I recently had the opportunity to interview well known Austin Economist, Angelos Angelou. He shared these thoughts with me:
Although Austin has one of the most stable real estate markets in the country, we are not immune to the credit crisis and uncertainty that is occurring in the national economy. According to Angelou, “The repercussions of the credit boom that made it so easy to buy homes and cars, and to build and develop real estate have impacted the Austin market as well. The negative impacts on our economy should last through most of 2009.”
“In Austin, we have experienced a 10% – 30% decline in sales, depending on the area and price range. When sales are slowing, people hold back, thinking that there will be better buys in the coming months. Of course, this acts to further slow the market. Looking ahead, however, we expect to see some pent up demand when people think the bottom has been reached, and begin to jump into the market.”
“During 2009, the national economy will move into a recession, and job growth, car sales, and retail sales will continue to decline. These kinds of troubles will further slow the housing recovery on a national level. Up to this point, in Austin, economic problems have been limited to tighter credit markets, slower retail sales, and reduced hiring. Our problems do not compare with the crashed real estate markets and job losses in some parts of the country.”
In difficult economic times people historically tend to move to cities where there are jobs and the economy is healthy. The positive perception of Austin as a great place to live attracts newcomers. Newcomers with good jobs keep the housing market active and moving. Homes selling at a reasonable rate tend to keep prices stable and modestly appreciating. This will help Austin weather the downturn.
“Areas like Austin tend to recover quickly, no matter what the challenge might be. State government and the University of Texas are strong foundations of our economy. We have a youthful workforce. Over 36% are the 25 – 44 age range. This is the demographic that high tech companies want. People do not need to be convinced to move to Austin. They already want to come here. Very few cities have this kind of mystique. The Austin brand is strong.”
Austin is evolving and changing as a high tech center. In 2000, we had about 120,000 people employed in 1,600 high tech companies in the Austin area. There are now about 85,000 people working for about 1,200 high tech companies. Partly, this is the result of high tech jobs, such as manufacturing, support, and call centers, moving to Asia and other countries. In recent years Austin has been moving toward high tech start ups and research & development, rather than high tech manufacturing.
It is more important that ever that our city leadership focus its efforts on attracting companies that provide good jobs in Austin. Engineering companies, manufacturing companies, and research and development companies each have very different needs. They should be actively and carefully recruited. We must have a committed and unified public policy focused on recruitment and retention of companies that provide quality jobs.
“As a city, we have accomplished this in the past. In the 1980’s our city leaders, together with the University of Texas and the Chamber of Commerce, brought high tech jobs to Austin. They put “Sillicon Hills” on the map. In today’s tough times, we need that kind of concerted attention and effort. There have been some successes, but there have also been many missed opportunities to attract quality companies to Austin. Companies that chose not to move here are not announced in the paper.
With leadership from the Chamber, our economic development should be supported with enthusiasm and tenacity, and with one voice. We must work together to create the high paying jobs and capital investment that is required to support Austin’s quality of life.”
It is clear that Mr. Angelou is adamant about two things: (1) As a city, we need to promote economic development by recruiting new companies that bring in good, high paying, jobs. (2) We need to improve on the rate that companies do select Austin, after considering relocation to Austin. With strong leadership to forward these goals, we will continue to have the kind of jobs that sustains our housing market.