commercial real estate is up 36 percent—and climbing.

Given the job gains in Houston, rental rates will climb and vacancies fall in industrial, retail, office and multifamily properties in the coming 12 months.

While Houston may have a few scratches in the Teflon economy, it still is slick and keeps on cooking.

Ted C. Jones, PhD
Senior Vice President-Chief Economist
Stewart Title Guaranty Company
ted@stewart.com

Dr. Jones is the bi-annual speaker of the real estate and economic symposia series for the Hobby Center for Public Policy’s Institute for Regional Forecasting at the University of Houston.

By JEANNIE KEVER, HOUSTON CHRONICLE

Updated 11:41 p.m., Tuesday, November 15, 2011

The food? Too heavy. The traffic? Not so bad. The weather? Don’t get them started.

If it seems like half the people you meet are from California, you might be onto something. Census figures show more than 363,000 Californians moved to Texas over the past five years, helping the state to grow more than twice as fast as the nation as a whole since 2000.

They come for jobs and for a lower cost of living. Some are drawn by love.

And although the transition can be rocky, many survive just fine.

“I actually love it now,” Stephanie Kiouses said, noting that moving from the Houston suburbs to inside Loop 610 was a turning point. “I don’t think I would be nearly as happy in any other Texas city.”

Pipeline tightens

California has sent more new residents to Texas than any other state in recent years. But the pipeline is tightening, part of a national slowdown in migration – from one house to another, from one county to another, and from state to state – that demographers say is a lingering sign of the recession.

Just 11.6 percent of Americans moved between 2010 and 2011, the lowest percentage since theCensus Bureau began tracking the information in 1948.

Demographers blame it on the economy, although William Frey, senior fellow with theBrookings Institution, who analyzed the census data, said the aging population also plays a role.

Lloyd Potter, director of the Texas State Data Center, said the housing market is a factor as well.

“It’s much more difficult for someone to put their house on the market and relocate now,” Potter noted. “And when you look at employment, there’s not that much hiring happening.”

In another sign of the times, Alison Fields, chief of the Census Bureau’s migration statistics branch, said so many people who moved wrote on their forms that they were forced out by foreclosure or eviction that the bureau will add those options to official forms beginning next year.

The drop – both within a state and between states – was especially steep for young adults and for college graduates 25 and older.

“They are the people that fuel our economy,” Frey said during a conference call with reporters Tuesday. “The fact that we see these college graduates stuck in the mud doesn’t bode well for what they can contribute economically.”

History between states

In mid-20th century America, California was the dream, so much so that in 1950, almost two-thirds of its residents were born elsewhere. By 2010, 54 percent of California residents were native-born.

California’s population is still growing, up 10 percent between 2000 and 2010 thanks to a strong birth rate. But for the past decade, more people have moved out than in.

In 2010 alone, almost 70,000 Californians moved to Texas, but Potter said there historically has been movement back and forth between the two states.

Texas’ relatively strong economy – think 8.5 percent unemployment here vs. 11.9 percent in California – gets most of the credit, he said.

Couple found jobs

It drew California natives Sandra Zalman and Ted Rubenstein, who moved to Houston from Los Angeles in 2009.

Zalman, 32, had completed her doctoral degree at the University of Southern California and was cobbling together an academic career as an adjunct faculty member at several institutions when she was offered a faculty job at the University of Houston.

“I guess driving was the No. 1 thing that marked my Southern California experience,” she said.

Rubenstein, an architect, quit his job to accompany his wife. And while Zalman said it took longer than they had hoped, he found work here, too.

“The economy is better,” she said. “Rents were lower. We noticed that immediately.”

They liked the fact that Houston is the hub of a major metropolitan area, but contrary to its reputation elsewhere in Texas, Zalman has found Houston easy to navigate.

“I know Houstonians don’t like to hear this, but Houston (seems) a lot smaller than Los Angeles,” she said. “It’s much easier to get around. It makes a huge difference in your day-to-day living, to know that a trip to the grocery store isn’t going to take all day.”

Kiouses, 27, also said Houston at first seemed smaller than Los Angeles, where she went to college, and more like her hometown of Bakersfield, population 347,483.

That wasn’t necessarily a good thing, but Kiouses moved in 2007 anyway, joining boyfriendJamie Kjellander, who had come back to Texas for graduate school.

Moving inside Loop 610 and taking a job as special events coordinator for the mayor’s office helped with the transition, she said.

“That’s made me like the city a lot more, to see everything this city has to offer,” Kiouses said.

Not that she considers herself a Texan.

“I’m always going to be a Californian,” she said. “But I’m happy for now.”

jeannie.kever@chron.com

SEATTLE, Nov. 14, 2011 — /PRNewswire/ — Zillow, Inc. (NASDAQ: Z), the leading real estate information marketplace, today launched a free real estate app optimized for Kindle Fire. Zillow®’s App now works on Kindle Fire, allowing home shoppers to search for, share and save information on more than 100 million for-sale and for-rent homes.

Zillow’s App is one of the first real estate apps developed specifically for Kindle Fire. At launch, home shoppers can:

• Search Zillow’s database of more than 100 million homes
• View homes for sale, homes for rent and recently sold homes
• See Zestimates and Rent Zestimates of nearly 100 million homes
• Filter by home type, listing type, home size, beds, baths, price
• View full-screen photos
• Share homes via email, Facebook® and Twitter®
• Save favorite homes and searches

“We’re excited to offer a Zillow App that is optimized for Kindle Fire with the launch of the device. The Kindle Fire gives home shoppers a new way to access information and we are thrilled to be part of that,” said Spencer Rascoff, Zillow CEO. “Real estate is inherently mobile and this announcement extends our goal of providing people with important real estate information whenever and wherever they need it.”

