TG - January 2020 by Texas Real Estate Research Center

JANUARY 2020

COLLEGE STATION, TEXAS 77843-2115

In This Issue Broker Succession Planning Abilene’s Housing Market Real Estate and Monetary Policy Micro Markets Hillcrest Relocation Military’s Housing Impact Seasonally Adjusting Housing Data Texas-U.S. Housing Comparison Q&A: Contract Effective Dates

Helping Texans make the best real estate decisions

JANUARY 2020

We’ve renovated! You spoke. We listened. In response to recent reader feedback, we’ve made some changes to our flagship magazine. In fact, you likely noticed the most apparent change on the cover: Tierra Grande now goes simply by TG, a nickname we’ve used in-house for years. But that’s just the beginning. If you’re an agent or a broker (as most of our subscribers are), you will see a wider variety of articles intended especially for you. For example, this issue digs into the military’s influence on Texas housing markets, broker succession planning, Texas “micro markets,” and the relocation of a Corpus Christi neighborhood because of the new Harbor Bridge construction. We’re pleased to introduce a back-page Q&A column by former Texas Real Estate Commission (TREC) General Counsel Kerri Lewis and former TREC Chair Avis Wukasch. “Practically Speaking” will address common issues licensees encounter in day-to-day business operations. After receiving the October issue, one subscriber noticed our usual black boxes containing a one-paragraph summary were no longer at the end of each article. “Did you take away my ‘Takeaways’?” she asked. We did not. We simply moved them to the beginning of each article in hopes of catching more readers’ eyes. Same summarization, but new location and no black box labeled “The Takeaway.” What’s not changing? The high-quality photos and design you enjoy and, most importantly, the reliable research you’ve come to expect from the Real Estate Center. This is a work in progress, so more refinements are on the way. We’ll be anxious to hear what you think. Bryan Pope Managing Editor

TEXAS A&M UNIVERSITY

Real Estate Center iii

TIERRA GRANDE

JANUARY 2020 VOLUME 27, NUMBER 1 www.recenter.tamu.edu @recentertx

2 | Who’s on Deck? Broker Succession Planning Death. Debilitation. License revocation. These things happen. Having a succession plan in place ahead of time can alleviate stress and minimize business disruptions. By Kerri Lewis

5 | Abilene

14 Under the Bridge Relocating a Corpus Christi Neighborhood A new, higher Harbor Bridge was necessary for the nation’s third-largest port, but what happened when that bridge encroached on a nearby neighborhood? Part one of this two-part series tells the story. By Harold D. Hunt and Clare Losey

Population Growing, Housing Cooling The Key City is home to several universities and an Air Force base, so it stands to reason that the residential rental market plays an important role in the area’s overall housing market. By Joshua Roberson

8 | Markets & Money Real Estate and Monetary Policy From mortgage interest rates to rates of return on commercial investments, the impact of U.S. monetary policy on real estate markets can’t be overstated. Here’s why. By Ali Anari

10 | Small Cities, Big Opportunities

19 Home Front How the Military Influences Texas Housing Markets Texas’ 13 U.S. military installations directly employed more than 224,000 in 2017. Factor in veterans and the mobile lifestyle of the typical service member, and the military adds an interesting twist to the state’s overall housing market dynamic. By Joshua Roberson

Executive Director, GARY W. MALER Chief Economist, JAMES P. GAINES Senior Editor, DAVID S. JONES Managing Editor, BRYAN POPE Associate Editor, KAMMY BAUMANN Creative Manager, ROBERT P. BEALS II Graphic Specialist/Photographer, JP BEATO III Graphic Designer, ALDEN DeMOSS Communications Specialist II, HAYLEY RIEDER

Census data show people flocking to Texas’ major metros, but many of the state’s “micro markets”—towns like Fredericksburg, Rockport, and Athens—are building reputations as recreational and retirement havens. By Joshua Roberson

22 | Filtering Out the Noise Seasonally Adjusting Housing Data With home sales data yo-yoing month to month, how can anyone make sense of what’s happening in the market? The answer is much simpler than you might expect. By Luis B. Torres and Wesley Miller

24 | States of Housing Does Texas Still Have the Edge? For years, Texas has enjoyed a reputation as an economic powerhouse. While that’s still true, other states are beginning to shine just as brightly. By Luis B. Torres and Paige Silva

28 | Practically Speaking Real Estate Questions Answered From required notices to referral fees to correctly completing contracts, the real estate industry has no shortage of pitfalls that can trip up even the most conscientious licensee. TG’s new Q&A column can help you avoid many of them. By Kerri Lewis and Avis Wukasch

ADVISORY COMMITTEE: Alvin Collins, Andrews, chairman; JJ Clemence, Sugar Land, vice chairman; Troy C. Alley, Jr., DeSoto; Russell Cain, Port Lavaca; Doug Jennings, Fort Worth; Besa Martin, Boerne; Walter F. “Ted” Nelson, Houston; Doug Roberts, Austin; C. Clark Welder, Fredericksburg; and Jan Fite-Miller, Dallas, ex-officio representing the Texas Real Estate Commission. TGTM (ISSN 1070-0234) is published quarterly by the Real Estate Center at Texas A&M University, College Station, Texas 77843-2115. Telephone: 979-845-2031. VIEWS EXPRESSED are those of the authors and do not imply endorsement by the Real Estate Center, Mays Business School, or Texas A&M University. The Texas A&M University System serves people of all ages, regardless of socioeconomic level, race, color, sex, religion, disability, or national origin. Nothing in this publication should be construed as legal or tax advice. For specific advice, consult an attorney and/or a tax professional.

Circulation Manager, MARK BAUMANN

PHOTOGRAPHY/ILLUSTRATIONS: JP Beato III, pp. 2–3, 22; Getty Images, pp. 5, 8–9, 10, 14–15, 24, 28; Harold Hunt, pp. 16, 17 (bottom), 18; courtesy of Harbor Bridge and TxDOT, p. 17 (top); Alden DeMoss, p. 26.

Lithography, RR DONNELLEY, HOUSTON

ON THE COVER: JANUARY 2020 Starlit night over Big Bend. Photographed by JP Beato III.

Brokerage

A brokerâ&#x20AC;&#x2122;s business can be interrupted when the broker suddenly dies or becomes incapacitated. The best way to avoid this is to have a succession plan in place ahead of time. Different factors must be considered for business entity brokers and individual brokers, but both are far better off with a plan than without one.

TIERRA GRANDE

WHO’S

ON DECK?

t happens—an unexpected illness, car wreck, or license revocation or suspension of a BY KERRI business entity designated broker or an individual broker. When these occur, what happens to the brokerage business and sponsored agents will depend on swift action being taken. Having a succession plan in place before the unexpected occurs is the best way to minimize disruptions in business operations. Different laws and issues come into play when creating a succession plan for business entities and individual brokers.

BROKER SUCCESSION PLANNING

Interplay Between Laws When the broker in charge of a brokerage becomes incapacitated, dies, or is otherwise ineligible to act as a broker, whether it is a designated broker or an individual broker, at least two of the following areas of law kick in. • Texas Real Estate Commission (TREC). Under the Texas Real Estate License Act (TRELA), for a business entity to act as a broker (i.e., sponsor agents, collect commissions, take listings, etc.), its designated broker must be an active licensed broker in good standing [TRELA 1101.355]. TREC rules specify that if the designated broker of a business entity dies, is suspended, or has his license revoked or otherwise inactivated (including expiration of his license), the licenses of the entity broker and all sales agents sponsored by the entity broker immediately become inactive. Likewise, an individual broker’s death immediately causes all of her sponsored sales agents to become inactive [TREC Rule 535.121]. Although TREC works with brokerages in these situations to expedite the approval of a new designated broker or transfer sponsorship of an individual broker’s sales agents to a new broker, technically, under the law, there is no grace period. Therefore, quick action is critical. If the brokerage does not have a succession plan in place, business will undoubtedly be interrupted. • Business entity structure and management. The laws related to business entity formation and management are applicable only to business entity brokers. Those laws set out the structure for ownership and management of the entity. However, each business entity’s management authority for appointing the designated broker will most likely be contained in the entity’s management documents, JANUARY 2020

like bylaws for corporations, operating agreements for LLCs, or partnership agreeLEWIS ments for partnerships. Understanding the ownership structure and who has authority to appoint a new designated broker is important when applying to TREC to change the designated broker. Having the wrong person sign the TREC change form or improper entity authorization documentation will cause delays, and, as previously noted, longer inactivation of sales agents and possible loss of listings and clients. • Estate and probate. Taking a dead broker’s estate through probate or getting authority to act on behalf of an incapacitated broker takes time in the best of circumstances. The spouse or other heirs of the broker will be dealing with their grief and any arrangements that must be made. Their first priority will not be upcoming closings or sales agents’ license status. While an executor will be appointed and an heir will eventually inherit ownership of business assets, it is likely that neither of them will be a broker who could take over the business in compliance with TREC requirements. Timing for implementation of estate and probate laws should influence an individual broker’s succession plan, but it may also be relevant for a business entity. A business entity could be impacted if the deceased or incapacitated designated broker is also the sole owner of the entity or a person whose authority is needed to appoint a new designated broker. A plan that can be put into action right away, before the probate process is complete, helps maximize the amount of commissions realized by an individual broker as the business is wrapped up or maintains continuity of business for an entity broker. It also benefits the sales agents and heirs left behind.

