subject: Houston Economic Future Looking Brighter In 2011 [print this page] It seems like the country's economic news swings on a huge pendulum - jobs / manufacturing / home prices are up one week and down the next, or sometimes seemlingly on the same day. Are we inching towards recovery, or is it "one step forward, two steps back"? For Houston, at least, it seems like a sustainable pattern of growth is starting to emerge. That's according to a report released this week by the Greater Houston Partnership on Houston's 2011 economic outlook.
First, the not-so-great news. The government has thrown a few curve balls our way, what with changes to the NASA budget and new safety regulations on off-shore drilling which have idled some rigs and exploration companies - not to mention state and city budget woes which will likely lead to some job cuts in the new year.
And, of course, anyone who follows real estate knows the housing market is still soft. Houston's home sales have dropped each month since the federal tax incentives expired in June, and we're currently sitting on 7.7 months' worth of home inventory.
But, when compared to the national average of 10.7 months of inventory, we're not doing too badly. Not to mention, Houston's home prices have remained steady this year, even rising 5.6% in October over last year. And, HDP's report has some promising economic indicators, which could mean a better real estate market for 2011.
Obviously, employment is key to any recovery, and the report predicts that 2011 will see a net addition of 18,200 jobs in the Houston area. While that's less than Houston's normal pace of adding 50,00 - 60,000 jobs per year, it's a significant increase over the 6,200 we added as of October 2010 - and obviously better than the job losses of 2009.
GHP's report also points to a number of signs that consumer confidence - along with the greater economy - is picking up. Retail sales in Houston are up 13.2% over last year, and new auto sales in October were up a whopping 33.7% over the same time last year. More imports and exports are flowing through the ports of Houston and Galveston, and air cargo volume at Houston's airports is at a record high.
Companies which had "postponed IT upgrades, slashed marketing budgets and put expansion plans on hold" are starting to loosen the purse strings. The report states that "engineering firms have begun rebuilding their backlogs. Merger and acquisition activity has begun to pick up. Companies are once again looking for ways to upgrade and improve their operations." This helped create at least 2,400 jobs in the professional and business services sector this year, with more projected in the new year.
The construction industry still faces tough times, but they'll get some help from businesses looking to expand. Banks added 15 branches in Houston in 2010, with more planned, and major retail outlets like HEB, Kroger, Wal-Mart and Whole Foods have expansion plans for 2011. Also, increased demand for oil - as well as increasing prices - will give a boost to the oil exploration and production businesses to help balance out the difficulties with offshore rigs.
Bottom line, Houston seems poised for a better year ahead - and many more. The GHP report predicts that, over the next 25 years, Houston will account for almost one-fourth of Texas' job growth, and will lead the state in population growth. As GHP summed up their report: "Though Houston faces some challenges in the near term, the long-term outlook is bright... The long-term outlook for the Houston metro area is positive, and a return to steady, healthy growth is expected in the near future." After the last three years, that doesn't sound too bad at all.
