Like deer in the headlights, a still skittish Wall Street staged a comeback last week; with the Dow Jones industrials erasing almost all of 209-point drop after an upbeat assessment of manufacturing activity eased some worries about a flagging U.S. economy.  Now that investors are relieved that manufacturing is still expanding many viewed this as an opportunity and bought some of the stocks pummeled in Tuesday's drop that sliced 416 points off the Dow.  The hysteria and paranoia contributed mostly by the media has only compounded fears about the U.S. economy which mainly contributed to that plunge, and a halfhearted rebound on Wednesday followed what many felt were soothing words from Federal Reserve Chairman Ben Bernanke.  As many economists have exclaimed, the national economy is expected to lose steam (thanks in part to a housing slowdown nationally), several Texas regions, including Austin, are poised to buck that trend occurring in many of the other regions of the US.   All of the way through 2008, the Austin, San Antonio and Dallas-Fort Worth regions, I am confident to report, will see jobs added at a faster pace than they did between 2004 and 2006, according to a senior economist for Moody's Economy.com, Rakesh Shankar.  Not only is Austin expected to post a job growth rate of above 4 percent, (which is above the 3.4 percent seen during the 2004 to 2006 period), but when considering the revival of the tech industry and the fact that our state government and university systems are set to contribute heavily to the market these factors continue to support a market that should continue to favor growth despite a slight drop in home sales at the beginning of the year for central Texans

Home sales in Central Texas hit a two-year low in January, according to a new report from the Austin Board of Realtors. Sales of pre-owned single-family homes fell 6 percent in January from the same month a year earlier, to 1,452 homes. Up nearly 5 percent from the same month a year ago the median price climbed to $175,000 as demand continues to steadily climb. Even thought the sales figures were the lowest since January 2005, when 1,336 homes were sold one must consider that January is traditionally a slow month for home sales. Our region continues to defy the cooling housing market that has affected other parts of the country (despite the January dip), and Land Mortgage as well as our analytical sources expect the trend to continue.  Local real estate agents as well as experts from the Real Estate Center at Texas A&M University have predicted that Central Texas' housing market in 2007 will be as strong, if not stronger, than last year's. Pending sales of single-family homes rose 12 percent from a year earlier to 2,168 according to an Austin American Statesman report.  Sales will likely show a rebound as data trickles in from February.  Indeed according to the same report, homes have remained on the market for an average of 76 days in January, down a day from the year-earlier period.  However many areas including Cherry Creek, Sendera, Great Hills and Balcones Woods were selling homes much more quickly and at higher prices. Also, properties located in the suburban north, northwest and southwest continue to show the same trend with strong sales growth.  One area not looked at as closely, but will certainly be a larger factor going forward as we develop our urban properties is that town homes and condominiums also did well in January, with 159 sold, which is up 21 percent from the same month last year. Year-over-year the pending sales are approximately 22 percent higher for town homes and condos, at 240.  Last, an unfortunate product of the demand exceeding supply factor is that potential home buyers seeking less-expensive homes are now facing a shrinking supply as values rise.  Of homes sold during the first month of 2007, the greatest numbers were in the $200,000 to $399,000 price range (source:  Austin American Statesman).

“Here we go into the wild blue yonder!”

A good measurement of the commerce that is transpiring in our area is to examine the passenger traffic at Austin-Bergstrom International Airport.  During January of 2007 the amount of passengers traveling was up 2.5 percent to 599,300 when compared with January 2006.  Domestic carriers such as Jet Blue Airways and Delta Airlines and its subsidiaries showed significant increases in passenger totals while air cargo also was up 1 percent to 17.9 million pounds in January over the previous year.  All of the major carriers showed increases with the exception of Continental and United Airlines which were down 1 and 25 percent respectively according to the Austin Business Journal.  Similarly, we are seeing numbers rolling in indicating a recovery in the industrial and office markets as a citywide vacancy rate is hits the lowest it has been since 2002 due to a four-year trend of positive absorption.  Most are thinking that this trend will continue and that we could easily see a vacancy rate dropping to as low as 10 percent by June.  The current levels of economic expansion mirrored by a diverse market and the expected increases in occupancy will continue to fuel a bullish local economy here in Austin and with that industrial rates will continue increasing, if not exceeding the boom rates of 2001.

“Government is not the generator of economic growth; working people are.”  - Phil Gramm

Written by Dale M. Neibert, a Senior Loan Officer with Land Mortgage.  If you have questions or comments he can be reached at 512.964.9544 or via email dneibert@landmortgage.net.