Economic Good News is Almost Overwhelming

Chip Gilmour & Mark Nanny

Jobless numbers hitting 18-year low is one of many positive signs in latest Economic Index

There was so much good news in the September Lubbock Economic Index, it’s mind-numbing to pick the most important piece. Is it:

Another record Index number?
Starting seven years of consistent economic growth?
Lowest jobless numbers since the last century? (OK, 18 years back to 1999.)
An uptick – even if small – in cotton prices?
Healthy jumps in retail and auto sales?
More historically strong construction/real estate numbers?

“The economy going into 2018 will be very, very healthy and that’s good news for the nation and Lubbock. Each month we see a healthy, stable situation in Lubbock. We have a lot to be thankful for,” said Chip Gilmour, Lubbock National Bank senior vice president, who briefed local media on the report the day before Thanksgiving.

The Index increased to 151.7, up .4 from August and 3.1 percent ahead of September last year, when the Index was 147.2.

Gilmour was joined by longtime Realtor Mark Nanny, with Coldwell Banker.

Here’s what they discussed:

1. Construction/real estate numbers continue to be very strong.

Two of the indicators were down.

Nanny said these numbers were kind of like a teeter-totter. There’s more demand for entry-level and “move-up” houses than are available. So when building is surging, sometimes sales slow until builders catch up with the demand.

“It’s a seller’s market,” said Nanny. “We need about 1,200 homes on the market and we’ve got about 1,000,” he said.

“Median price is up, active listings are up and time on market is down,” he said. “We’ve heard it’s the fifth inning of a nine-inning game across the country things are good – although some markets are better than others.”

“We’re blessed to be in Lubbock, Texas,” said Nanny. Homes in the $100,000-$300,000 range are the most active and Realtors are seeing activity in all subdivisions.

“There’s a resurgence in the lower economic neighborhoods, where people are investing in properties. Restoring homes and bringing them current is huge,” he said. Part of the reason for continued housing need is more retirement-age folks are coming to Lubbock he said, because it’s a medical hub and relocations. Nanny said he’s seen relocations from Dallas, the East Coast, North Carolina and other areas tied to the cotton business, medicine and Texas Tech. Randy Laycock, Lubbock National Bank’s senior vice president, added more people are coming to Lubbock from surrounding communities and Nanny agreed.

“Midland, Hobbs, Clovis,” said Nanny, “I just sold a house to a couple from Clovis looking to retire.”

Activity is slower in homes above half a million dollars, but that may change after the first of the year.

“We see money enter the big home market in late January or February,” said Nanny. “People see their balance sheet after getting taxes ready and then they know where they are before pulling the trigger.” Gilmour said he’s heard bonuses will be higher because business is better and that could also delay people’s decisions on buying a home until after the end of the year.

Nanny also discussed how people will be watching proposed tax reform nationally and how Realtors will be fighting to keep deductions for homeowners.

As the market does well, more people are becoming Realtors, Nanny said, with about 1,200 in the area, compared to about 500 in the 1990s.

2. The jobless rate fell below 3 percent at 2.9 percent and wage and salary employment increased 1.4 percent September over September and up 1.6 percent year to date.

3. Cotton prices were 69.64 cents a pound, more than two cents above August’s price and creeping near the Index’s 1996 base year price of a bit more than 72 cents.

Gilmour said it’s good news prices are up, but it’s too early to tell if prices will continue to rise.

4. Retail sales were up 3.2 percent in September over the previous September and up 1.5 percent year to date, showing growing consumer confidence. Auto sales were up 4.2 percent September over last September and up 4.2 percent year to date.

(A Forbes article also says this holiday shopping season is expected to be the best in a number of years.)

Lubbock’s Consumer Price Index dipped to a 2.3 percent increase, but still ahead of 1.5 percent September of last year, driven mostly by energy prices.

Lubbock National Bank Senior Vice President Chip Gilmour briefs local media each month on the report.

To see the full report, click here

To see the Lubbock Avalanche-Journal story, click here

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