Central Texas Economy In Perspective

By Beverly Kerr, Chamber Vice President of Research

Friday’s Texas Workforce Commission and U.S. Bureau of Labor Statistics releases of December 2009 workforce numbers marked the 8th month running that the Austin metro, on a year-over-year basis, has lost jobs. Austin’s nonfarm payroll jobs total 781,000 in December, a loss of 2,300
(-0.3%) over December 2008. It should be noted that this year-over-year difference is the smallest Austin has seen since May, and as the graph below indicates, the difference has been steadily narrowing over the last several months.

On our customary ranking of the best performing large metros, we retain second place behind Virginia Beach. Austin’s aggregate job losses of 2,300 or 0.3% compare to 42,100 or -2.0% for Dallas, 8,000 or -0.9% for Fort Worth, 92,500 or -3.5% for Houston, and 9,000 or -1.1% for San Antonio.

Texas has 277,400 fewer jobs (-2.6%) than one year ago and has been seeing negative year-over-year numbers for 11 months. Nationally, 4,096,000 jobs (-3.0%) have been lost over the last 12 months and this is the 20th month of year-over-year decline.

In Austin’s private sector, 6 industries lost jobs in the last 12 months, with the greatest numbers and the highest rates of loss, from -5.6% to -11.1%, in 3 of these: natural resources/construction, manufacturing, and wholesale trade. These sectors lost a combined total of 11,900 jobs. A combined total of 1,600 jobs were lost in 3 other sectors: transportation/warehousing/ utilities, retail trade, and information. One of Austin’s negative growth sectors, manufacturing, lost a greater percentage in Austin than it did statewide (-11.1% vs. -9.8%).

Moderate increases were seen in professional and business services (700 net new jobs or 0.6%), other services (800 or 2.5%), and government (1,800 or 1.1%). Larger rates of increase were seen in education/health services (4,000 or 4.9%), financial activities (1,300 or 2.9%), and leisure/hospitality (2,600 or 3.3%). Texas edged over Austin’s growth rates only in the government sector. The only other sectors growing state wide were education/health services and other services, but Austin added at a greater rate in both of these industries.

Austin’s net gains in private service providing industries (4,800) and in government (1,800) were outweighed by a loss of 8,900 jobs in goods producing industries. Austin’s goods producing jobs decline of -8.6% was matched by Houston this month, which saw the same year-over-year loss. Dallas, Fort Worth, and San Antonio’s declines ranged from -2.8% to -5.8%. However, losses were greater statewide, -12.2%. While Austin’s manufacturing losses were greater than the state’s, our construction losses (-5.6%) were considerably lower than seen statewide (-14.6%). Among Texas’ major metros, Austin was the only one seeing a year-over-year net gain in private service-providing jobs. Dallas and Houston lost the most in these sectors, -3.0% and -1.9% respectively.

LA Gang Tours!

There is a new venture in Los Angeles offering tours through Los Angeles gang turf. These are high end specialty tours of top crime scene areas of South Central Los Angeles.

The first tour on January 16th was sold out! Passengers received a discount of $35 on the regular $100 per head ticket and signed waivers that they were aware they could become crime victims and agreed to put themselves in the hands of ex-gang members who had negotiated a cease-fire in the most violent gang area in the U.S.

The objective of these tours, which are scheduled to run once a month, is to create jobs for residents of South Central and to inject money back into the community. It also promotes the continuation of a cease fire in certain designated areas in exchange for the tour operators hiring some of their youth for employment and training opportunities. Designated routes and times are being honored by participating gangs.

For more information on these tours visit L.A. Gang Tours.

Thanks to Jane Peters, Los Angeles Real Estate agent for sharing this with us.

Securing an FHA mortgage is about to get more expensive.

In a statement issued Wednesday, the Federal Housing Authority outlined policy changes to its mortgage assistance program. The shift is meant to both reduce the government group's portfolio risk while strengthening its overall financials.

For consumers, the changes mean higher costs. As listed in the official announcement, there are 3 major guideline updates for the FHA:

• Upfront mortgage insurance premiums are increasing to 2.25% from 1.75%
• Minimum downpayments for applicants with sub-580 FICOs are rising to 10 percent (not a huge deal because our minimum FICO is 620 anyway)
• Seller concessions are being limited to 3%, down from today's allowable 6%

Furthermore, the FHA has appealed to Congress to raise an FHA borrowers' monthly mortgage insurance premiums.

To read the FHA's statement, it's clear what the group is trying to balance. On one side, the FHA wants to provide affordable financing to families that need it. That's its mission statement. On the other side, though, the FHA must manage the risk that comes with insuring lesser-quality loans.

To that end, the FHA is stepping up its enforcement of "bad lenders" in hopes of stopping problems where they start.

 Also in its new policies, the FHA is introducing a "termination clause". If banks or loan officers that produce more than their fair share of bad loans, they lose their right to originate FHA mortgages.

 As a result, homebuyers should expect tougher FHA underwriting in 2010. Not because the FHA says so, necessarily, but because banks don't want to do "bad loans". Lenders are incented to turn down at-risk applicants and, already, we're seeing examples of this. Despite FHA allowing 580 FICOs and lower, many banks have made 620 their minimum.  Some have other guideline overlays, too.

The FHA's new guidelines don't go into effect until April 5th, 2010. So, between now and then, the old guidelines will apply. Therefore, if you know you're going to need an FHA home loan in the next few months, consider moving up your time-frame.

Consider Live-In Stagers for Vacant Homes

Showhomes, a Nashville, Tenn.-based home-management and staging company with eight offices in Florida, provides live-in stagers for vacant homes that are up for sale.

Live-in stagers reduce the chances that the property will be vandalized, and they ensure that the listing is kept in show condition and ready for buyers to tour with just 30 minutes' notice. They also must vacate the home when it sells; but in return, they pay dramatically reduced rents. Don Vanderhoef, who owns Showhomes' Fort Lauderdale franchise, says, "A big part of it is psychology. Buyers see food in the refrigerator, clothes in the closet. They see all the signs of life of a regular home."

While some real estate agents worry that live-in stagers will not keep the home clean or cause problems when asked to move out, Vanderhoef says in-home managers sign contracts and submit to background checks.

In the company's 24-year history, he says it has worked with only one problem manager. The program's properties generally spend less time on the market and fetch more money than other vacant listings. The company collects a "success" fee of 1 percent of the list price when a sale is completed and only the upfront money if the home is not sold.

Source: Charlotte Observer, Paul Owers(01/17/10)

FHA To Toughen Down Payment Rules

The Federal Housing Administration will raise the minimum down payment for its least credit-worthy borrowers, agency announced Tuesday.

Borrowers with credit-rating scores below 580 will be required to put down at least 10 percent. Those with a credit score above 580 will be able to continue to put down only 3.5 percent. The changes are intended to shore up the agency's finances.

The FHA also will increase its upfront mortgage insurance premium from 1.75 percent to 2.25 percent. The agency is expected to seek congressional approval to raise annual mortgage insurance premiums, paid by borrowers over the life of the loan, above the current 0.55 percent maximum. The amount it will seek has yet been announced.


Source: Reuters News, Corbett B. Daly (01/19/2010)

Haiti Relief Fund

I placed a link on my blog today for those of you who would like to contribute to Haiti via the American Red Cross. Please find it in your heart to give what ever you can to help this devastated country.