Brokerage Ownership, Appointment Authority One of the key advantages of being a business entity broker is that the entity can exist perpetually, changing owners and designated brokers over time. In other words, the brokerage can continue to operate for generations. A successful succession plan for a business entity must start with a good understanding of the entity ownership structure and appointment authority. In particular, a business entity owner must know who the governing body for

Succession-Planning Pointers For Business Entities • Check the entity’s governing documents to see who has authority to appoint a new designated broker. • If it is the same person as the designated broker, contact an attorney to amend the governing documents to add another person to the ownership and/or governance of the entity. • If it requires unanimous consent of all of the directors, members, or partners, and the designated broker is one of those parties, contact an attorney to amend the governing documents to allow the remaining directors, members, or partners to appoint a new designated broker. • Identify a successor designated broker either from within the brokerage or outside. Let that person know the plan, and get his agreement to step up when needed. • Identify the documents needed to change the designated broker at TREC. These will include: Ŋ a Change of Designated Broker form, signed by the appropriate governing person/people; Ŋ an authorization document from the entity appointing the new designated broker, signed by the appropriate governing person/people; and Ŋ either documentation that the new designated broker owns 10 percent or more of the entity or proof of errors and omissions insurance in the amount of at least $1 million per occurrence. • Create a written succession plan detailing the name of the designated broker who will be on deck and the documents that will be required to make that happen. Have the governing body sign off on it. • Keep the plan in a place known to the governing body.

For Individual Brokers • If the brokerage is intended to continue after the individual broker becomes incapacitated or dies, restructure as a business entity immediately. • If the individual broker’s business assets and name have value and the broker can identify a willing future buyer (business entity or individual), contact an attorney to negotiate and write up a conditional sales contract that is triggered by certain events (retirement can be one of them). • Alternatively, find another individual broker who may be in the same situation and suggest a reciprocal agreement to step in and finish up pending transactions. The terms of this agreement should be clear and preferably in writing, especially if there is some compensation involved. Depending on how detailed this agreement is, the services of an attorney might be useful. • Let sales agents and family members know what plan will be followed if something unexpected were to happen.

the entity is and who has been granted the authority to appoint the designated broker under the entity’s governing document. Keep in mind that the designated broker must be an officer of a corporation, a manager or member of an LLC, or a general partner of a partnership. Many governing documents refer to officers, managers, members, or partners, not specifically to a “designated broker.” In some cases, the designated broker is also a director or owner of the entity. If the designated broker is the only owner, the only person authorized to appoint a new designated broker, or is part of a group that requires unanimous consent to appoint a new designated broker, the business can be at high risk of major business interruption or even dissolution. In these situations, governing documents will need to be amended before a succession plan can be viable.

Business Finality of Individual Broker

nlike a business entity broker, an individual broker’s business ends when the broker dies or otherwise becomes incapacitated or inactive. Not only do the sales agents become inactive immediately, those agents must find a new sponsoring broker. Any listing the individual broker had pending automatically terminates. While the estate of a deceased broker may collect commissions on transactions where the commission had been fully earned, many clients will have to find another broker to complete their transactions. A “succession plan” for an expected departure of an individual broker, such as retirement, is really just a sale of the broker’s business assets and marketability of the broker’s established name. A plan for the unexpected termination of the brokerage can take two forms. Both involve making an arrangement with another broker. One plan is to have a conditional sales contract for the business assets and established name that is triggered by certain events. It could be based on a prenegotiated amount or formula. Another is more of a “I’ll scratch your back if you’ll scratch mine” type of arrangement. This is where two individual brokers agree to step in for the other in the case of an unexpected tragedy and help finish pending business, usually for little or no commission. The goal of either plan is to let sales agents and clients have an immediate broker to go to for sponsorship or completion of a transaction and allow any commissions earned by the broker to date to be paid to the broker’s estate. Keep in mind that because there is no continuation of the individual broker’s license, sales agents would have to agree to be sponsored by the other broker. Likewise, clients would have to agree and sign a new listing agreement with the other broker. Nothing in this article should be construed as legal advice for a particular situation. For specific advice, consult an attorney. Editor’s note: This article includes information about business entity brokerages. For a comparison of different types of business entities, use the QR code to read Lewis’ “Covering Your Assets: Business Entities Limit Personal Liability.” Lewis (kerrilewis13@gmail.com) is a member of the State Bar of Texas and former general counsel for TREC. TIERRA GRANDE

Market Profile

Abilene

Population Growing, Housing Cooling

bilene’s housing market is at the end of a multiyear sales run. After bottoming out in 2011 from lingering effects of the Great Recession (GR), housing sales bounced back in a big way over the next couple of years and again between 2015 and 2017 (Figure 1). At the current rate, sales in 2019 should exceed 2018 but not by much. Activity has begun to cool, much like the local job market.

Employment, Household Growth Slowing Employment growth in Abilene has been in step with the overall state trend throughout the decade except in magnitude. A few areas stand out. First, the 2014 oil downturn may have had a more drastic effect on Abilene jobs than on the state as a whole. In fact, a sharp decline in mid-2016 dipped the city into negative growth. Second, Abilene job growth began to diminish in 2018 as statewide job growth simply plateaued. Growth hasn’t gone negative, but it is tip-toeing near that boundary. Abilene’s population growth has been strong, but growth in the number of individual households has not. The result has been an uptick in occupants per household, which for the area means growing birthrates and family sizes. This aligns with JANUARY 2020

the growth trend of residents age 30–34, which has been the fastest growing age segment in Taylor County. Along with these younger households, at least two other big groups (military personnel and college students) are competing for local affordable housing space. Demand from all three creates a tight market for not only affordable homes but also rental homes.

Young People Influencing Housing Market As home sales activity has slowed, so has price growth. Growth based on repeat home sales reveals local price growth

Figure 1. Annual Abilene Home Sales Volume 2,000

Residential Home Sales

Abilene has a younger population base than the state as a whole, and it heavily influences the local housing market, including rental homes. The market has been tightened by demand for affordable housing. By Joshua Roberson

1,500

1,000

500

2007

2009

2011

2013

2015

2017

October through December January through September

2019 YTD

Source: Real Estate Center at Texas A&M University

Year-Over-Year Change

Figure 2. Abilene vs. Texas Job Growth

largely because of the diminishing inventory of homes on the market. The shrinking inventory of affordable homes could also explain why the share of renter-occupied housing units throughout the metro is growing. Homes in that price range may have been bought and repositioned as rentals. Demand for rental homes also comes from nearby Dyess Air Force Base. Privatized housing located on base and inaccessible to the general population fulfills much of the military’s housing needs. However, according to CB tract data, dense pockets

–2% 2010

2012 2014 Abilene

2016 2018 2020 Texas Job Growth

Sources: U.S. Federal Housing Finance Agency and Real Estate Center at Texas A&M University

Figure 3. Abilene Four-Year University Fall Enrollment

Fall Enrollment

7,500

2,500

0 1990

1996 1999 2002 2005 2008 2011 2014 McMurry University Hardin-Simmons University Abilene Christian University

2017

Figure 4. Housing Activity Near Abilene Universities Census Tract 101

Census Tract 109

Census Tract 123

60 40 20 0 60 40

For Sale

Transaction Volume

1993

Note: ACU enrollment numbers after 2015 may include new ACU Dallas campus. Sources: National Center for Education Statistics and Real Estate Center at Texas A&M University

5,000

For Lease

was more resistant than state price growth to downward price pressure during the GR (Figure 2). Abilene home price growth has been more level compared with the state’s runaway price acceleration, which is influenced heavily by the big four Texas metropolitan areas. By 2016, Texas price growth surpassed Abilene’s, and the spread between the two continues to expand. The city has a larger-than-average 18-to24-year-old population thanks largely to the presence of three four-year universities— Abilene Christian (ACU, the largest of the three), Hardin-Simmons, and McMurry. In 2017, over 13 percent of Abilene’s population was college age. Total fall enrollment for the three universities began to decline in 2010 (Figure 3). The lowest point was 2014 with a combined enrollment of about 7,500, almost 1,100 fewer students than the peak total fall enrollment level set in 2009. ensus tract data from the U.S. Census Bureau (CB) estimate most undergraduate and graduate students reside in tracts within the loop near Abilene’s largest supply of affordable housing. The highest population density of students is in tracts that contain or are near a campus. These tracts show the most obvious swings in activity most aligned with enrollment trends (Figure 4). Multiple Listing Service (MLS) homeleasing activity near McMurry (Census Tract 123) rose almost 50 percent since 2012. Activity between ACU and HardinSimmons (Census Tract 101) increased but not at the same rate. Both tracts are islands of households with the median age at 23 compared with the metro’s median of 34. Home sales in these same tracts and Census Tract 109 show flattened growth,

20 0 2012 2014 2016 2018

2012 2014 2016 2018

Note: Only includes transactions through MLS. Source: Real Estate Center at Texas A&M University TIERRA GRANDE

Jones Census Tract123 INTERSTATE

of military-employed households close to Dyess fill neighborhoods southwest of town. Tight housing demand has spilled over into the apartment market. Overall vacancy fell to the area’s lowest levels up until 2015 when a new apartment complex in south Abilene relieved the market (Figure 5). Since then, vacancy has gotten back on track and continued to decline.

