The boom is over.
So says Jim Gaines, chief economist at the Texas A&M Real Estate Center, referring to the strong job growth and sizzling home prices that have buttressed the North Texas economy over the last few years.
In a phone interview, Gaines told us that 2016 will be “our transition year in Texas,” marked by significantly slower growth in the economy and jobs that will put the brakes on soaring home prices. He foresees growth in statewide gross domestic product of less than 1 percent, while home price gains could halve.
“The feeling of a boom economy is going to leave,” he said. “The question is not whether we’re going to slow down and possibly decline, but at what rate and what’s the timing.”
Job growth has already slowed, particularly on the Fort Worth side of the Metroplex. The Federal Reserve Bank of Dallas reports that through November, employment in the Fort Worth area increased by only 0.2 percent last year, while jobs grew by 4.1 percent on the Dallas side.
In terms of housing, slower gains may still not be bad considering that strong sales pushed home prices to record levels in Dallas-Fort Worth over the past couple of years. For all of 2015, homes sales totaled 96,158 in the 29-county North Texas region, up 6 percent from 2014, the real estate center reported, and the median sale price grew by 10 percent to $205,000.
Gaines said the Texas economy, and DFW’s to some extent, was boosted by the resurgence in oil drilling in the Eagle Ford Shale and the Permian Basin. But with the collapse of oil prices last year and a pullback in drilling, that fuel is gone.
The oil bust has prompted some to warn that DFW home prices are now overvalued. In a recent report, Arch Mortgage Insurance listed Fort Worth and Dallas among the five U.S. metro areas most at risk for declining home prices. Houston — with its bigger energy industry — has the most elevated risk.
Gaines expects to see a slowdown in home sales soon, though it hasn’t shown up in the data yet. A very low inventory of homes on the market should continue to support price gains, even as sales slow, he said. But he still expects growth, not a return to the days of the Great Recession with job losses and foreclosures.
“Right now, in the DFW area, I would say risk of that happening any time soon is relatively small,” he said.
Gaines will be in Fort Worth on Jan. 25 to share the details of his annual economic forecast with the Greater Fort Worth Association of Realtors.
FW chamber award finalists
A dozen Tarrant County businesses have been named finalists for the Fort Worth Chamber of Commerce’s 2016 Small Business of the Year Award.
The annual program honors companies for best practices. Winners will be announced Feb. 16 at Mayor Betsy Price’s Annual State of the City address at the Fort Worth Convention Center.
“This year’s finalists are an impressive group that reflects the diversity of Fort Worth’s business base, including pharmaceutical, technology, manufacturing and professional services,” chamber President and CEO Bill Thornton said in a statement. “The judges have their work cut out for them because these are all excellent contenders.”
Finalists were selected from 125 nominees and 45 written applications. The judges visit the sites to determine the winners.
Finalists, by category, are:
Emerging Business (in business less than three years): Alpha Industries, a provider of fabrication, construction welding, industrial construction, global logistics and team management for industrial and energy clients; Cowtown Cycle Party, an eco-friendly 16-person party bike for sightseeing in downtown and the near south side; Ventavia Research Group, a clinical research company that conducts trials for new medications developed by pharmaceutical companies.
1-10 Employees: Blue Jean Networks, an information technology service to small and midsize businesses; M-Pak, an industrial packaging and tactical clothing/uniform supplier to private and government businesses; Synergy HomeCare, nonmedical home-care services for people who need assistance with activities of daily living.
11-50 Employees: CMIT Solutions of Fort Worth, a managed information technologies and computer consulting services firm; Sutton Frost Cary, a full-service certified public accounting firm; the Baker Firm — Fidelity National Title, residential and commercial title services.
51-150 Employees: Firefighting’s Finest Moving & Storage; Sellmark Corp., a maker of outdoor lifestyle products; Simplifi Holdings, a provider of localized programmatic solutions for digital business.
Fort Worth retail market grows
Strong leasing and limited construction have boosted occupancy at Dallas-Fort Worth shopping centers to the highest level in more than three decades.
The region’s retail market ended 2015 with a 91.6 percent occupancy, an increase of 1.1 percentage point from the end of 2014, according to the latest Weitzman Group’s annual survey.
“Currently, the Dallas area reports 91.2 percent occupancy. That is a gain of a full percentage point over 2014 and only the second time in six years vacancy has dipped under 10 percent,” said Bob Young, Weitzman’s managing director. “And for the Fort Worth area, occupancy looks even better with 92.4 percent. These percentage gains mean we basically saw the equivalent of two regional malls go from fully vacant to fully leased in a year.”
Weitzman has been conducting the survey for 25 years. The occupancy rate is based on a market inventory of 193 million square feet of retail space at centers with 25,000 square feet of space or more. Of that, 58.3 million square feet are in the Fort Worth area.
Glade Park in Euless was the largest power center to open in Dallas-Fort Worth in 2015, the report said.
“The improvement seen in the retail market during 2015 is due to steady demand for lease space in D/FW’s existing shopping centers,” the report said.
In the Fort Worth market, nearly 1.4 million square feet of vacant space was leased.