New Home Sales Surge

New single-family home sales in December rose to their highest level in eight months and prices were the highest since April 2008, raising cautious optimism for a housing market recovery.



Housing Starts & Sales Up

 The Commerce Department said sales jumped 17.5 percent to a seasonally adjusted 329,000 unit annual rate after a downwardly revised 280,000-unit pace in November. Economists polled by Reuters had forecast new home sales rising to a 300,000-unit pace in December from a previously reported 290,000 unit rate. Compared to December a year earlier, sales were down 7.6 percent. Overall 2010 sales dropped 14.4 percent to a 321,000-unit rate.


Economists saw the gains as significant.
"Clearly we are seeing stabilization in new home sales and this data suggests some upward momentum that we have seen in existing home sales. What is important to realize is even in a period of softer new home sales, inventory continues to decline, said Dean Maki, chief U.S.. economist with Barclays Capital in New York.
“The level of inventory is at its lowest since the 1960s," Maki said. This suggests the big declines in housing starts are now behind us and housing starts should be on a gradual trend in 2011.”

Brian Bethune, an economist with HIS Global Insight in Lexington, Mass added: "It's meaningful to the extent that there is a pattern of numbers showing increases. It's a sign that there is a turnaround. Things are definitely perking up, but there is a question whether it's sustainable.

Read the latest report from the National Association of REALTORS®: December Existing-Home Sales Jump

Source: "New Home Sales Surge in December," Reuters(Jan. 26, 2011)

Austin #1: Best City For College Grads

Americans value mobility. But if you want to move up in the world, sometimes you have to move, literally. In a recession, that's a problem.

In 2010, migration within the United States slowed to its lowest rate in recorded history, according to new research from William Frey at the Brookings Institution. Among college graduates, the story is particularly striking. Here are the 10 most popular cities for college graduates since the recession:

Frey's analysis challenges the story of the 2010 Census, which is the Rise of the Sun Belt. In the last decade, 7.5 million people — more than the total population of Massachusetts and Vermont — moved to Texas and California, while Arizona and Nevada led the nation in pace of growth. Imagine a river flowing from the northeast to the southwest, and you've got a sense of America's general migration pattern.

That's changing, fast. At the height of the housing boom, the most popular destinations for college graduates were Phoenix, Seattle, Atlanta, Riverside (CA), and Charlotte. But when the bubble burst, Texas cities have zoomed up the list: Austin and Dallas were the most popular destinations for bachelor degree earners between 2007 and 2009.

[See America's Best Cities for Young Professionals]

"In 2005-2007, college-educated adults, like other segments of the population, were strongly attracted to "bubble" metro areas like Riverside, Phoenix and Las Vegas," Frey writes. After the burst, degree-earns are clustering in more "knowledge economy" metros, like Austin, Raleigh, Charlotte and Seattle.

According to Frey's figures, the five metro areas with the highest concentration of people with bachelors degrees are: Washington, D.C./Arlington (47%), San Francisco (43%), San Jose (43%), Boston (42%), and Raleigh (42%). The most popular destination in America, Austin (38%), is number six on that list. New York City (36%) is number ten.


When I asked Frey to call out some of the more surprising results of his analysis, he pointed out that interstate migration rates have generally fallen over the last few decades, but the recession accelerated the trend.

Why didn't the recession increase migration, sending families fleeing from weak states like Florida to stronger states like Texas? Frey answered: "The financial crisis meant families couldn't get a loan to get a house. They couldn't sell a house. They were frozen in place because of the housing market and the paucity of jobs."

[See American Cities That Are Running Out of People]

In his Brookings paper, Frey concluded by sounding the alarm on slow interstate migration:

The recent more tentative migration patterns of the younger and "best and brightest" segments of our population are holding back the free flow of human and social capital that has made our society more vital and dynamic than most of our developed country peers. This slowdown, in addition to the decline in immigration can be expected to pick up when the economy revives. But if it takes too long, we run the risk of creating a "lost generation" of young adults, the likes of which we have not seen for some time.


1. Austin, Texas

Percent with BA: 38
Austin is one of the most resilient cities in the U.S., buffeted by state government spending, a large public university and a thriving high-tech sector. It is also the most dynamic city in the United States, according to the Brookings Metropolitan Policy Program, a mecca for music lovers, and a cultural jewel of the South. It's got brains, it's got growth: Indeed, Austin could be America's hottest city at the moment.

 2. Dallas, Texas

Percent with BA: 30
The second most popular city in the Texas is also the second most popular city in the country for college grads. Credit the ample housing, the legendary (if recently disappointing) sports franchises, and the legendary and non-disappointing tech and and transportation industries.

