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Market News and Trends

Mark Sprague – Economic Outlook

In December I attended an economic forecast presentation at a luncheon for the local chapter of the Residential Real Estate Council. Our speaker was Mark Sprague, Director of Information Capital for Independence Title and an analyst and prolific writer and speaker on all things real estate.

As always, Mark’s presentation was extremely detailed, but I want to share some important highlights:

  • The global economy has slowed and is projected to continue its slowdown in 2020, owing to a host of issues including:
    • the trade dispute between the U.S. and China,
    • uncertainty about Brexit and what impact it might have if/when it happens,
    • political instability in Venezuela, Brazil, Italy, Turkey, and Eastern Europe,
    • the fate of the USMCA (a little clearer now than a month ago),
    • ongoing concerns in the Middle East — OPEC, Saudi Arabian oil (and other issues in that part of the world since Sprague’s presentation)
  • Mark noted that U.S. job growth remains strong, and that the job market is strong enough that more people are quitting their jobs to take others than at any other time at least since 2001.

One of Sprague’s slides highlights Austin as being in very good company among other U.S. metropolitan areas in at least one important category:

Austin is the orange bar closest to the left end of that chart, among the most highly educated metros in the United States. That is a benefit for Central Texas as employers looking to move or expand search for a pool of qualified workers.

The United States is experiencing its longest economic expansion in history, and has added jobs for 100 consecutive months. Unemployment is at a 50-year low, and wages are rising the fastest rate in nine years. Moreover, although the pace of expansion (GDP growth) has slowed somewhat, the rate of Texas’ GDP growth in 2019 was almost 2 1/2 times that of the U.S. (And Texas’ job growth rate was just over 2.5 times the U.S. rate of change.)

Regarding real estate, the presentation included Mark’s assessment that “Housing industry nationally appears to have peaked. Texas housing industry still has room to grow.”

Mark’s comments about the Texas economy included:

  • Both residential and commercial real estate sales remained stronger than expected in 2019.
  • At the state level, single family and multifamily construction have slowed. Mark highlighted almost universal labor shortages as one of the reasons.
  • Office and warehouse construction remain strong.
  • Shortages of homes under $300,000 dragged down total home sales.
  • Population expansion continues but not uniformly — only 12 cities out of 1,200 grew over the past 10 years.
  • Job growth continues, also not uniformly. But here’s an important comparison of job growth for cities all over the country:

That chart helps to explain why we may feel very differently about the economy than much of what we read and hear in the national media.

And here is a deeper look at job growth in Austin in comparison with Texas and the United States:

You may need to stare at that graphic a bit to understand it, but if you do you’ll see that in almost all sectors the Austin metro outperformed the state and the country. The exceptions were Construction & Natural Resources, Financial Activities, and Education & Health Services. (And it appears that we created Government jobs at about the same pace as the state and national levels.)

For his audience of REALTORS®, Sprague made the point that job and population growth translate into demand for real estate (historically 1 home start for every 3 jobs created) and this chart confirms that fact:

Having skipped over a LOT of details along the way, I’ll cut to the chase. Here’s Mr. Sprague’s look-ahead on one slide:

Depending on the device you’re using to read this, that very dense slide may not be legible. The summary is:

  • Our local/regional economy is expected to continue much like 2019.
  • Growth issues that impede increasing housing supply — codes, permitting, etc. — are issues in Texas major metros, and tight inventory continues to push prices up.
  • Interest rates will remain low, at least for the first part of the year. Sprague anticipates possibly one Fed rate increase late in the year.
  • Job creation is strong, but the lack of qualified applicants results in tight labor markets in all sectors.

Obviously, I spend a lot of time on market analysis myself — looking at specific homes, neighborhoods and market segments for my clients and studying large market trends so that my consultations are built on deep understanding of our area. Mark Sprague adds a lot to that understanding. I have omitted 50-plus slides from his presentation but I have attempted to accurately summarize his key points that I think best apply here. I am completely responsible for any errors or misinterpretations (and Mark, if you read this and find errors, please weigh in so I can make any corrections needed).

I hope that this outlook is helpful. There will be more to come in my own analysis of our residential markets …. Stay tuned.

About Bill Morris, Realtor

Many years of business experience (high tech, client service, business organization and start-up, including almost 20 years in real estate) tell me that service is the key to success and I look forward to serving you. I represent both buyers and sellers throughout the Austin metropolitan area, which means first-hand market knowledge is brought to bear on serving your needs. Learn more about my background and experience, my commitment to my clients, my profession, and to the real estate industry at


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