The economic outlook for Texas during 2008 points towards slower growth, yet that’s still better than most parts of the country, which will see no growth at all. Texas, with the 2nd largest state economy in the U.S. and the 15th largest economy in the world, will record growth of about 2.2% annually, according to the Texas Workforce Commission.
Warm weather, undervalued real estate, lack of a state income tax, and good jobs
continues to attracted people to the Lone Star State. These new residents all need a place to live, so the real estate market statewide should continue to be busy, though less busy than recent high-water marks, like 2006.
Recent national uncertainty about a slump in the housing market and a “credit crunch” has lowered consumer confidence, and the United States may now be in a recession for the first time since 2001. Higher energy costs, mainly the near $100 per barrel price of oil, are now reflected in the price of many goods and services. The Federal Reserve Board (the Fed) cut a key interest rate, the federal funds rate, twice over a two week period, by 125 basis points (1.25%), to increase lending and public consumption. The Federal Reserve Board Open Market Committee, which sets the federal funds rate (the overnight interest rate that banks charge each other), meets again March 18th, and MarketWatch.com reports that the Fed could lower the rate again, this time by 50 basis points (.5%). Controlling this interest rate is how the Fed regulates the money supply in the U.S. economy, and this in turn helps manage inflation and interest rates. Such actions by the Fed make it appear that either the economy is in a recession now or quickly sliding into negative growth.
The Fed reports that banks are raising credit standards at a rate not seen since quarterly surveys of senior bank officers began 17 years ago. Mortgages, consumer loans, commercial real estate loans, and just plain business loans will see higher credit standards, the Fed reports. As most economists know, tighter credit generally slows down economic growth.
To increase growth, Congress just passed a stimulus package worth about $160 billion dollars, and President Bush is expected to sign it into law, though some economists doubt that it will have any effect.
However, with high population growth and low unemployment, like a 4.3% jobless rate at the end of December, Texas continues to outperform the national economy. Economists predict this growth to continue throughout 2008, according to the Real Estate Center at Texas A & M University.
Eric Bramlett is the broker & co-owner of One Source Realty in Austin, Texas. Eric currently manages his Austin Real Estate website, his Northwest Austin Texas real estate company's website, & his Austin Texas welder website.