Zillow operates the most popular platform of mobile real estate applications across iPhone®, iPad®, Android™, Blackberry® and Windows® Phone 7.

About Zillow, Inc.

Zillow (NASDAQ: Z) is the leading real estate information marketplace, providing vital information about homes, real estate listings and mortgages through its website and mobile applications, enabling homeowners, buyers, sellers and renters to connect with real estate and mortgage professionals best suited to meet their needs. More than 24.6 million unique users visited Zillow’s websites and mobile applications in October 2011. Zillow, Inc. operates Zillow.com®, Zillow Mortgage Marketplace, Zillow Mobile, Postlets® and Diverse Solutions™. The company is headquartered in Seattle.

The Zillow logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10012

Zillow.com, Zillow and Postlets are registered trademarks of Zillow, Inc. Diverse Solutions is a trademark of Zillow, Inc.

Kindle Fire is a trademark of Seesaw, LLC.

Facebook is a registered trademark of Facebook, Inc.

Twitter is a registered trademark of Twitter, Inc.

iPhone and iPad are registered trademarks of Apple Inc.

Android is a trademark of Google Inc.

Blackberry is a registered trademark of Research in Motion Limited.

Windows is a registered trademark of Microsoft Corp.

SOURCE Zillow, Inc.

Read more: http://www.sacbee.com/2011/11/14/4053919/zillow-launches-free-real-estate.html#ixzz1dih9Bzqc

Written by Sarah Firshein at Curbed.com

Thanks are due to our friends at Houston real estate blog Swamplot for bringing this flapdoodle to our attention: a guy in Seabrook, Texas, not only lost his house in 2008’s Hurricane Ike but he was also foreclosed on by Bank of America. Despite the fact that the property had washed away, Brad Gana continued to make regular mortgage payments, completely unaware that the bank had issued a forced homeowner’s policy on his home—which, again, just for clarity’s sake here because there seems to be some confusion, didn’t exist. Gana was never notified of the increased monthly payments, despite the fact that he had given BofA his email address and phone number. Then again, his mailbox had washed away, too, so snail-mail notices never got to him—he learned of the foreclosure two days before the property was set to sell, and had a lawyer stop the proceedings. While a bank rep tries to sidestep what had happened—”There were a number of factors that contributed to the issues that resulted in the actions that we took on [the] mortgage and property”—Gana lays it out clearly: “Bank of America is ruthless in their incompetency,” he told the local paper.

Updated 11:46 p.m., Sunday, October 30, 2011

The national economy may barely be chugging along, but the pace is better in Houston.

In assessing the third quarter, a panel of experts assembled by the Chronicle focused on Houston’s strong job growth – the highest by percentage of the 12 largest metros in the nation – which is buoyed by the surging energy industry. The number of jobs in the area grew by 2.6 percent from September 2010 to September 2011, according to the Bureau of Labor Statistics.

Also contributing to the area’s relative economic strength are a real estate market that isn’t suffering from as many foreclosure problems as other cities and manufacturing gains that create high-paying jobs.

Those factors should continue to boost Houston’s fortunes, according to the panel – with expertise in banking, purchasing management, recruiting and real estate – although its members vary in their assessment of how much economic strength they expect. And even with the jobs growth, unemployment remains a worry.

Read the entire article here.

In October, the winners embarked on a Western Caribbean cruise aboard the Carnival Conquest, and a good time was had by all!

If you weren’t there this year, then make sure that you qualify for the next one! But where will it be?

Cast your vote here and let us know where you’d like to go!

http://www.surveymonkey.com/s/RGY7S6V

To learn more about a career with this fun-loving Houston Real Estate Company, call Michael Bossart of Keller Williams Memorial at 713-461-9393 or send an e-mail to michaelb@kw.com.

The event was held on Saturday, October 15th, 2011 at Nottingham Forest Club.

Guests feasted on a potluck style lunch.

Hot dogs, cotton candy and snow cones were bottomless!

There were contests and games.

And the ultimate show-down… the Hot Dog Eating Contest!

Congratulations to our champion, Pat Welsh!

Thanks to everyone who made this event a success! See you next year!

BY MARY UMBERGER, MONDAY, OCTOBER 17, 2011.

Inman News™

The Texas Department on Aging has said that Baby Boomers are rolling through each stage of life “like a great tidal wave.”  This generation has consistently bucked the trends set by the generation before, changing the definition and expectations of each stage as they go. Now, reacting to current economic conditions, the Baby Boomers are delaying retirement.

A recent survey by Harris Interactive shows that at least two-thirds of all participating boomers plan to work during retirement. This number surges to 77 percent with younger Boomers, aged 55 – 64. Some eye part-time positions, or drifting between periods of employment and leisure, while others plan to embark on new ventures that would allow them to “give back” to the community – termed “Encore Careers.”

The Census shows that this decision to delay full retirement is causing Boomers to shift away from traditional retirement communities and toward big cities. Population figures show that annual growth of retirement-destination counties slipped from 3.1 percent between 2000 and 2007, to 1.7 percent between 2007 and 2009″.  At the same time, a strong labor market, no state income tax and desirable weather is drawing Boomers to Texas. Dallas-Ft. Worth and Houston Metropolitan areas ranked first and second with the most numerical gains in population during this same time frame.

For more information, visit these sites:

http://www.dads.state.tx.us

http://www.tdoa.state.tx.us

http://www.harrisinteractive.com/