Shackelford Census Tract101 Census Tract109 INTERSTATE

Callahan Taylor Census Tract134.02

Census Tract134.04

South Abilene Growth Much of Abilene’s home sales growth is to the south Census of town outside the loop. Homes there are typically Tract135 newer, larger, and more expensive. In addition, the two highest-rated school districts—Wylie ISD and Jim Source: Real Estate Center at Texas A&M University Ned CISD—are nearby. Activity for new homes sold through the MLS activity to the southwest between Abilene and Buffalo Gap shows rapid growth in new construction sales volume continues to grow exponentially. since 2011, with Census Tract 134.04 in outer southeast Taylor County building permits suggest new residential Abilene leading the way for most of the decade (Figure 6). home activity has been in high gear for more than five years. Volume in this tract peaked in 2017 and had little activity As of August 2019, year-to-date permit levels are set to exceed in 2019 as of August of that year. In its place, new home sale 2018’s total. or the time being, the supply of new homes is being absorbed by the market at a steady pace. Months invenFigure 5. Taylor County Apartment Vacancy Rates tory of new homes sold through the MLS more than 10.0 doubled in 2018 when a wave of new-home listings entered the market, but 2019 sales are on pace to exceed 2018’s recordsetting volume. 7.5 The outer south end of Abilene has one of the highest childdependency ratios in the county. This CB statistic measures the ratio of children younger than 18 to adults age 18 to 64. For 5.0 the entire metro, the ratio is approximately 39 kids for every 100 adults, but in south Abilene it’s closer to 60 per 100. This 2.5 helps explain why Wylie ISD enrollment has grown on average 3.8 percent each year. In addition, Abilene is the largest city of its size between 0.0 2008 2010 2012 2014 2016 2018 Dallas and Midland. It’s the urban center for surrounding counSource: Moody’s Analytics REIS ties, and the south end of Abilene benefits when those counties grow. For example, adjacent Nolan County (which is not within the Abilene Metropolitan Statistical Figure 6. South Abilene New Housing Activity Area) has experienced a tremendous amount of Census Tract 134.04 Census Tract 135 Census Tract 134.02 growth and notoriety for its high density of wind 120 turbines. In fact, in the entire nation only two 60 40 California counties have more wind turbines than 90 Nolan County. Sweetwater is the Nolan County 30 40 seat, but an independent housing analysis spon60 sored by the city found Abilene is where resi20 dents choose to live because of better schools 20 and more plentiful, newer housing stock, par30 10 ticularly to the south of town.

Transactions Volume

Percent Vacancy Rate

2011 2013 2015 2017 2019

Source: Real Estate Center at Texas A&M University

JANUARY 2020

2011 2013 2015 2017 2019

Roberson (jroberson@mays.tamu.edu) is a senior data analyst with the Real Estate Center at Texas A&M University.

Finance

MARKETS & MONEY Real Estate and Monetary Policy

Interest rates affect real estate market conditions in a number of ways. Residential buyers see the impact in their amount of personal savings and in mortgage rates. Commercial investors are affected by rates of return and cap rates, which are related to interest rates. By Ali Anari

costs of a mortgage loan. Higher (lower) interest rates lead to lower (higher) levels of borrowing and expenditures. Interest rates determine the amounts of investments in commercial and industrial real estate properties, as well as their prices, through the channels of rate of return and cap rates. Businesses use funds from investors and lenders to invest in real estate and select investment projects if the rates of return are higher or at least equal to the costs of funds to be invested.

Figure 1. Texas Monthly Home Sales Projected for 3%, 5% Mortgage Rates Mortgage rate=3% Mortgage rate=5%

Sales in Thousands

nterest rate changes, which are influenced by U.S. monetary policy, have important implications for real estate markets, affecting sales, prices, and supplies of real properties. The two main channels of transmission of the impacts of interest rates on real estate properties are the borrowing-saving channel and the rate of return and cap rate channel. Interest rate changes affect residential real estate markets through the borrowing-saving channel, whereas the impacts of monetary policy on commercial and industrial real estate markets are mainly through the rate of return and cap rate channel. For households, interest rate changes affect income and prices. Income effects depend on whether households are net savers or net borrowers. For savers, higher (lower) interest rates mean more (less) interest income from their savings. For borrowers, higher (lower) interest rates mean higher (lower) payments on their loans which, when deducted from their gross incomes, lead to lower (higher) income levels. Changes in household incomes impact residential real estate markets. Higher (lower) incomes make purchasing or renting of real estate properties more (less) affordable, leading to higher (lower) sales and prices of real estate properties. Interest rate changes impact prices of residential units as well as the number of sales. The size of loans households can borrow depends on their incomes and interest rates. Real estate, whether a home or an office building, is an expensive, big-ticket item. Purchases normally require extensive use of credit. When households use mortgage loans to purchase residential units, their ability to buy larger and higher-priced homes depends on the amount of their mortgage loans. Consequently, the number of homes sold and their prices depend on the availability and

35 30 25 20

2020

2021

2022

Source: Real Estate Center at Texas A&M University

Higher (lower) interest rates and costs of funds result in lower (higher) investment levels. Although households buy and keep their homes as shelter, they may also consider rates of return on their homes as an investment. Interest expenses paid on mortgage loans to buy homes are an important component of the ownersâ&#x20AC;&#x2122; cost, along with taxes, insurance, and maintenance costs. Higher ownersâ&#x20AC;&#x2122; TIERRA GRANDE

to be used to purchase or invest in the property. An investment is warranted if the cap rate is higher than the interest rate. When expected operating income from a real estate property is known but its price is not, cap rates of similar properties are used for valuation and compared with interest rates.

Implications for Texas Real Estate Markets U.S. monetary policy impacts real estate markets primarily through changes in mortgage rates, regional income, and employment levels. The Real Estate Center’s econometric models of Texas real estate markets include these variables to link the demand and supply sides of the state’s real estate markets to variables influenced or driven by U.S. monetary policy.

Figure 2. Texas Average Home Prices Projected for 3%, 5% Mortgage Rates

360

Mortgage rate=3% Mortgage rate=5%

Prices in Thousands

340 320 300 280 260

2020

2021

2022

Source: Real Estate Center at Texas A&M University

Mortgage rates, the most important interest rates in real estate markets affecting sales and prices of real estate, are closely associated with the ten-year Treasury rates. The Federal Reserve open market operations and financial markets determine ten-year treasury rates used to determine mortgage rates. Businesses use capitalization rates, or cap rates, for valuation of individual properties and to compare the profitability of alternative real estate projects. The cap rate is the ratio of net operating income from a property in one year to the property value when operating income and property value are known. Investors compare the cap rate for a property with interest rates on funds JANUARY 2020

140 Listings in Thousands

costs reduce the streams of net rents equal to rent (or imputed rent) minus owners’ costs. Given that real estate property values are equal to the discounted streams of future net rents, lower net rents lead to lower property prices. Because mortgage interest expenses are deductible from homeowners’ incomes and interest expenses are deductible from firms’ profits, changes in interest rates have tax effects. For homeowners, the tax benefits depend on principal and interest payments on a mortgage, filing status, income bracket of the owner(s), and state and local tax rates.

Figure 3. Texas Listings Projected for 3%, 5% Mortgage Rates Mortgage rate=3% Mortgage rate=5%

120 100 80 60

2020

2021

2022

Source: Real Estate Center at Texas A&M University

For instance, in the estimated model of the state’s housing market, the mortgage rate and unemployment rate impact home sales and home prices. When the Fed implements an expansionary (contractionary) policy by reducing (raising) interest rates to increase (decrease) investment and consumption, lower (higher) mortgage and unemployment rates lead to higher (lower) numbers of homes sold and higher (lower) home prices. As an example of the Center’s housing model projections, Texas home sales, home prices, and listings are projected to decrease when the fixed 30-year mortgage rate increases from 3 to 5 percent, and the gaps between trajectories for all three widen over longer forecast horizons (Figures 1–3). In the peak month of June 2020, home sales decrease from 38,584 to 32,611, home price falls from $326,000 to $313,000, and listings drop from 122,000 to 116,100 when the mortgage rate increases from 3 to 5 percent. Dr. Anari (m-anari@tamu.edu) is a research economist with the Real Estate Center at Texas A&M University. To read the full article, which includes a brief history of the Federal Reserve and its role in setting monetary policy, use the QR code.

Texas Economy

With significantly fewer people than larger metros, Texas’ Micropolitan Statistical Areas have smaller economies driven by a handful of dominant industries. Some benefit from their close proximity to larger urbanized metros, which can provide additional economic opportunities and attract certain demographic groups, such as retirees. By Joshua Roberson

icropolitan Statistical Areas (micros), the smaller siblings of Metropolitan Statistical Areas (metros), are a demographic category developed to analyze urbanized communities with populations of 10,000 to 50,000. They are defined by the Office of Management and Budget (OMB) and tracked by the U.S. Census Bureau. Some micros could be seen as the next emerging metros. Texas has almost twice as many micros as it does metros. In 2017, around 6.1 percent of the state’s population lived within a micro area (see table), down from 2010. Meanwhile, metro population growth has continued to expand. With so much

Texas Population Distribution 2010

2017

Metro

21 mil (87.6%)

24 mil (88.9%)

Micro

1.6 mil (6.85%)

1.6 mil (6.06%)

Noncore

1.3 mil (5.6%)

1.3 mil (5.02%)

Note: Metros and micros are two variants of Core-Based Statistical Areas. Noncore refers to counties that are not in either. Source: U.S. Census Bureau

growth in the metros, what kind of growth prospects are there for the micro housing markets?

