Home Buddies – Home Ownership Coach – Houston, Texas

Economic News: Southwest Economy

The overall economy in the southwest has been bucking the trend of the overall US economy. Although the southwest has been strong it appears to be finally slowing down. Business owners will need to proceed with caution as we move into 2009.

Retail Sales
Consumer retail tells us a lot about an economy because they typically represent about two-thirds of an economy. Retail sales in the southwest have been stronger than US retail sales since 2005. Nothing has changed during 2008 of which from December to August, in the southwest region, retail sales increased at 10.1% when compared with 0.8% for the nation.

Effects of Hurricane Ike
The estimated cost of Ike to the Gulf Region is between $7 billion to $12 billion. This makes Ike one of the most costly storms in Atlantic history. Texas Workforce commission estimates that approximately 35,000 unemployment claims where made that are directly related to Ike. However, the Gulf’s energy infrastructure remains intact after Ike, and the storm had minimal affect on gas prices.

Commercial Real Estate Investment
As the financial markets fell into turmoil many businesses have postponed commercial real estate deals. In addition, some lenders have backed out of deals, especially larger transactions. Currently, there is uncertainty surrounding the commercial real estate investment market. However, economic drivers that attracted investors to Texas commercial real estate have remained in place. It is safe to say that once the credit situation stabilizes, Texas commercial real estate will benefit once again as investors begin to become active again in the market.

Employment
As always, employment is very important because it is one of the key drivers for real estate demand. The southwest employment continues to grow as the national employment continues to decline. Texas employment rose 0.6 percent annualized rate in September, which added 5,500 jobs.

Texas Home Prices
Texas home prices continue to hold up despite the national woes. Texas home prices rose 3.6% over a year, compared with a 1.7% decline for the nation.
The sluggish national economy and the global credit crunch have taken some steam out of the Texas economy. Businesses and investors will need to proceed with caution moving into 2009. Although the Texas economy is slowing, it is still doing better the national economy.

Cliff Pape
Home Buddies