By Bryan Pope, Associate Editor, Real Estate Center
COLLEGE STATION, Tex. (Real Estate Center) — Texas’ economic recovery is strengthening, according to the latest monthly economic review from the Real Estate Center at Texas A&M University.

After 16 months of job losses, the state had its third month of positive annual employment growth.

Texas’ employment growth rate from July 2009 to July 2010 was 1.3 percent compared with a rate close to zero percent for the nation.

The state’s private sector posted a positive annual employment growth rate of 1.2 percent compared with a zero percent rate for the United States.

The seasonally adjusted unemployment rate in Texas rose from 7.9 percent in July 2009 to 8.2 percent in July 2010, while the U.S. rate increased from 9.4 to 9.5 percent over the same period.

All Texas industries except the construction and information industries had more jobs in July 2010 than in July 2009.

Nineteen Texas metro areas had positive employment growth rates from July 2009 to July 2010, up from 16 for the period from June 2009 to June 2010. San Angelo ranked first in job creation, followed by College Station-Bryan, Austin-Round Rock-San Marcos and McAllen-Edinburg-Mission.

The state’s actual unemployment rate in July 2010 was 8.5 percent. Midland had the lowest unemployment rate followed by Amarillo, San Angelo, and College Station-Bryan.

The complete economic review, written by Center Research Economist Dr. Ali Anari, is available on the Center’s website at http://recenter.tamu.edu/econ/.

TEXAS (The Atlantic) – Even in the middle of the Great Recession, Texas is faring well compared with the rest of the nation, racking up an ever-growing list of accomplishments.

 In addition to ranking fourth in the country with the least amount of state debt, Texas has four cities in the Milken Institute’s Top Five Best Performing Cities Index, four among Forbes’ list of top ten “Cities Where the Recession is Easing,” and four in last year’s Top Ten in Homebuilding.

 Texas is home to three of the top five most resilient major metro areas for employment, with McAllen first, Austin third, San Antonio fifth and El Paso and Houston not far behind in the top 15.

 The Lone Star State also claims 64 Fortune 500 companies — more than any other state — in addition to being dubbed Top State for Business for the second time in three years by CNBC.

 The Atlantic says these accomplishments are because Texas’ major cities have chosen comparatively stable industries — Houston is the nation’s energy hub, Austin leads in education and technology, and San Antonio dominates the health care and education sector in addition to military spending.

 “Our research shows that the more tax incentives and less regulation you have, and the less likely businesses are to get sued, the more likely it is they’ll want to come and prosper in your state,” said Brooke Rollins, president of the Texas Public Policy Foundation.

 These factors support Texas’ position as a global economic leader, having the 15th largest economy in the world.

HOUSTON (Metrostudy, Houston Business Journal) – Houston’s economy is showing signs of recovery, according to a recent Metrostudy report.

 The annual 2009 Census Household survey showed that the Houston-Sugar Land-Baytown area added over 140,000 to its total population, a 2.5 percent increase over one year.

“The continued arrival of people in Texas fuels demand for housing markets,” said David Jarvis, director of Metrostudy’s Houston division. “This, coupled with a more optimistic employment outlook, signals continued stability in the Houston housing market.”

For the 12 months ending in June 2010, the Houston region lost 17,100 jobs. As recently as December, the 12-month loss exceeded 100,000 jobs. By year’s end, year-over-year comparisons are expected to show moderate gains.

Houston ranked tenth among major U.S. metros for high-salary jobs, according to employment website TheLadders.com.

“We’re seeing hiring in the energy (oil and gas) sector,” said TheLadders.com Editor-in-Chief Matthew Rothenberg. “Considering the makeup of the local economy, it is not a surprise that there are a large number of engineering and consulting positions opening in Houston as well.”

The Houston housing market has continued to show stability through 2nd quarter 2010. Home starts for the quarter were at 5,942, a more than 12 percent increase over the first quarter. And home closings have outpaced new supply, indicating a higher housing demand and reducing total inventories of homes. At current absorption rates, the level of housing supply stands at 6.1 months.

