Embed Size (px)
Citation preview
SEPTEMBER 2020 DATA
TEXASBORDER ECONOMY
LUIS B. TORRES RESEARCH ECONOMISTJAMES P. GAINES CHIEF ECONOMIST
WESLEY MILLER PAIGE SILVA
RESEARCH ASSOCIATE
RESEARCH ASSOCIATE
GRIFFIN CARTER RESEARCH INTERN
2165
About this Report .................................................................................................................................. 2
Border Summary ................................................................................................................................... 3
Economic Activity .................................................................................................................................. 8
Business Cycle Index ......................................................................................................................... 8
Employment Growth Rate ................................................................................................................ 8
U.S. Manufacturing Production ........................................................................................................ 9
Mexico Maquiladora and Manufacturing Employment ................................................................... 9
Unemployment Rate....................................................................................................................... 10
Total Private Employee Hourly Earnings ........................................................................................ 10
Total Construction Values............................................................................................................... 11
Nonresidential Construction Values ............................................................................................... 11
Residential Construction Values ..................................................................................................... 12
Real Peso per Dollar Exchange Rate ............................................................................................... 12
Import Values ................................................................................................................................. 13
Export Values .................................................................................................................................. 13
Housing ................................................................................................................................................ 14
Housing Sales .................................................................................................................................. 14
Single-Family Housing Construction Permits.................................................................................. 14
Total New Private Single-Family Construction Value ..................................................................... 15
New Home Months of Inventory .................................................................................................... 15
Existing Home Months of Inventory ............................................................................................... 16
Laredo Months of Inventory by Price Cohort ................................................................................. 16
El Paso Months of Inventory by Price Cohort ................................................................................. 17
McAllen Months of Inventory by Price Cohort ............................................................................... 17
Brownsville Months of Inventory by Price Cohort ......................................................................... 18
New Home Days on Market ............................................................................................................ 18
Exiting Home Days on Market ........................................................................................................ 19
New Home Median Sales Price ....................................................................................................... 19
Existing Home Median Sales Price .................................................................................................. 20
New Home Median Price Per Square Foot ..................................................................................... 20
Existing Home Median Price Per Square Foot ................................................................................ 21
Housing Affordability Index ............................................................................................................ 21
2
Real Estate Center economists continuously monitor many facets of the global, national, and Texas
economies. Texas Border Economy is a summary of important economic indicators that help discern
trends in the housing markets along the Texas-Mexico border. All measurements are calculated
using seasonally adjusted data, and percentage changes are calculated month-over-month, unless
stated otherwise.
This monthly publication provides data and insights on the Texas border markets. We hope you find
them useful. Your feedback is always appreciated. Send comments and suggestions to
Dr. James P. Gaines, Dr. Luis B. Torres, Wesley Miller, Paige Silva, and Griffin Carter
Data current as of Sept. 21, 2020
© 2020, Real Estate Center. All rights reserved.
3
September 2020
Economic recovery along the Texas-Mexico border slowed in September as labor-market conditions
backtracked. Employment declined in the metros except for in Laredo, where the increase was
modest. Meanwhile, joblessness rose, and the number of residents in the local labor forces
decreased. Construction values fell behind the pace of activity set in the first three quarters of last
year, signaling a fall in groundbreakings along the border. Mexican manufacturing and maquiladora
employment posted gains the previous month as U.S. manufacturing production and border trade
values stabilized after the United States-Mexico-Canada Agreement (USMCA) reaffirmed North
American commerce, and as the initial shock of the pandemic lessened.
The housing market remained one of the stronger components of the local economies, particularly
in Brownsville and El Paso, where sales through Multiple Listing Services reached record highs.
Shrinking inventory, however, pushed metro-level median sale prices up considerably, chipping
away at gains in housing affordability from historically low mortgage interest rates. On the bright
side, single-family building permits increased for the fifth straight month, supporting a more
optimistic outlook for housing supply heading into 2021. COVID-19 remains the greatest headwind
to the border communities remains COVID-19 as the recent surge of virus-related hospitalizations
in El Paso has prompted another round of local shelter-in-place recommendations. These types of
challenges are a persistent threat to public health and economic activity.
Economy
Worsening labor-market conditions limited the Dallas Fed’s Business-Cycle Indexes as economic
activity decelerated to 7.4 and 5.2 percent growth on a seasonally adjusted annualized rate (SAAR)
in El Paso and Laredo, respectively. The Rio Grande Valley’s metric flattened in Brownsville and fell
22.2 percent SAAR in McAllen. Retail sales, a component of the index, may be limited by
restrictions on nonessential travel, which ban Mexican tourists from entering the U.S. These
measures have been extended through Dec. 21, 2020. Pedestrian and personal vehicle traffic sank
more than 60 and 40 percent year to date (YTD), respectively (Figures 1 and 2).
Border nonfarm employment contracted by 4,500 positions in September, ending the third quarter
with payrolls 5.3 percent below year-end levels. El Paso shed 2,100 jobs, followed by Brownsville
with 1,700 layoffs. McAllen employment also posted a net decrease, falling by 800 workers. In the
aforementioned metros, losses in the local government sector offset gains in leisure/hospitality.