Micro Market Movers Housing activity within micro markets varies considerably. Over the past eight years, some Texas micros have experienced a tremendous amount of housing sales growth while others have had almost none at all (Figure 1). They can benefit in a number of ways from being near much larger metros. For example, Athens and Granbury, which are both adjacent to Dallas-Fort Worth (DFW), have seen strong growth in home sales. Like those cities, many of the other top micros are in or near the “Texas Triangle” (the area between the state’s largest metros). Economic opportunity is another benefit of metro proximity. The amount of opportunity, or the lack thereof, can have a visible snowball effect on micro dynamics at numerous levels. Areas with sustained employment growth tend to have sustained population growth, which leads to housing demand. Between 2011 and 2017, most micros with positive population and employment growth were close to the Texas Triangle TIERRA GRANDE

(Figure 2), with only a few exceptions. Micros with negative population and/or employment growth are often more remote. Although there are some indications that micros nationally have become more economically diverse, many Texas micros still rely on only a handful of industries. This can be a sign of potential job growth volatility or even stagnation. Employment patterns in these markets often spill over into housing trends. Since 2011, the labor force in almost 10 percent of micros has been predominantly employed in either natural resource and mining (most likely from oil and gas production and distribution) or manufacturing (Figure 3). The former provides an economic outlet for some of the more remote micros but creates an obvious dependency on economic growth. overnment is a major source of employment for almost a third of Texas’ micros, higher than the proportion taken by metros. Most of these jobs are with local municipalities, school districts, and/or county seats with employment levels that do not fluctuate much year to year. Local government is a support industry and not an economic driver, so its dominance as an employer could point to a lack of economic growth opportunities. Meanwhile, metros have a higher proportion of education and health services jobs, signifying more higher education and healthcare options than micros. Both sectors, but especially healthcare, are major influences for specific population groups. The trade, transportation, and utilities industry is a broad group typically dominated by the retail sector. Metros have the upper hand with more shopping outlet options providing a larger general employment base compared 6 with micros.

Growth Comes in Different Forms A handful of micros stand out as examples of major employment and population growth. At one extreme are Andrews, Pearsall, and Pecos, where oil and natural gas plays have caused lopsided local employment and population growth (Figure 2). Housing grew tremendously during oil’s rise but plummeted when the cycle ended. Granbury has had more sustained growth than Andrews, Pearsall, and Pecos since the start of the decade, JANUARY 2020

Employment Growth (Percent)

Granbury Athens Kerrville Lufkin Rockport Paris Stephenville Gainesville Huntsville Brownwood Nacogdoches Fredericksburg Palestine Corsicana Mount Pleasant Bonham Sulphur Springs Jacksonville Del Rio Brenham Mineral Wells Big Spring Bay City Andrews Plainview Borger Eagle Pass Port Lavaca El Campo Kingsville Pampa Dumas Snyder Levelland Uvalde Beeville Sweetwater Alice Hereford Raymondville Rio Grande City-Roma Pearsall Vernon Lamesa Pecos Zapata

Figure 1. Micropolitan Statistical Area Annual Home-Sales Volume

2011 2012 2013 2014 2015 2016 2017 2018

Sales Volume

<700 <800 <900

<400 <500 <600

<100 <200 <300

<1,100 <1,200 <1,400

<1,500

Source: Real Estate Center at Texas A&M University

Figure 2. Micro Area Employment Growth and Population Growth Median Annual Growth between 2011 and 2017

Andrews Pecos

Pearsall

Granbury

2 Lamesa

–2

–1

Population Growth (Percent)

Sources: Bureau of Economic Analysis and Real Estate Center at Texas A&M University

Figure 3: Metro, Micro Primary Industries

Metropolitan Statistical Area Trade, transportation, and utilities

Industry Supersector

Professional and business services Natural resources and mining Manufacturing Leisure and hospitality Government Education and health services Construction

Micropolitan Statistical Area

44.0%

52.0%

56.0%

60.0%

56.0%

39.1%

41.3%

43.5%

34.8%

0.0%

4.0%

0.0%

4.0%

10.9%

13.0%

10.9%

8.7%

0.0%

6.5%

8.7%

6.5%

8.7%

0.0%

2.2%

28.0%

24.0%

20.0%

16.0%

12.0%

34.8%

32.6%

28.3%

30.4%

37.0%

24.0%

20.0%

16.0%

20.0%

24.0%

8.7%

4.3%

6.5%

8.7%

0.0%

2.2%

0.0%

2011 2012 2013 2014

2015 2016 2017

2011 2012 2013 2014

2015 2016 2017

Proportion 0%

10%

20%

30%

40%

50%

60%

Note: Percentage represents the proportion of metro or micro employment counts (where industry is ranked by largest employer).compared with other industries for that year. Sources: Bureau of Labor Statistics and Real Estate Center at Texas A&M University

benefiting from being close to DFW as well as from gas exploCedar Creek Reservoir, a major recreational lake, with either ration in the Barnett Shale during the early 2000s. Considering Gun Barrel City or Mabank competing for top annual sales Granbury’s much larger size, growth numbers for those other (Figure 4). three cities are all the more impressive. According to Census Bureau migration data, Dallas County ousehold growth in Granbury has increased demand ranks among the highest sources of inflow migration to for housing and placed upward pressure on prices. In Henderson County. Henderson County’s fastest growing age 2017, home sales approached 1,500, placing the city segment is 65-to-74-year-olds. This means the housing boom is above all other micros in housing activity. likely from a surge of retirees coming from DFW. The story goes a little differently for Athens, the second Leisure and Retirement Growth largest housing micro market. The number of households Employment growth is not the only bellwether for housthere has not grown much over the years. In fact, the Census ing growth. Several micros—including Brenham, Kerrville, Bureau estimates household count within the principal city of Athens may have fallen. The Figure 4. Henderson County Home Sales by City unemployment rate has fallen in Henderson County, where Top Five Cities Athens resides, but so has the overall labor force. Addition300 ally, since 2010 the ratio of those working to the overall population has shrunk, altering the interpretation of the area’s unemployment rate. 200 Despite Athens’ employment trends, the economy is still growing but in a different form. Since earlier in the decade, per 100 capita income has typically grown around 3 percent or less. This includes earnings for work performed. Retirement and 0 passive income, however, have 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 grown at a much faster pace. Most home sale growth in Tool Chandler Mabank Gun Barrel City Athens Henderson County is along Source: Real Estate Center at Texas A&M University Annual Sales

TIERRA GRANDE

of all Texas metros and micros by a growing margin. Of the four other top cities, three are micros and only one, Midland, is a metro (Figure 6). In light of Midland’s current housing boom, passive income could be from rents but is more likely from oil payments. The L&H industry’s high job contribution is a com2.0 mon thread among three of these micro markets. Kerrville has a smaller proportion of L&H jobs but has an industry level still much higher than other micros. In Rockport, over 40 percent of jobs in 2017 and 2018 were in L&H, which is partly why job levels there plummeted after Hurricane Harvey and are still recovering. 1.5 renham’s high passive income per capita rates are not due to tourism. Instead, its economy is heavily influenced by production of one of the state’s tastiest exports, Blue Bell Ice Cream. The 2015 listeria crisis, which resulted in approximately 10 percent of Brenham’s labor force being either furloughed or laid off, was a 1.0 major setback for the local economy. Per capita personal 2000 2005 2010 2015 income and employment levels are still recovering. Fredericksburg Austin MSA Fort Worth MD Brenham’s high passive income rates could be from Houston MSA Dallas MD San Antonio MSA retirement-aged homeowners migrating from metros, Sources: U.S. Federal Housing Finance Agency and Real Estate Center particularly from Houston. This would explain Brenat Texas A&M University ham’s growing retirement-aged community and the amount of retirement income flowing to the area. It could also Fredericksburg, and Rockport—exhibit housing growth due to mean that, like Midland, the high passive income could be more recreational reasons. While not identical, each of these from sources besides rents. cities has carved a niche drawing in people interested heavily in lifestyle. Smaller Populations, Smaller Economies, Fredericksburg and Athens have similar demographic trends. Different Relationships Growth in each city’s retirement-aged population and per capTexas micros have smaller populations, which means smaller ita retirement income is on the rise, and both housing markets economies and/or fewer socio-economic groups. These features are among the most active of all micros. However, Frederickscan change the typical burg’s most impressive Figure 6. Top 5 Metro or Micros relationship between growth is in its escalating Passive Income Per Capita economic growth, populahome prices (Figure 5). Includes rents, dividends, and interest tion growth, and housing Since 2000, the city’s price 25 growth. growth has matched or Smaller economies exceeded many of the big often come with a handTexas metros. ful of dominant industries Expansion in the leisure 20 that can directly shape and hospitality (L&H) housing trends. At the industry has had a major same time, growth in effect on Fredericksburg specific groups, such as housing in the Airbnb era. 15 retirement-aged citizens, Typically one of the largcan provide housing est job sectors in the area, growth outside the local in 2016 L&H went from base economy. Finally, the third largest industry 10 close proximity to highly by number employed to urbanized metros can second largest. This had a expand a city’s economic positive economic impact opportunities and attract on Fredericksburg thanks 5 new residents. to the rapid increase in passive income (for 2010 2011 2012 2013 2014 2015 2016 2017 Roberson (jroberson@mays. example, rents, dividends, Brenham Fredericksburg Kerrville tamu.edu) is a senior data anaand interest) per capita. In lyst with the Real Estate Center Midland Rockport fact, it has the largest per at Texas A&M University. Sources: Bureau of Economic Analysis and Real Estate Center at Texas A&M University capita passive income level

Index 2000:Q1=100

Figure 5. Fredericksburg Home-Price Growth

Per Capita (Thousands Dollars)

JANUARY 2020

Residential

TIERRA GRANDE

Relocating a Corpus Christi Neighborhood An unprecedented voluntary acquisition and relocation program is being carried out in Corpus Christi’s Hillcrest neighborhood, near the construction of the new Harbor Bridge as well as an area zoned for heavy industrial activity. This case study could provide useful insights for other cities attempting similar residential relocations. By Harold D. Hunt and Clare Losey

ince 1959, the 243-foot-tall Harbor Bridge has towered over Corpus Christi’s skyline, beckoning visitors to the eighth largest city in Texas. The iconic bridge, which partitions the Corpus Christi Bay from one of the nation’s largest ports, taxies roughly 60,000 vehicles daily to and from the Northside (downtown) and North Beach (home to the Texas State Aquarium and USS Lexington). In 2016, the Texas Department of Transportation (TxDOT) initiated construction of a new, 538-foot-tall Harbor Bridge amid concerns over the current bridge’s safety and maintenance costs. Another consideration was the current bridge’s JANUARY 2020

clearance limitation of 138 feet, which prevents many larger ships from entering the port. The new bridge, with a clearance of 205 feet, was originally expected to be completed by 2020. The current consensus deems 2021 more likely. Although not passing directly overhead, the new bridge will skirt the Hillcrest neighborhood. A Title VI civil rights complaint was filed against the Federal Highway Administration in 2015 based on the siting of the new bridge. The lawsuit alleged that the deleterious health and economic effects of the proposed route for the bridge would disproportionately encumber the Hillcrest neighborhood’s residents.