3. Phoenix, Ariz.

Percent with BA: 27
The sun is fun, but is it enough? Phoenix is a city that has, in the last few years, lived up to its namesake. The second-fastest growing metro in the 2000s (after Las Vegas) got rocked by the recession, and median home prices are down 43 percent from their peak in 2009. Phoenix has been on Brookings' list of 20 weakest city economies for more than a year.

4. Portland, Ore.

Percent with BA: 34
What is it about Portland? Despite an unemployment rate over 10 percent, the city has drawn hoards of young, creative, educated graduates in the last few years. Frey chalks it up to a unique cult status. "If you're going to be underemployed somewhere," he said, "you might as well embrace the lifestyle." Here, here!
 
5. Houston, Texas

Percent with BA: 28
One of three Texas on this list, the largest city in the Lone Star State isn't just an oil town, anymore — but recovering oil prices aren't exactly hurting the economy, either. An expanded biotech sector and an aeronautical cluster draw brains and BAs from across the country — if they can stand the infamous humidity.

6. Seattle, WA

Percent with BA: 37
Seattle has long been a magnet for young brainiacs looking to either start their own firm or work for a major corporation. As the headquarters for Amazon, Microsoft, it's a major draw for other companies in the Web-and computer-tech business. The city gets an additional boost from the temperate weather (for those who don't mind the misty rain) and a coffee culture that makes it something like a modern Vienna.

7. Atlanta, GA

Percent with BA: 34
It's no surprise that only Deep South city on this list arguably has the region's best school: Emory University. Before being slammed by the recession, Atlanta was the 3rd most popular destination for both college grads and young people between the ages of 25 and 34. Today it ranks 7th among both groups.

8. Riverside, CA

Percent with BA: 19
Nice weather! But Riverside's inclusion in the top ten is somewhat an artifact of the housing bubble. Only 19 percent of its population holds a BA, by far the lowest on this list. Once the most popular destination for young people during the bubble, Riverside's attractiveness took a hit in the recession. Brookings recently called Riverside one of the worst performing metro areas in the country, based on growth, housing and employment. But still: nice weather!

9. Raleigh, NC
Percent with BA: 42
The Research Triangle of Duke, UNC and NC State make Raleigh an inevitable destination for young degree-earners on the move — especially if they're interested in medicine or looking to go back to graduate school. But Raleigh is more than a college town. It's also a blooming high tech center, with IBM among its highest employers.

10. Tampa, FL
Percent with BA: 26
On the one hand, Tampa and St. Petersburg have every reason to be on this list, with beautiful weather, large universities, and hordes of young people. But consider the headwinds: the Tampa-St. Petersburg area has one of the worst housing markets in the country (Brookings puts it in the bottom quintile) and a relatively low share of bachelors degree earners.
____________

This cities were ranked by total migration among BA earners. But as a percentage of total population, the cities with the fastest growing college-educated community are (in order): Austin, Raleigh, Portland (Ore.), Riverside, Phoenix, Charlotte, San Antonio, Tampa, Nashville, and Kansas City.


by Derek Thompson

Friday, January 14, 2011

Austin Ranked 3rd Best Job Market in US - Forbes.com

On the eve of a Katie Couric interview on Austin's job market, the city was ranked as having the third best employment prospects in the U.S.

Forbes.com released a report Thursday ranking Austin 3rd best job market in the U.S. The business publication cited the city's low unemployment, about 7.1 percent, and low job-seekers per opening ratio, about 2.39 to one.

Forbes said Austin has many assets that have helped it weather the downturn: It's a state capital and major convention center, especially for the music industry, and home to the University of Texas and a wealth of technology companies.

In October, Austin officials announced a new Eco-Merge Green Corporate Center devoted to producing new technologies, Forbes said. Also, several international firms, including Toshiba and China's Taiwan Clean Energy, plan to open shop here.

The listing is not Austin's first appearance on Forbes' best of lists. The publication ranked Austin No. 1 last year for economic recovery, 8th best for business and careers, No. 2 most innovative and 10th best place for best cities for young professionals, among other rankings.

Washington, D.C. topped the most recent list as healthiest labor market among major U.S. metro areas. By one estimate, the nation's capital has roughly one advertised job opening for every unemployed worker in the region. Its unemployment is just 6 percent, the lowest among the country's largest 50 metros.

Las Vegas was ranked as having the worst major job market with 14.3 percent unemployment and eight unemployed workers for every job opportunity.

The see the full listing, click here.

Austin Business Journal
1/7/2011

Austin 26 out of 150 world cities for recovery: Where are the Jobs? Welcome to Jobstown, USA

First impressions mean a lot.

As soon as I got off the plane at Austin-Bergstrom International Airport I could tell this place was different from nearly all the mid-size US cities we have visited since the beginning of the Great Recession.

It was close to midnight and the tarmac was crowded with aircraft parked nearly wing-tip to wing-tip.