However, the New Home Buyer Tax Credit should be taken into consideration (see “Weak Home Sales Numbers Not Whole Story” in today’s RECON).

By David S. Jones, Senior Editor, Real Estate Center

Release No. 26-0810

 COLLEGE STATION, Tex. (Real Estate Center) — Some parents are warning their kids not to bank on inheriting the homestead. Why? Because some parents are considering a reverse mortgage. Such mortgages may not be beneficial for everyone, but their popularity is definitely on the rise.

 “Reverse mortgages are based on the home’s current value, borrower’s age and existing interest rates,.” said Dr. James Gaines, research economist for the Real Estate Center at Texas A&M University. “Borrowers can choose to receive loan proceeds in a single, lump-sum payment, as periodic predetermined payments, a line of credit or both.

 Writing in the July issue of Tierra Grande magazine, the Center’s flagship periodical, Gaines explained the pros and cons of reverse mortgages.

 Pros of a Reverse Mortgage

• A reverse mortgage has no fixed due date.
• No repayment is required as long as the home remains the borrower’s principal residence.
• Loans become payable upon death, sale, ceasing to live in the home or failure to keep taxes, insurance or maintenance current.
• Borrowers cannot be foreclosed on.
• Reverse mortgages are nonrecourse loans. The amount owed can never exceed the selling price.
• Borrowers continue to hold title to the property.
• There are flexible payment options.
• Loan proceeds are not taxable.
• Underwriting and approval do not depend on the borrower’s current income or employment status.
• Would-be borrowers are required to meet with an independent financial counselor prior to getting a loan.
• The lender’s lien on the property is removed if the lender fails to make loan advances according to the agreement.

Cons of a Reverse Mortgage

• Homeowners must be at least 62 years old, own their home outright or have high home equity.
• Reverse mortgages provide around 65 percent of the home’s value. Loan-to-value ratios as high as 80 percent may be available to older homeowners, but higher closing costs and fees and shorter life expectancy offset some of this advantage.
• When the borrower dies, the loan and all accrued interest and costs become due and payable, typically necessitating the sale of the home. Heirs wanting the house must repay the entire amount due, which could be greater than the home’s value at the time. Inheritance planning is tricky.
• Relatively high up-front costs mean borrowers need to stay in the home longer (at least ten years) to make the loan financially attractive. This disadvantage has been offset by some lenders eliminating origination fees, setting aside service fees or both.
• Borrowers are responsible for all other ownership costs.
• Homes can be foreclosed on if borrowers cease to live in them for 12 consecutive months or default on any obligation, such as maintenance, taxes or insurance.
• Borrowers may be targets for aggressive sales pitches for other expensive and potentially inappropriate products or services.
• Reverse mortgages are fundamentally different than forward purchase mortgages or home equity loans. Generally, reverse mortgages have more complicated terms and conditions.

For a comprehensive explanation, read “Reverse Mortgages: Alternative Home Equity Funding” by Gaines and former Center research assistant Beth Thomas. It can be found online at http://recenter.tamu.edu/pdf/1939.pdf.

COLLEGE STATION (Real Estate Center) – Texas is currently holding more than $2 billion in unclaimed property, including cash. Could some of it belong to your community? Edie Craig tells you how to find out on this week’s Real Estate Red Zone podcast.

 Also, Craig and cohost Bryan Pope cover the latest real estate news from Austin, Houston, San Antonio, DFW, Victoria, Waco, El Paso, South Padre and Abilene.

 You can listen to the free podcast from your computer by going to recenter.tamu.edu/podcast and clicking the “play” button beneath each episode. To subscribe, click on the RSS feed found on the podcast page. You can also subscribe through iTunes and download each episode to your iPod.

 So kick back, relax and and join us in the Red Zone. We’ll save a seat for you.