Corpus Christi’s Hillcrest and Surrounding Neighborhoods, Industrial Areas Industrial

The suit culminated in the creation of a unique voluntary relocation program. The program provides participating homeowners and renters of residential property financial compensation and mobility counseling to relocate. Participating homeowners who elect to remain in the neighborhood are also eligible for financial compensation. The landmark program has already facilitated the relocation of more than 120 homeowners to homes two to three times the value of their Hillcrest property, enhancing their wealth-building opportunities. More than 130 renters have been relocated as well.

Industrial Neighbors

New Harbor Bridge Refinery Row INTERSTATE

Sea District

181

North Beach

Old Harbor Bridge

Hillcrest 181 WashingtonColes Downtown

Sources: Texas Observer and Real Estate Center at Texas A&M University

uring the early part of the 20th century, Hillcrest among the lowest in the city. In 2016, the median home value housed a largely white and affluent population; the there was $67,100, over half that of the city ($118,900). neighborhood to the east, Washington-Coles, was A Landmark Program predominantly black. Restrictive covenants prohibited blacks from purchasing homes in Hillcrest. However, a 1944 HousIn March 2015, in response to the route selected by TxDOT ing Report significantly altered the neighborhood’s racial for the new Harbor Bridge, two lawyers, Erin Gaines and Kelly composition. Haragan, filed a Title VI civil rights complaint against the FedThe report recommended that, due to overcrowding in eral Highway Administration. Title VI bans discrimination on Washington-Coles and a desire to ensure the refineries surthe basis of race, color, or natural origin by recipients of federal rounding the neighborhood retained their workforce, blacks be funds. allowed to move into Hillcrest. By the 1960s, Hillcrest was a In essence, the lawyers argued that the new Harbor Bridge, largely black neighborhood. which is funded with federal transportation dollars, “would The neighborhood remains predominantly minority-occucause adverse disparate impact—including increased isolation, pied; in 2016, it was 58.3 percent Hispanic and 34.3 percent noise, and air pollution—based on race.” The complaint folblack, the latter more than eight times greater than the city’s lowed scores of class action lawsuits filed over the decades by overall black population. Meanwhile, in 2016, the median Hillcrest residents against the harmful health effects from the household income of Hillcrest ($26,269) was half that of the nearby heavy industry. city ($52,154). With its proximity to the port, the area around Hillcrest was a likely candidate for the siting of heavy industry. The opening of the port in 1922, coupled with the discovery of oil close to Corpus Christi in the 1930s, led to the siting of several refineries along the ship channel. Refineries and other energy-related operations soon dotted the northern and western borders of Hillcrest. The completion of I-37 in the 1950s established Hillcrest’s southern border. On completion, the new Harbor Bridge will effectively secure the neighborhood’s eastern border, threatening to exacerbate the negative health effects experienced by Hillcrest residents. A 2008 study conducted by Texas A&M University found that average levels of benzene, a known carcinogen, in Hillcrest residents were 280 times those of the general population. Furthermore, the new bridge’s proximity is expected to reduce area property values that have A TOTAL OF 391 OUT OF 467 Hillcrest households were eligible for already been depressed by nearby heavy industry relocation. The remaining 76 either elected not to participate or did and infrastructure. Hillcrest’s property values are not provide the required documentation.

TIERRA GRANDE

in July 2020. It also offered homeowners the opportunity to receive financial assistance to remain in the neighborhood. The program is unique in several ways. IN RESPONSE TO SAFETY CONCERNS • As the name suggests, relocating and larger ships entering the port, the was optional. While it is unclear 61-year-old Harbor Bridge is being replaced. whether eminent domain would The new bridge, which will add 67 feet of have been invoked in this instance clearance for ships, is likely to open in 2021. (barring the creation of the program), the involuntary displacement of affected residents has long The case resulted in a four-party agreement between the been a component of governmental projects. Furthermore, Port Authority of Corpus Christi, the Corpus Christi Housing participating homeowners who opted to remain received Authority, the City of Corpus Christi, and TxDOT that created financial compensation. a landmark program designed to mitigate the adverse health • The Port hired Del Richardson and Associates (DRA), a and economic effects of heavy industry and infrastructure on mobility counseling firm, to assist residents, businesses, Hillcrest residents. and churches with the process. The DRA ensured clients Voluntary Acquisition, Relocation Program were educated about their options and assisted relocating clients in finding comparable properties. The Voluntary Acquisition and Relocation Program offers residents, churches, and businesses the opportunity to receive • The buyout amount totaled two to three times the value financial compensation to relocate from the neighborhood. of the Hillcrest property. The 1970 Uniform Relocation While clients needed to declare their participation in the Assistance and Real Property Act (URA) stipulates that program by May 7, 2019, the program will officially conclude the residents of property acquired for public use receive

REFINERIES, SEVERAL OF WHICH are within walking distance of Hillcrest, have contributed to the neighborhood's falling property values, which are among the lowest in Corpus Christi.

JANUARY 2020

financial compensation that is adequate to relocate to a home that is decent, safe, sanitary, sufficient in size, and affordable to the relocating household. Homeowners of properties acquired through eminent domain are generally awarded fair market value for their property. The buyout amount for Hillcrest homeowners exceeded the fair market value. It equaled the appraised value of the property plus the difference in cost between the comparable property and the Hillcrest property. For example, if the appraised value of the Hillcrest property is $40,000 and the price of the comparable home is $100,000, then the buyout amount equals $100,000 ($40,000 plus the $60,000 difference in price). Because of the comparatively low values of Hillcrest homes to other homes in Corpus Christi, affordability constraints, and the generally higher overall amount of the buyout, homeowners relocated to higher-value homes.

This allows these households to amass more wealth through homeownership and relocate to neighborhoods with access to higher-quality resources and amenities, such as schools. Homeowners opting to participate were given three options. • The homeowner sells his home to the Port, as previously mentioned. The homeowner receives relocation assistance under the URA. • The homeowner sells his home to the Port and retains a life estate, permitting him to remain on his property for the remainder of his life. This option also allows the homeowner to lease his property for the remainder of his life. The purchase price equals the appraised value of the property minus the value of the life estate, which is calculated through actuarial tables. On the death of the last remaining homeowner, the Port becomes the owner of

the property. The homeowner is not eligible for relocation assistance. • The homeowner sells a restrictive covenant and purchase option on his home to the Port for at least $7,500. The homeowner remains in place and is not allowed to lease his property. eanwhile, landlords of residential rental property who chose to participate in the program were offered just one option: sell the property to the Port for its appraised value. Tenants of landlords who opted to sell their property had to relocate. They received a lump sum payment equal to 42 months’ difference in rent between the new property and the Hillcrest property. For example, if the tenant paid $300 in rent each month for his Hillcrest property and relocated to a property that charges $400, the lump sum payment equals $4,200 ($400–$300 times 42 months). However, if the tenant spent more than 30 percent of his income on the Hillcrest property, then the lump sum payment is equal to the difference in rent between the new property and the rent the tenant should have paid for the Hillcrest property if he spent no more than 30 percent of income on rent. For instance, in the previous scenario, if the tenant earned $800 per month, the lump sum payment would equal $6,720 ($400 minus $240— the maximum rent the tenant should have paid—times 42 months). In total, 391 out of 467 households were eligible for the program. As of Sept. 9, 2019, 258 had relocated, including 126 homeowners and 132 tenants. Seventeen of those tenants transitioned into homeowners. Offers to 71 households have yet to be issued, 13 offers are pending acceptance, 23 households are in the closing process, and seven homeowners are in the process of locating a comparable home. Seventy-six households either elected not to participate or failed to provide the required eligibility documents, such as clear title to the property. The process will conclude in July 2020, when all open contracts expire. Part two of this series will discuss the impact of the relocation program on Hillcrest residents and how future efforts might be modified to achieve a better result.

Dr. Hunt (hhunt@tamu.edu) is a research economist and Losey a research intern with the Real Estate Center at Texas A&M University. TIERRA GRANDE

Residential

How the Military Influences Texas Housing Markets

Because active-duty military are generally more active in Texas’ rental market than homebuying market, rental activity is more likely to suffer when troop counts decline. Meanwhile, veterans can be a stabilizing force in some housing markets. By Joshua Roberson

DECLINING MILITARY PERSONNEL The U.S. military has shrunk significantly since the start of the decade (Figure 2). This trend includes both full-time (active duty) and part-time

Figure 1. Texas Military Personnel Permanently Assigned 125,000

Number of Personnel

exas has a large military community that comprises activeduty service members, reservists, national guardsmen, and veterans, among others. It has the third-largest count of permanently assigned military personnel in the nation, trailing only California and Virginia. The vast majority of personnel comes from the Army and the Air Force (Figure 1). The military’s economic contribution is significant. In 2017, the statewide economic impact from activity affiliated with military installations was at least $101 billion, according to the Texas Comptroller. The level of personnel affects the housing needs in many Texas housing markets.

