Declines in vehicle sales, home sales and the value of general building permits caused the Greater Waco Economic Index to stumble in March after a sizable increase in February, according to a report by Amarillo-based economist Karr Ingham.
On the positive side, Ingham said housing construction in Greater Waco “is simply booming,” with a record 151 permits issued in the first quarter, a jump of 72 percent from the first quarter last year.
“That is the highest quarterly number of permits ever issued, surpassing the 148 permits in the first quarter of both 2007 and 2008,” said Ingham, who prepares a monthly snapshot of local trends for the First National Bank of Central Texas and the Waco Tribune-Herald using data dating to the year 2000.
The March monthly total of 56 permits being issued for construction of single-family homes is not a record for the city of Waco, but beat last March’s total of 39 by almost 44 percent.
Fort Worth-based D.R. Horton continues its surge into the Greater Waco market. It secured 28 of the 56 permits issued in March, according to Whitney Richter, manager of business development and marketing for the Greater Waco Chamber of Commerce.
Richter presented Ingham’s monthly findings during a press conference at the First National Bank of Central Texas.
Raw figures provided by Ingham showed the index retreated slightly in March, dropping to 125.4 from 125.6 in February, which was its all-time high. Still, Richter said the index has suffered a decline in only five of the last 62 months.
Builder Jason Peavy, owner of Peavy Homes, said demand for new homes has caused prices to escalate the past couple of years. And the new tariff of up to 24 percent the Trump administration has placed on lumber from Canada could aggravate the situation.
“You have to remember that 33 percent of the lumber used by the homebuilding industry is imported, and 95 percent of that comes from Canada,” Peavy said. “We’re seeing the price of our framing material increase more than 20 percent, which makes it more of a challenge to build homes that are affordable.”
Local builders also find themselves competing with more national companies attracted to the local market, “where they gobble up everything they can find,” in acquiring land, he said.
Most builders are seeing an influx of buyers from outside Texas, “including people from California, Colorado, Florida and Pennsylvania,” and he thinks the popularity of Chip and Joanna Gaines and their hit TV show, “Fixer Upper,” is partly responsible, Peavy said.
Ingham’s report shows the price for a home sold locally in March averaged $204,021, which was almost 15 percent more than the average of $177,566 in March of last year.
For the first quarter, the average stood at $181,864, which is almost 9.3 percent more than the $166,421 for the first quarter of 2016.
The sale of existing homes dipped slightly in March, but Ingham said the value of the homes changing hands was impressive.
“The higher prices pushed the total real inflation-adjusted dollar volume of residential real estate sales into record territory for March and the first quarter, which were up by 7.7 and 8.5 percent, respectively, compared to year-ago levels,” he said.
“I’ve never seen anything like it in my 37 years,” said Kathy Schroeder, who oversees residential services for Coldwell Banker Jim Stewart Realtors, commenting on the housing market.
“We’re getting a lot of Californians buying homes here,” Schroeder said. “They may not stay longer than a year, but they are making deals.”
Empty-nesters and investors also are making their presence felt on the homebuying front, she said.
General spending in Greater Waco totaled $249 million in March, a 4.4 percent increase from March last year and a welcome change from flat totals in recent months, Richter said.
She said Magnolia Market at the Silos typically attracts 20,000 to 30,000 visitors a week. But in March, a popular month for spring breaks nationwide, it had 171,000 visitors and contributed to the sales increase.
The Waco Metropolitan Statistical Area, which includes McLennan and Falls counties, added an estimated 2,500 jobs in the 12 months between March of last year and this year.
“The Greater Waco metro area economy has been steadily adding jobs since mid-2012, and that trend continues,” Ingham said. “The unemployment rate remains above its year-ago level, however, at 4.3 percent in March compared to 3.9 percent in March last year.”
The value of construction activity, not counting homes, was down about 40 percent in March, but the number of permits issued increased by 60 percent, Ingham said.
Automobile spending of $54 million in March reflected an 8 percent drop from March of last year. But that follows an impressive month a year ago, Ingham said.
“The March 2016 real auto spending total was up by a whopping 40 percent compared to the prior year, so in that context, auto sales activity in Waco remains generally strong,” he said. “And indeed, first quarter real auto spending was the highest-ever first quarter total and was up nearly 6 percent compared to the first quarter of a year ago.”
Several business and community leaders made comments during Wednesday’s meeting at First National Bank of Central Texas.
Adam Hutchison, provost of Texas State Technical College in Waco, said the school has about 400 acres available for development near the TSTC airport. The land has attracted interest from several prospects, “including an international company and another company outside Texas,” Hutchison said.
Cameron Goss, with Bowen Electric, said he continues to have trouble finding people to hire.
“This typically is a 25-employee company, but we have 48 now because of all the commercial work we’re doing,” Goss said. “We need to find young people who want to make a really, really good living, but there is a labor shortage.”