After a brief pause in the first two months of the year, the Lubbock economy began growing again in March and April, showing just how strong and diversified it has become.
It set a number of records in April:
“People are working and that is a good driver for the economy,” said Randy Laycock, senior vice president, Lubbock National Bank. “There are a lot of jobs available. We are looking at historically low levels of unemployment.”
Joining Laycock were Gene McGuire and Russell McGuire, broker/owners of Exit Realty, who explained factors behind this superheated real estate market.
Sales of existing homes went from 888 in the first quarter to 400 in April. Russell McGuire said the Multiple Listing Service showed 434 sales in May, foreshadowing more records to be set in the second quarter. First-time buyers are driving the real estate market, McGuire said.
Gene McGuire said there are more factors bringing buyers to the real estate market. Home owners who went through the foreclosure process during the housing crisis, beginning in 2008, have had enough time to restore their credit and are getting back into the market, he said.
Texas Tech grads are entering the local real estate market, he added.
“It used to be that kids would move back to DFW, but now they are more and more likely to stay in Lubbock. They’ve grown used to the lifestyle – less traffic, more opportunities,” he said.
It’s not just Lubbock residents fueling home sales, said Chip Gilmour, Lubbock National Bank’s vice president of marketing and business development. “Outside people are coming in when national companies like Costco and Cabela’s open stores here. People underestimate how diversified our economy is.”
This is reflected in the latest Lubbock Economic Index for April rising to 152.0, a record for the index and a 2.4 percent increase over the April 2017 benchmark.*
Consumer spending, as reflected in retail sales, rose 1.3 percent in the first quarter. Figures for January and February were lackluster, but spending picked up in March, a gain of 2.2 percent over March 2017.
However, other measures of consumer spending rebounded: hotel/motel spending, 4.7 percent in the first quarter, and the number passengers flying out of Lubbock International Airport rose 3.9 percent during the same period.
Auto sales still enjoy higher levels of consumer spending. The dollar volume, adjusted for inflation, was 7.7 percent higher in the first quarter of 2018 compared to the same period last year. March sales, however, were actually down 0.1 percent.
The value of all construction permits from January-April dropped 27.8 percent, compared to the same months in 2017, making it the lowest January-April total since 2014. The number of permits for single family residences is down about 10 percent compared to 2017, but the 433 permits issued in that window is still the second-highest number for that period.
Lubbock’s inflation rate remained fairly steady at 2.2 percent in April. The national inflation rate was 2.5 percent in April, and the rate for the southern region was only a tick behind at 2.4 percent. In Lubbock, the housing and energy components rose faster than the consumer price index. The strong demand for housing puts upward pressure on prices, which rose 3.6 percent in April. Increases in crude oil prices, which were tempered by low natural gas prices, pushed the energy price index up to 2.9 percent in April.
The price per barrel of West Texas intermediate crude oil in March rose 30. 6 percent over the same time in 2017. Cotton prices are slightly higher, rising 2.9 percent to 76.83 cents per pound, and fat cattle prices dropped 1.4 percent in March to $125.47 per hundred-weight, but the value of cattle marketed rose 8.1 percent.