100,000 75,000 50,000 25,000 0

Army

Air Force Active Duty

Millions Employed

2.30 2.25 2.20 2.15 2.10 2.05 2.00 2000

2005

JANUARY 2020

Civilian

National Guard/Reserve

(reservists) and impacts potential local housing demand by staff military. Several Texas military installations have had declines in military personnel. This decline has not necessarily meant bad news for the surrounding housing markets, though. In fact, some cities containing large military installations have done well in terms

Full-time and part-time with year-over-year

Source: U.S. Bureau of Economic Analysis

Marine Corps

Department of Defense

Coast Guard

Source: Defense Manpower Data Center (DMDC) as of March 31, 2019

Figure 2. National Military Employed 2.35

Navy

2010

2015

of home sales despite drops in military personnel. One big reason for this is the workforce composition of the military installation itself. Data collected by the Comptroller group employees as either military or civilian. At one extreme, bases such as Fort Hood and Fort Bliss employ at least 80 percent of their fulltime personnel from active-duty service members while the remaining portion comes from civilians (Table 1). The split is nearly 50/50 for Joint Base San Antonio (JBSA), while at the opposite extreme the Army depots in Corpus Christi and Texarkana are both nearly 100 percent staffed by civilians. As will be discussed later, the military has a significantly different buyer profile than the public. The active-duty employment base in some major Texas cities has diminished in proportion to other emerging employment sectors. For example, take San Antonio, officially known as “Military City, USA” as of 2017. Within the city, JBSA directly employs

around 24,000 service members. However, the armed forces’ contribution to the total employment in Bexar County is only around 1 percent and has been in steady decline. There has been a decreasing dependence on the military as other industries either move to or grow in San Antonio.

ACTIVE-DUTY INCLINED TO RENT Generally speaking, active-duty service members are not engaged in the overall homebuying market by both total count and population participation rate. They are more likely to be renters. This includes both privatized military housing and the general rental market. ccording to the U.S. Census Bureau, the proportion of homeowners among Texas’ active-duty population is considerably lower than that of the nonmilitary population (Figure 3). There are several reasons for this.

Figure 3. Texas Homeownership, Military vs. Nonmilitary, 2017 100

50 25 0

Active Duty Base Name Dyess Air Force Base

Count

Percent

Civilian Count

Percent

4,456

90.0

493

10.0

Fort Hood

35,611

84.1

6,718

15.9

Fort Bliss

33,262

80.0

8,312

20.0

3,593

79.2

945

20.8

Goodfellow Air Force Base Naval Air Station Kingsville

483

64.9

261

35.1

Naval Air Station Fort Worth Joint Reserve Base

2,829

56.6

2,171

43.4

Laughlin Air Force Base

1,247

54.3

1,051

45.7

431

51.9

399

48.1

24,043

49.4

24,602

50.6

Sheppard Air Force Base

1,612

47.6

1,778

52.4

Naval Air Station Corpus Christi

1,947

32.0

4,138

68.0

Corpus Christi Army Depot

0.2

2,742

99.8

Red River Army Depot

0.2

3,505

99.8

Ellington Field Joint Reserve Base Joint Base San Antonio

Sources: Texas Comptroller of Public Accounts and Real Estate Center at Texas A&M University

to San Antonio in 2013, a captain in where they want to end up may find the Air Force with at least four years acquiring, financing, and maintainof service and dependents would have ing a home to be challenging. had more than twice the income Second, active-duty service required to qualify for a median-priced members are typically young, single, home (Figure 4). Meanwhile, the puband often live in military housing, lic would have had an overage of 63 including barracks. Even nonpercent. military millennials put off buying homes because of lower net Figure 4. San Antonio-New Braunfels worth, the desire for mobility, Housing Affordability Index or both. 2.25 Finally, for those in the military who are able to buy 2.00 homes, there is still the reality that Texas home prices have 1.75 risen considerably over the past ten years making home1.50 ownership more expensive. In addition, overall income 1.25 growth in Texas has lagged considerably compared with 2012 2014 2016 2018 home-price growth, the leadFirst-Time Buyer Officer Overall ing driver of declining home Sources: Defense Finance and Accounting Services and affordability. Real Estate Center at Texas A&M University Amending the Texas Housing Affordability Index (THAI) proFast forward to 2018 when a captain vides a simple comparison of purunder the same assumptions would chasing power between the public have had around 63 percent more than and active-duty military. Swapping the required income in the San Antoout overall median income with an nio market while the public would be officer’s compensation provides a closer to 18 percent. The THAI for the side-by-side comparison of home military officer fell from 2.13 in 2013 affordability trends. Looking back to 1.63 in 2018, a 23 percent drop. Officers fared better than the public, which lost almost 27 percent on the THAI over the same five years. This means the officer’s income was more robust than most incomes in keeping up with housing price growth during that period. Index

Percent

Table 1. Texas Military Full-time Personnel Estimates 2017

Active duty Nonmilitary

Rent

Veterans

Own

Sources: IPUMS USA, University of Minnesota, and Real Estate Center at Texas A&M University

First, there is the mobile lifestyle of the typical service member. A change of station or even deployment for many service members is always a possibility. Committing to a property, which is typically a mid- to long-term investment, may simply not be practical. Even service members who know

According to CFPB, in 2017 Texas had the third largest count (52k) of originated VA loans behind only California (60k) and Florida (56k). 20

TIERRA GRANDE

Median Monthly Rental Rates

Figure 5. Killeen-Temple Residential Rental Rates

$1,300

$1,200

$1,100

$1,000

2011 2013 2015 2017 2019 Source: Real Estate Center at Texas A&M University

In 2019, the Consumer Finance Protection Bureau (CFPB) reported that the national proportion of first-time homebuyers fell immediately after the Great Recession but began to recover between 2012 and 2016, the end of the study period. According to CFPB’s study, this same recovery did not happen for first-time homebuyers who were in active-duty status. hen it comes to housing, active-duty members probably exert their biggest influence on the rental market, where they’re most active. This certainly appears to be the case near Fort Hood in recent years. Residential home prices in the Killeen-Temple Metropolitan Statistical Area began to grow again in 2014 after several flat years. Meanwhile, residential rent growth, both per month and per square foot, remained flat (Figure 5). At this time, Army personnel counts throughout Texas, including at Fort Hood, declined. Even on-base privatized housing performed poorly during much of this time with stagnant rent growth and low occupancy. According to the Fort Hood Sentinel, in 2016 occupancy got so low Fort Hood authorized civilians to live on the installation.

JANUARY 2020

VETERANS STRENGTHEN HOUSING MARKET Military veterans, broadly defined as all who have served in active duty, are another key segment for Texas’ many military housing markets. Unlike their active-duty counterparts, veterans have exceptionally high homeownership rates—higher, even, than the public (Figure 3). Texas veterans live throughout the state, including in major metro areas, but they often choose to live in communities near major military installations. Bell, Bexar, and El Paso Counties all have exceptionally high veteran population estimates (Table 2). Veterans make up more than 20 percent of Bell County’s population over the age of 18, the highest in the state. Many other counties with the highest veteran populations are near Bell and Bexar Counties, spilling over into surrounding communities. Due to their population size and high homeownership rate, veterans can have a strong impact on an area’s housing market. This may help explain why some housing markets, like the one including Fort Hood, continued growing despite diminishing active troop counts or other downturns.

Table 2. Texas Veteran Population by County Percent of County

County

County Estimate

Harris County

163,317

5.0

Bexar County

151,560

11.0

Tarrant County

108,552

7.5

Dallas County

95,114

5.1

Travis County

51,893

5.7

Bell County

48,330

21.6

El Paso County

48,216

8.3

Collin County

41,379

6.2

Denton County

40,774

7.0

Williamson County

33,985

9.1

Sources: U.S. Census Bureau and Real Estate Center at Texas A&M University

adopted by conventional loans after the financial crisis. This is likely given the drastic rise in FHA loans originated in the late 2000s (Figure 6). Both FHA and VA finance at or near 100 percent of the home’s value. obust demand from veterans played a major role in housing market growth in KilleenTemple, near Fort Hood. For much of the decade, approximately half the purchase loan demand came from veterans through VA loans. Used as

Figure 6. Texas Purchase Mortgages Originated

Conventional

Loans Originated (Thousands)

Officers, however, are the numeric minority with a considerable pay gap compared with enlisted service members. At any given time, there are typically four or five enlisted servicemembers for every officer in the military according to raw personnel counts from the Defense Manpower Data Center. This further fragments the number of military personnel able to buy a home.

FHA

200

100

0 2008 2011 2014 2017

2008 2011 2014 2017

Sources: Consumer Financial Protection Bureau and Real Estate Center at Texas A&M University

For example, veteran housing demand was strong even during the ups and downs of the past ten years. According to loan origination data for primary residence purchases, VA loan activity avoided much of the fallout from the mortgage crisis, unlike activity for conventional loans. One of the most influential drivers behind loan demand could be the more restrictive loan-to-value requirements

a proxy for general housing demand, veteran contribution to home sales may actually be higher assuming some veterans elected other loan options or paid in cash. It’s clear that this segment can provide a stabilizing force in some local housing markets. Roberson (jroberson@mays.tamu.edu) is a senior data analyst with the Real Estate Center at Texas A&M University.