The morning rush was going to be huge. Business travelers would be on the move.

Make no mistake - find a city where businesspeople are travelling and I'll show you a city where money is being made. Welcome to Jobstown, USA.

A study by the Brookings Institution and the London School of Economics ranks Austin 26 out of 150 world cities in its ability to recover from the recession well ahead of places like Dallas (39), New York (77), San Francisco (129) and Las Vegas (146). No other US city is experiencing faster job growth than Austin (2.4 percent per year).Over the course of three days, CBS News visited a number of firms to try and figure out what's behind Austin's success as a job generator and if there is anything other American cities can learn from their example.

Here are some things we noticed right away: The place is loaded with young talent. There is venture capital pouring in from all over the world (especially the Persian Gulf). There is a sense that anything is possible. And finally, there is openness to new ideas - no matter how off the wall. In many ways, Austin has the same feel as Palo Alto, California did as it was morphing into what the world knows as "Silicon Valley."

There are negatives in Austin too, for example an infrastructure that's not close to being ready for the crush of people that's flooding the area (avoid the Loop during rush hour at all costs!). The town also remains largely dependent on Texas state government and education for its job base (22 percent of jobs, versus 18% across all U.S. metro areas).

Still, we were left with a sense that Austin represents a model many American cities may need to follow if they are to fully recover from the recession and be competitive in the global economy.


From a tiny toy company struggling to get on its feet to an international tech giant creating thousands of new jobs, CBS News Senior Business Correspondent Anthony Mason gives you an inside look at Jobstown, USA tonight on the CBS Evening News with Katie Couric. We invite you to watch.

CBS News w/ Katie Couric

.

Austin 10th Strongest Commercial Real Estate Market

Austin is forecast to have the 10th strongest commercial real estate market nationally for the next four years, according to a new Grubb & Ellis Co. (NYSE: GBE) report.

The real estate services and investment firm Monday released its "2011 Real Estate Forecast," which foresees the start of a slow recovery in the leasing market for all property types in the coming year.

Activity in the investment market, which began its recovery earlier than anticipated in 2010, will expand beyond assets at the top and bottom of the quality scale to include properties with slightly more risk, the report said.

“All things being considered, 2010 was actually better than most anticipated it would be — we saw positive net absorption and an uptick in investment sales during the second half of the year, positioning us for a continued recovery in 2011,” said Robert Bach, senior vice president and chief economist at Grubb & Ellis.

“We have challenges to overcome, and we don’t expect fundamentals to return to their pre-recessionary peaks for several more years, but we’re slowly and cautiously building the foundation necessary to do just that.”

Analysts said Austin’s market continues to benefit from the city’s low business costs, high quality of living and a highly-educated workforce that attracts new companies to the area. Many of the sectors saw improvement last year, though industrial properties continue to struggle, according to Grubb & Ellis’ 2011 Central Texas forecast report.

“Austin’s commercial real estate market is predicted to continue its recovery in 2011, although at a slow, but steady pace due to different obstacles faced in each property sector,” said Moody Younger, Grubb's executive managing director of Texas. Although Austin witnessed an uptick in the number of properties trading hands last year compared to 2009, lower values, coupled with increased loan-to-value ratios restricted more deals. This year, the market is expected to see the beginning of a turnaround, especially in transaction volume, since debt availability and credit terms have improved.

At the same time, though foreclosures and write-downs are expected to increase as banks deal with the pool of distressed loans extended last year, Austin’s office market still managed 10th place on Grubb & Ellis’ annual "Investment Opportunity Monitor." The listing ranks metropolitan markets with the strongest investment prospects for each major property type during the coming five years. The rankings are based on 15 to 20 variables.

The vacancy rate in Austin’s office market benefited from an overall improvement in demand due to job growth in 2010, which was aided by an empty construction pipeline. For landlords most severely impacted by the down cycle, the office market is beginning to see a stabilization of rental rates.

“Austin’s office market has seen a renewed level of demand and is enjoying a healthy rebound that is expected to continue over the next year,” Younger said. “The city’s long-term investment prospects are also extremely encouraging.”

In multi-family housing, Austin experienced considerable occupancy gains and moderate rental rate growth last year. Leasing activity improved as a result of better economic conditions, job creation and an influx of people moving to the area. New construction projects are expected to taper off this year, which will likely keep positive net absorption up.

The entire Central Texas report is available here.

U.S. OFFICE MARKET STRENGTH FORECAST
Top 10 Markets 2011-2015

 1. New York
 2. Washington, D.C.
 3. Portland, Ore.
 4. Boston
 5. Los Angeles
 6. San Diego
 7. San Francisco
 8. Oakland/East Bay, Calif.
 9. Raleigh/Durham, N.C.
10. Austin

Austin Business Journal
Monday, January 3, 2011, 2:09pm CST