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

Release No. 23-0710

 COLLEGE STATION, Tex. (Real Estate Center) — One word will have a significant effect on the future of Texas real estate – population.

 More people are moving to Texas than are moving out. These new adult Texans need housing the day they arrive. That is more good news for a real estate industry that has already fared better most states during the latest economic downturn.

 “Forty years ago, the Texas population was largely rural and Anglo,” said Gary Maler, director of the Real Estate Center at Texas A&M University. “Forty years from now, Texas will be largely urban and Hispanic.

 “The state’s demographics will shift dramatically during the next several decades, and with change comes opportunity.”

 In times past, Texas depended on “natural” increases for most citizens. That is, most Texans were born here. In the 1950s, 94 percent of the state’s population growth was of the natural variety. By the 1990s, just half of new citizens entered the state that way.

 “The real estate implications are significant,” said Dr. Harold Hunt, a Center research economist. “Population primarily from net inmigration means there are more adults and more would-be homebuyers.”

 While newly arriving households require housing, that can quickly become a negative should the state economy worsen and jobs be lost. Adults that migrate to Texas can just as quickly depart.

 Between 2005 and 2008, more than 200,000 Californians moved to Texas. Whether they stay depends on how well the state’s economy holds up.

Texas’ population also is younger than the nation as a whole. At 33.2 years, the median age gives Texas the second youngest population. Through 2040, Texans 65 and older will increase three times as fast as the overall state population. Flattened incomes and falling retirement savings will lessen the demand for second homes. Many boomers age 55 to 64 will continue to work, thus reducing the number of future relocations.

“Americans born between 1977 and 1997, known as ‘Generation Y,’ are showing less interest in homeownership,” said Hunt. “Whether because of personal preference, economic reasons or both, they are expected to be renters for a longer time.”

Other demographic factors will determine the future of Texas real estate. Texas is rapidly becoming more urban, especially east of I-35.

“By 2030, the average density of the five major Metropolitan Statistical Areas is forecast to more than double,” said Maler. “Dallas-Fort Worth is expected to have the highest population density.”

Higher density means more multifamily dwellings, both for rent and for sale.

Sometime between 2028 and 2040, Hispanics will outnumber Anglos in Texas, according to the Texas State Data Center. Studies show that heads of foreign-born households currently are less likely to own a home.

“Home purchases by new Hispanic immigrants will continue to be limited because of income, education and language constraints,” said Maler. “However, as future generations become better educated, more skilled and more proficient in English, exceptional growth in the Texas Hispanic population could result in increased home purchases in the years ahead.”

For more information, read “The Changing Face of Texas” in the July issue of Tierra Grande magazine, the flagship periodical of the Real Estate Center. It is online at http://recenter.tamu.edu/pdf/1938.pdf.

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

Release No. 25-0810

 COLLEGE STATION, Tex. (Real Estate Center) — After years of soaring in the stratosphere, Texas land prices have returned to earth.

 “The ongoing recession took its toll on Texas land markets in 2009,” said Dr. Charles Gilliland, research economist for the Real Estate Center at Texas A&M University. “Most rural land markets across the state pitted bargain-seeking buyers against unmotivated sellers. Fearing further financial turmoil and falling land values, bidders made offers well below asking prices.”

 Sellers resisted offers lower than the asking price. After all, prices had gone up four straight years. Eventually, however, sellers in need of cash were forced to take sizeable discounts.

 “The result was a profound drop in sales volume,” said Gilliland, “and there were fewer large properties being offered.”

 Prices in 2009 were influenced by the type of land being sold. Previously strong markets for Texas grazing and recreational properties fell. Meanwhile, prices for cropland remained strong.

“Because pasture and rangeland make up more than 80 percent of Texas land, overall market indicators largely reflect conditions for those land types,” Gilliland said.

 The year-end 2009 average price per acre was $2,086 — 7 percent less than the record high of $2,247 established the previous year. The 4,138 total sales transactions were the fewest since 1995. The most sales ever recorded by the Center were 8,005 in 2005.

 When it comes to land sales, size matters, too. The average tract sold in 2009 was only 73 acres, a record low. Just a year earlier, the average was 90 acres.

 “Large-property sales were scarce,” said Gilliland.”This suggests prospective buyers with ample resources are unwilling to risk losses if prices weaken further.”

 Buyers looking for cropland will not find much selection as higher commodity prices increase demand for land to grow them.

 “The impasse between buyers and sellers indicates strong differences of opinion regarding the future of Texas land markets,” said Gilliland, who has monitored the state’s rural land for 30 years. “Buyers anticipate falling prices, while sellers are hoping for a turnaround in the near future.”

 To learn more, read Gilliland’s article, “Landslide,” in the July issue of Tierra Grande magazine. It is free online at http://recenter.tamu.edu/pdf/1942.pdf.

HOUSTON (Houston Business Journal) – Ten developers that are constructing or rehabilitating affordable apartments in the Houston area are set to collectively receive $14.6 million in incentives from the Texas Department of Housing and Community Affairs.

The developers will receive tax credits in exchange for charging lower rental rates on a portion of a property’s units so they are affordable for low-income individuals and families.

The following developments are the local recipients of this year’s tax credit program:

• Cypress Creek at Fayridge ($2 million for 148 affordable units)
• Cypress Gardens ($1.4 million for 100 affordable units for seniors)
• Golden Bamboo Village III ($1.6 million for 130 affordable units for seniors)
• Mason Senior Homes ($1.5 million for 120 affordable units)
• Perry Street Apartments ($921,000 for 160 affordable units)
• Parkway Ranch II ($963,000 for 44 affordable units)
• Tarrington Court Apartments ($2 million for 153 affordable units for seniors)
• Travis Street Plaza ($1.4 million for 192 affordable units)
• Zion Gardens ($954,000 for 70 affordable units)
• Tuscany Place ($2 million for 152 affordable units in Kingwood)

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.