Residential

Filtering Out the Noise Seasonally Adjusting Housing Data Seasonally adjusting housing market data filters out a number of factors that can distort data analysis. By doing so, it provides a more accurate picture of housing market changes. By Luis B. Torres and Wesley Miller

ave you ever noticed the volatility in housing data? Monthly headlines seem to cycle between sales going up and sales going down, and then back up, and then back down. These systematic fluctuations make it difficult to decipher meaningful movements in the market. Analysts attempt to filter out this noise to take a more precise pulse of the data. More accurate data allow for better decision making and planning. It is no surprise that Texas housing sales were higher in June 2019 than they were in January of the same year. Since 1990 (the earliest year for which data are available), the number of closed listings in June has been more than double the respective January total. While the differences are smaller when comparing consecutive months (e.g., June versus July), they still distort fundamental changes in the series. Market participants and policymakers are interested in how economic variables (such as interest rates and income) and regulations (for example, zoning and permitting) affect housing sales and prices. To analyze these impacts, researchers filter out seasonal movements in the data (for example, sales activity stalls on Christmas Eve and Christmas Day, but not because market conditions suffer over the holidays). Seasonal adjustment processes control for factors that affect sales in the same

TIERRA GRANDE

Home Sales (thousands)

way every year, providing a This nuance adds noise to clearer picture of the current unadjusted data. Consider Monthly Texas Home Sales market (see figure). While again the 12 percent YOY 40 the seasonally adjusted (SA) decline in December 2018. sales do not exhibit annual While market jitters certainly peaks and valleys like the raw played a role, there were also 30 data, they still mirror more two fewer business days than minor movements caused by in December 2017. After 20 non-calendar factors. This adjusting the data, the YOY comovement corroborates decline shrinks to 5.1 percent. that the SA series captures Not only are YOY com10 important changes in the parisons a noisy measure, but actual data. they do not capture contem0 Another tool commonly poraneous trends. Texas sales 2011 2012 2013 2014 2015 2016 2017 2018 2019 employed to avoid seasonalreached a trough in SeptemRaw Seasonally Adjusted ity is a year-over-year (YOY) ber 2010 in the aftermath of Note: Texas housing sales are calculated as the number of closed listings through comparison. For example, the Great Recession before Multiple Listing Services from January 2011 through June 2019. These data Texas housing sales fell 12 the fracking boom launched are adjusted using the U.S. Census Bureauâ&#x20AC;&#x2122;s X-12 ARIMA process controlling for trading days. percent in December 2018 the economy into the curSource: Real Estate Center at Texas A&M University relative to December 2017. rent expansion. Although the Seasonal factors such as recovery began during fourth Christmas, winter break for schools, and colder weather cannot quarter 2010, YOY calculations indicated contractions until explain the decline because they occur every December. On June 2011. These contractions were slowing, but the inherent the contrary, higher mortgage rates and concerns of a recesvolatility hindered that determination in real time. sion characterized the end of 2018 and weighed on the housing The primary benefit of seasonal adjustment is that it allows market. for meaningful month-over-month (MOM) comparisons. Recall While effectively removing seasonality, YOY comparisons the folly of comparing the difference in raw sales between June still suffer from high levels of volatility because they rely on and July, which suffers from recurring seasonal bias (namely, just two data points. Suppose December 2017 sales had spiked Independence Day). Once the data are adjusted, MOM calculauncharacteristically, perhaps due to anticipations of tax reform. tions are no longer problematic and provide up-to-date meaThis spike wouldnâ&#x20AC;&#x2122;t reflect a change in market conditions, but sures of market activity. rather the fact that transactions that would have occurred in Just as there is no single variable that perfectly describes the January were rushed to close before year-end. In this scenario, economy, there is no single measure that perfectly describes even if sales activchanges in economic ity was normal in series (e.g., housing Texas Percentage Change in Home Sales December 2018, the sales). Which measure SA MOM SA YOY NSA YOY NSA MOM YOY change would be to employ depends negative. on the question of Standard Deviation 3.1 7.7 11.1 16.6 Seasonal adjustment interest. Sometimes Note: Texas housing sales are calculated as the number of closed listings through Multiple Listing Services processes, however, researchers want to from January 2011 through June 2019. These data are adjusted using the U.S. Census Bureauâ&#x20AC;&#x2122;s X-12 ARIMA process controlling for trading days. use information from know how things have Source: Real Estate Center at Texas A&M University all of the historical changed over the past data rather than just year or decade. Other two data points. This provides a more stable comparison and times they want to know what the most recent changes were reduces volatility. In fact, YOY comparisons are improved or where the market is heading. when calculated with seasonally adjusted data (see table). This Regardless of the selected measure, it is important to underimprovement is driven by the flexibility of seasonal adjuststand the intricacies and nuances of the data being analyzed. ment procedures, the most common of which is the X-12 When these data are provided at a monthly or quarterly ARIMA technique developed by the U.S. Census Bureau. frequency, seasonal adjustment may be critical for accurate In addition to standard seasonal adjustments, X-12 can conanalysis and interpretation. trol for business or trading days. Distinguishing business days Dr. Torres (ltorres@mays.tamu.edu) is a research economist and Miller from holidays or weekends is critical in the housing market. wamiller@tamu.edu) a research associate with the Real Estate Center at ( For example, 98 percent of closings occur on business days, Texas A&M University. with 48 percent of all closings on either Mondays or Fridays. JANUARY 2020

Residential

STATES OF HOUSING Does Texas Still Have the Edge?

Texas’ population, employment, and income growth are still ahead of the nation as a whole. However, some states are gaining ground, making them as attractive as Texas to some homebuyers. By Luis B. Torres and Paige Silva

Who’s Growing, Who’s Not Population growth is among the top drivers of housing demand, so it provides much insight into a housing market’s future. California is the most populous state with an estimated 39.6 million residents in 2018, followed by Texas (28.7 million), Florida (21.3 million), and New York (19.5 million). Washington and Arizona ranked 13th and 14th with 7.5 million and 7.2 million residents, respectively. Colorado

placed 21st with 5.7 million residents. Since the start of the 21st century, population growth patterns of these seven states have generally followed the same trends (Figure 1). After accelerating in 2014, growth has slowed nationwide and in these seven states. Following the recovery from the GR, however, population trends in California and New York have diverged from the other states, as neither experienced a significant post-recessionary rise in growth. In the last three years,

3.5

California’s population growth has registered below the nationwide average, and the Empire State’s population has contracted. Arizona was also an outlier, accelerating to its highest growth rate in ten years in 2018. Between 2011 and 2018, the U.S. averaged 1.7 percent employment growth. Since 2015, growth has slowed as retail contractions weighed on acceleration in goods-producing sectors. All seven states included in this analysis exceeded the national

Figure 1. Annual Percentage Change in Resident Population from 2000–18

3.0 Percent Change

exas fared better than most of the United States during and after the Great Recession (GR), thanks in part to its diverse economy (e.g., oil fracking and the technology sector) and stronger housing market fundamentals. The state’s favorable economic conditions attracted new residents who bought homes, supporting the housing market. In recent years, however, the nation’s economy has improved, reducing the Lone Star State’s attractiveness. To evaluate how Texas measures up ten years after the GR, the Real Estate Center compared Texas’ current housing market fundamentals to those of some fast-growing states (Arizona, Colorado, Washington, and Florida) and some with slower growth (California and New York).

2.5 2.0 1.5 1.0 0.5 0.0

–0.5 2000

2002

2004

United States Washington

2006

2008

Colorado New York

2010

2012

2014

Florida California

2016

2018

Texas Arizona

Note: Gray bars indicate recessions as defined by the National Bureau of Economic Research. Source: U.S. Census Bureau

TIERRA GRANDE

benchmark except for New York, where payrolls grew 1.6 percent since 2010. rizona employment grew at the fastest rate in 2018, increasing 2.8 percent and exceeding its 2011–18 average of 2.3 percent. Professional/business and education/health services contributed to much of the growth, although the former shows signs of deceleration. Washington payrolls expanded 2.6 percent, surpassing the 2.3 percent eight-year average as education/health services and leisure/ hospitality jobs were added at a faster rate. Florida and Colorado each grew 2.4 percent but fell short of the average 2.6 percent growth. Texas employment expanded 2.3 percent in 2018, just 0.1 percent below its 2011–18 average. California job growth decelerated for the third consecutive year, slowing to 2 percent as the state’s education/health services sector fell below 3 percent growth for the first time since 2011 and retail employment contracted. The Golden State’s eight-year average was 2.3 percent. Since the GR, real personal income per capita (RPIPC) across the states moved in the same general direction as the nationwide average. In second quarter 2019, the U.S. registered 2.9 percent year-over-year (YOY) growth in RPIPC.

