Sign Number 1 – Texas Leading Indicators: The Federal Reserve of Dallas publishes a number of reports analyzing the employment and economic activity of both the state and major metropolitan areas. The recent Texas Economic Indicators has several positive signs of recovery for Texas and Austin.
The Metro Business Cycle Index, which tracks movements in employment, unemployment, wages and retail sales, shows that Austin’s economy moved into recovery in February. The index for Austin has sustained growth at an increasing rate each month, while the Texas Business Cycle Index has stayed at roughly the same rate of growth for the last four months. Texas and its major metros, except for San Antonio, have been indicating economic growth since January or February. Texas, Austin, and Houston have seen roughly 2% growth in the Index over the first seven months of 2010 while Dallas and Fort Worth have seen gains of about 1%. San Antonio continued to see negative growth for several months longer and July is its first instance of an increase in the Index since April 2008.
Source: Texas Economic Indicators – Federal Reserve of Dallas and the Austin Chamber of Commerce
The Austin Chamber of Commerce provides additional analysis of the Texas Economic Indicators report.
Sign Number 2 – Apartment occupancy rate is increasing. Capital Market Research reports that twelve new communities brought units to the market in the last six months, adding a net total of 1,344 units since December. But absorption was a remarkable 4,849 units which pushed occupancy up 2.3% points to almost 93%. Because there are only 623 units scheduled for delivery in the last six months of 2010, CMR predicts the multi-family occupancy rate will increase another 2% to 95% by year end.
Multi-family development and construction is at a stand still. New developments will not begin until occupancy rates increase (which they are) which will force rents to increase (which is happening) which will spur new developments. Apartment builders should be lining up their projects now.
Source: Capital Market Research
Dr. Mark Dotzour, the Chief Economist for the Real Estate Center at Texas A&M, similarly predicts the Austin Apartment Occupancy rate will be 96% by the end of this year.
Sign Number 3 – Austin’s Job Growth is Strong: Dr. Dotzour also predicts U.S. economy would begin to produce jobs in the next 12 months and that Austin would outperform the nation in job growth. At the RECA 10th annual Mid-Year Economic Forecast, Dr. Dotzour noted the Austin's job growth is 2.3 percent today and forecast Austin job growth to be 3% in the next 12 months. He also forecast Austin population will grow 2% in the next 12 months.
Sign Number 4 – Corporate Profits are Increasing: Finally, as also noted by Dr. Dotzour, corporate profits are increasing. Companies need profits before they can start hiring.