Waco’s economy is getting better, but business leaders have said the next three or four months could prove extra special. Businesses committed to or eyeing the community for expansion could invest $500 million.
But here and now, segments including home sales, home construction, retail sales and automobile sales are trending upward despite the pandemic, according to Amarillo-based economist Karr Ingham, who uses data dating to 2000 to prepare the monthly Greater Waco Economic Index for the Tribune-Herald and First National Bank of Central Texas.
Ingham said the GWEI raw score reached 131.3 in August, up from 130.4 in July but below the 132.0 achieved in August last year.
“The monthly table of economic indicators is actually quite impressive under the circumstances,” Ingham wrote in the report released this week. “The spending components posted year-over-year gains, and construction was sharply higher powered by a record number of new single-family residence building permits issued.”
Specifically, the city of Waco issued 153 permits in August to build single-family homes, more than tripling the 49 issued in August last year.
And 362 single-family homes changed hands in August, Ingham reported, citing figures from the Waco Multiple Listing Service. That represents a 13.5% jump from the 319 homes sold in Greater Waco a year earlier.
More than 1,000 homes, 1,130, to be exact, were sold in Greater Waco during June, July and August, a record for that three-month stretch. The average price of homes sold in August soared almost 18%, to $256,906, compared with the $218,114 recorded the same month last year.
Like much of Texas, Waco suffers from an inventory shortage. Its stockpile stands at only 2.2 months, meaning if home sales continued at the current pace with no new listings, all available homes would be gone in about two months.
“While sales surged during the summer, the number of new listings hitting the market has not matched that recovery, worsening the state’s housing shortages, particularly for homes priced less than $300,000,” Texas A&M Real Estate Center research economist Louis Torres said in a Real Estate Center news post. “This mismatch has pulled the months of inventory to record lows of fewer than 2.5 months.”
Another industry trend could aggravate the shortage of homes.
The rising cost of building materials threatens to stymie home construction, said David Brennan, a senior vice president with the First National Bank of Central Texas, during a Zoom meeting Thursday to discuss Ingham’s findings.
He said prices for lumber products, including plywood, have steadily increased by 30% to 70%, and price instability could last into next year.
Local real estate agent Pam Tucker-Hanson, with Coldwell Banker Apex, said she knows of a custom homebuilder locally who informed a client he could not build a home for the price quoted and included in a contract. The increased cost of materials dictated a course change, Tucker-Hanson said.
“He wanted to include allowances for future price increases,” she said. “She (the client) had reservations and walked away from the deal.”
Tucker-Hanson said the trend bodes well for existing home sales.
Retail spending in August set a record, totaling more than $380 million, an almost 12% increase from August last year, Ingham reported.
“Even more impressive is that the August sales tax collection largely reflects spending activity that took place in June,” Ingham said. “That means that given the opportunity, Waco area consumers returned to the marketplace in short order following the shutdown in March and April.”
August sales tax rebates to communities statewide reflect sales in June reported to the Texas Comptroller’s Office in July.
Ingham said recovery in spending “is likely to be choppy going forward,” suggesting early gains were in part a result of pent-up demand.
In March and April, the local economy lost 11,500 jobs, Ingham reported. But job creation in May, June, July and August has restored about 9,200 of those, “including the addition of about 1,700 jobs in August,” Ingham said.
Permits for non-residential construction, such as commercial and industrial, totaled $50.7 million in August, up from $20.8 million in August last year.
Auto sales enjoyed another banner month in August, totaling almost $64 million.
“In fact, inflation-adjusted auto sales activity put up record numbers in June, July and August, which was up by nearly 5% compared to August of a year ago,” Ingham wrote. “For the year-to-date, auto spending is up by over 5% compared to the first eight months of 2019.”
April was the only month that saw declines in auto sales, and sales remained slow in May “before going on this record run in the last three months.”
Spending to stay in local hotels remains subdued, as the lodging industry has suffered mightily during the COVID-19 pandemic, Ingham reported.
Revenues totaled $2.5 million, down from $5.2 million in August of last year.
“The recovery thus far is impressive, though many businesses continue to suffer, hospitality most notably,” Ingham wrote. “The Waco lodging numbers are still terrible, though they are improving slowly with each passing month. Most areas of Texas, including Waco, expanded to 75% capacity from 50% capacity, which will further benefit” restaurants and other sectors.
In economic development news, Kris Collins, industry recruiter for the Greater Waco Chamber of Commerce, said during Thursday’s Zoom meeting that several noteworthy announcements of new industry expanding or locating in Greater Waco likely will take place before year’s end.
Greater Waco Chamber President Matt Meadors, speaking at a chamber-sponsored “State of the Nation” program earlier this week, said investment in economic development projects could total $500 million this year.
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