More People Mean More Housing Population growth spurs the need for new housing. One measure of new homes is the number of residential permits and starts issued per capita. From 1991-2007, Arizona led the seven states in single-family permits issued per capita. Texas then dominated per capita issuance until 2015. Most recently, Colorado has held onto

Figure 2. Single-Family Permits Per Capita Index January 2007=100

250

200

150

100

0 2005

2007 2009 United States Washington

2011 Colorado New York

200

150

100

0 2005

2007 2009 United States Washington

2011 Colorado New York

2013

2015 Florida California

2017

2019 Texas Arizona

Note: Gray bar indicates recession as defined by the National Bureau of Economic Research. Sources: U.S. Census Bureau and Bank of Tokyo-Mitsubishi UFJ

JANUARY 2020

2013

2015 Florida California

2017

2019 Texas Arizona

Note: Gray bar indicates recession as defined by the National Bureau of Economic Research. Source: U.S. Census Bureau

Figure 3. Total Housing Starts Per Capita Index January 2007=100

250

the top spot. As of August 2019, it is the only state in this analysis that has reached the same level of activity as in January 2007 (Figure 2). All the other states, except for New York, registered some degree of growth in 2019. Arizona and Texas had the most housing starts per capita in January 2007, followed by Washington, Colorado, and Florida. New York and California measured beneath the nationwide level. As of August 2019,

Florida led the comparison, followed by Texas, Colorado, Arizona, and Washington. California and New York starts remained below the U.S. metric. All states have trended upward in 2019 except for New York and Washington, where signs of decline are apparent, and Arizona, where the trend has recently flattened. Similar to permits per capita, only Colorado starts-per-capita have regained lost ground since January 2007 (Figure 3). Supply measures haven’t returned to precrisis highs in any of the seven states or nationally. onstruction costs differed from region to region. According to the U.S. Census Bureau, the nationwide median cost per square foot of a new single-family home in 2017 was $101.25. The South (including Texas and Florida) registered $95.35. The West (Arizona, Colorado,

One of the simplest estimates of housing affordability is the median multiple; that is, the ratio of the median home price to median annual household income. A lower ratio indicates the annual median household income has more purchasing power against the median home price. As of June 2019, only Texas’ median multiple is higher than its January 2007 level (see table). The Lone Star State, however, registered the lowest ratio in 2007, and it boasts the same today, implying Texas is still relatively the most affordable state in this analysis. tates whose housing markets got hit the hardest during the GR (California and Arizona) show the largest decrease in their respective median multiples due to the median home price falling to greater degrees in the aftermath of the housing bubble’s burst. In the past year, the median multiple has increased in nearly all comparative states as well as in the U.S., indicating decreasing affordability. Arizona was the exception. Its data showed signs of easing in 2Q2019. Comparing 2Q2019 actual Federal Housing Finance Agency (FHFA) values to estimated FHFA index values, the nationwide consensus seems to

and California) and Northeast (New York) were higher at $126.42 and $148.95, respectively. Higher construction costs increase home prices, thereby decreasing affordability.

Texas Tops in Home Sales Texas fared better than the nation and the other six comparative states in home sales, falling the least from its prerecession peak to trough in terms of percentage change. Texas is the only state to have recovered completely from the GR, surpassing its predownturn record high in October 2014 (Figure 4). If Florida sales continue to trend upward, the Sunshine State will be the next to exceed precrisis levels. f the seven states analyzed, Texas’ median home sales price was the first to reach its trough during the GR, but it was also the fastest to recover, rebounding in less than two years. Due in part to stricter lending standards than most of the country and a more robust economy, Texas’ housing bubble was not as extreme, with the lowest median price recorded during the crisis only 8 percent below the prerecessionary high. As of June 2019, Texas’ median price was 72 percent higher than the

recession’s low. In Colorado and Arizona, the median price has increased one-and-a-half times from its recessionary trough. Texas’ median price in June 2019 was 58 percent higher than its prerecession maximum. Washington registered the second-highest gap at 31 percent.

175

Figure 4. Housing Sales Index January 2007=100

150 125 100 75 50 25 2005

2007 2009 United States Washington

2011 Colorado New York

2013

2015 Florida California

2017

2019 Texas Arizona

Note: Gray bar indicates recession as defined by the National Bureau of Economic Research. Sources: Federal Reserve Bank of St. Louis, National Association of Realtors, California Association Of Realtors, Colorado Association of Realtors, Florida Realtors Research Department, New York State Association of Realtors, Real Estate Center at Texas A&M University, and Washington Center for Real Estate Research at University of Washington

TIERRA GRANDE

Ratio of Median Home Sales Price to Median Annual Household Income

Jan 2007

United States

Arizona

California

Colorado

Florida

New York

Texas

Washington

4.38

5.96

10.32

5.41

5.72

5.57

3.08

5.29

Jan 2019

4.20

4.57

8.11

5.34

4.73

4.04

3.78

4.70

June 2019

4.26

4.61

8.31

5.33

4.77

4.30

3.81

5.11

Sources: Federal Reserve Bank of St. Louis, National Association of Realtors, California Association of Realtors, Colorado Association of Realtors, Florida Realtors Research Department, New York State Association of Realtors, Real Estate Center at Texas A&M University, and Washington Center for Real Estate Research at University of Washington

be that home prices are in line with market fundamentals. New York and California home prices may be slightly undervalued, but estimated values are within 10 percent of actual values. Arizona, Washington, and Florida’s actual index values are greater than estimated values but by less than 10 percent. Colorado and Texas housing markets show the greatest price misalignment with the actual indices 11.5 and 17.5 percent greater than the estimated value, respectively. A possible explanation for these disparities is the demand for entry-level housing is outpacing supply in each of the markets.

Who Has the Economic Edge? Ten years ago, Texas fared better than the rest of the country coming out of the GR. Does that hold true

today? In terms of population, Texas’ annual growth rate remains above the nationwide average, although other states appear to be catching up after a seven-year period where Texas ranked consistently among the top three fastest-growing states. Employment and income data showed growth exceeding that of the nation’s, but other states are performing just as well or better in recent years. Less expensive construction and land costs combined with a low-regulatory environment foster residential permit issuance and construction starts. Affordability still challenges the Texas housing market, albeit to a

lesser degree than many other states, which may explain why Texas is the only state in this analysis to have recovered precrisis sales levels. conomic conditions all over the U.S. have improved to the point where people are less likely to move to the Lone Star State for monetary or employment reasons, but that doesn’t mean the Texas housing market is struggling. It may just be that other states’ economies and housing markets are improving.

Dr. Torres (ltorres@mays.tamu.edu) is a research economist and Silva (psilva@tamu. edu) a research associate with the Real Estate Center at Texas A&M University.

The online edition of this article includes additional information and figures. To read it, use the QR code.

Find out what other industry experts have to say about the latest housing trends and developments that promise to change homebuying.

Room to Grow: Housing for a New Economy Friday, Feb. 21, 2020 Federal Reserve Bank of Dallas 2200 N. Pearl St, Dallas, Texas

For more information or to register, visit the conference website using the QR code. https://www.dallasfed.org/research/events/2020/20housing

JANUARY 2020

Q. What is the Effective Date of a contract? A. The Effective Date is the date of final acceptance by both parties. Q. Who fills in the blank for the Effective Date on a contract? A. The agent who has possession of the contract at the time of final acceptance should fill

in the blank for the Effective Date. That agent should also communicate the date that was inserted to the other agent as soon as possible so all parties are aware of the Effective Date.

What the Law Says The Effective Date is the date of final acceptance of the terms of the contract by the parties to the transaction. What constitutes final acceptance has been determined by common law (court cases) over the years. Final acceptance occurs when both parties have unequivocally accepted

all terms of the transaction, signed the written contract (including initialing of any changes), and the last party to sign/accept (or their agent) has communicated the final acceptance back to the other party (or their agent).

For Example Buyer submits a signed contract offer through her agent on Tuesday. On Wednesday, Seller makes a change to one of the terms of the contract, initials the change and signs the contract. Seller’s agent delivers the signed contract with the change to the Buyer’s agent Wednesday night. Buyer initials the change on Thursday and Buyer’s agent communicates the acceptance of the change and contract to Seller’s agent

on Thursday evening. Seller’ s agent notifies Seller of the final acceptance on Friday morning. What date should be inserted as the Effective Date of the contract and by whom? Buyer’s agent, who is in possession of the final signed and initialed contract, should insert Thursday’s date because that is when final acceptance was communicated to Seller’s agent.

Best Practice It is critical that the Effective Date blank in the contract is filled in every time. The Effective Date is used throughout the contract as the start date for many other performance

due dates in the contract. Although a contract with a blank Effective Date is still valid, a missing Effective Date can lead to uncertainty for contract deadlines and possible litigation.

Bonus Question Q. What do I do if the Effective Date on a signed contract already receipted by the title company is blank? A. As soon as you discover it is blank, contact the other agent and verify the final date of acceptance. If all are in agreement, prepare TREC Form 39-8, Amendment

to Contract, by listing this date as the Effective Date in paragraph 9 (Other Modifications). Have both parties to the contract execute the amendment. Give the amendment to the escrow agent at the title company.

Nothing in this article should be construed as legal advice for a particular situation. For specific advice, consult an attorney. Lewis (kerri@2oldchicks.com) is a member of the State Bar of Texas and former general counsel for the Texas Real Estate Commission (TREC). Wukasch (avis@2oldchicks.com) is a broker and former TREC chair.

TIERRA GRANDE

, t i a w ore! t u B e’s m r e h t

Visit the Real Estate Center’s website for these online exclusives.

2019 Legislation Lowdown: What You Need to Know

It would take you hours upon hours to sift through recently passed state legislation finding which new laws apply to you and how. Thanks to this summary by Research Attorney Rusty Adams, you don’t have to. His article covers new laws impacting property taxes, tenant rights, annexation, and more.

Water Wise: Merging Ideas for Future Resources Water-planning groups from around the state are taking a deep dive into the problem of future water shortages in search of solutions. Texas citizens can help. Research Economist Dr. Charles Gilliland explains how the process works. Read both articles at www.recenter.tamu.edu or by using the QR codes. TEXAS A&M UNIVERSITY

Real Estate Center Helping Texans stay informed about issues affecting the entire state. JANUARY 2020