4
Laredo was the exception, hiring 100 employees with increases in state government and
leisure/hospitality.
On the southern side of the border, Mexican manufacturing and maquiladora employment1
regained another 13,600 positions in August, pulling levels up to the year-end reading. Juarez and
Reynosa accounted for most of the increase, adding 6,500 and 2,900 jobs, respectively, and
pushing employment up 4.4 percent YTD in the former. The metric in the other locales remained
below year-end levels, although maquiladora payrolls expanded by 800 jobs in Matamoros and 500
in Nuevo Laredo during the month. Chihuahua City, however, extended a four-month decline,
laying off 200 workers. U.S. manufacturing production flattened in September but rose 11.5
percent quarter over quarter (QOQ), while global economic growth also rebounded in 3Q2020,
suggesting Mexican manufacturing and maquiladora hiring may continue in the coming months.
The unemployment rate increased along the border, jumping to 11.2 and 13 percent in Brownsville
and McAllen, respectively. Joblessness rose to 9.7 percent in Laredo and 8.7 percent in El Paso.
Another sign of weakening labor-market conditions, the number of residents in the labor force
decreased in each metro. Initial unemployment claims declined during the first half of the month
but ticked up the last week of September (Figure 3), suggesting a rocky recovery during the last
quarter of 2020 amid a recent resurgence in COVID-19 cases in El Paso.
Annual growth in average real private hourly earnings slowed during layoffs, particularly in
McAllen, where wages registered a modest decline in real terms. Brownville and El Paso earnings
ticked up just 0.4 and 0.3 percent year over year (YOY), respectively. Laredo’s metric increased 1.9
percent YOY as hiring continued; the rate of wage and job growth, however, decelerated.
Total construction values fell every month in the third quarter, sinking 13.4 percent in September
due to declines in both residential and nonresidential activity. Decreased single-family construction
in McAllen pulled down residential values, while reduced school construction in Brownville and El
Paso offset a pickup in Laredo’s school sector. Contractions in El Paso and McAllen store/restaurant
capital investment were mainly responsible for the drop on the nonresidential side despite monthly
improvements in El Paso and Laredo’s warehouse sector.
In the currency market, the peso per dollar exchange rate dipped to 21.66 after the inflation-
adjusted rate2 stabilized the previous month. Nevertheless, the metric elevated 8.1 percent YOY in
real terms, making domestic goods more expensive to Mexican buyers. Meanwhile, total trade
values passing through the border slumped 0.6 percent in September as El Paso imports
plummeted to one-fifth of the values reached the prior month. Reduced vehicular-related
shipments dropped in particular. Total trade through the Rio Grande Valley ended a four-month
increase, although the Brownsville metric rose 3.3 percent YTD. Laredo values jumped 4 percent
1 Mexican manufacturing and maquiladora employment is generated by the Instituto Nacional de Estadística y Geografía. Its release typically lags the Texas Border Economy by one month. 2 The real peso per dollar exchange rate is inflation adjusted using the Texas Trade-Weighted Value of the Dollar. Its release typically lags the Texas Border Economy by one month.
5
but still remained slightly below year-end levels. The USMCA, which was implemented July 1, 2020,
should reaffirm North American trade relationships, supporting the ongoing recovery.
Housing
Border housing sales accelerated 8.3 percent in September on top of an upward revision to the
prior month’s reading, bringing quarterly growth to 39.2 percent. El Paso’s metric exceeded 1,000
for the first time ever with sales for homes priced between $100,000 and $400,000 increasing by
about one-fifth. Activity in Brownsville also reached an all-time high after climbing 7.9 percent with
sales in the $200,000-$300,000 price cohort doubling YTD. On the other hand, transactions in
Laredo flattened while McAllen’s metric decreased 2.4 percent with contractions in sales for homes
priced less than $200,000. Nevertheless, the trend extended an upward trajectory in all four
metros.
Single-family housing construction permits climbed 8.3 percent, increasing for the fifth
consecutive month to a post-Great Recession high. Issuance rose along the border uniformly,
rebounding 10 and 8.4 percent in El Paso and Brownsville, respectively, after declining the previous
month. McAllen permits jumped 6.5 percent, while Laredo’ metric surged 7.4 percent for stable
growth throughout the second and third quarters. On the other hand, private single-family
construction values decreased 14 percent, although the trend was steady.
Strong sales and a dwindling supply of active listings pulled months of inventory (MOI) down to
historic lows of 3.8 and 1.7 months in Brownsville and El Paso, respectively. Meanwhile, the
McAllen MOI sank to 3.4 months. In contrast, the supply of active listings expanded in Laredo as
sales slowed, pushing inventory up to 5.6 months.
The average number of days on market (DOM) trended up in the Rio Grande Valley despite a
monthly decrease to 108 days in Brownsville and 84 days in McAllen. Nevertheless, the metric
remained below year-ago levels, indicating relatively robust demand. Laredo’s DOM ticked up to 54
days, on par with last September’s reading, while El Paso’s average home sold after 60 days,
extending a steady downward trend.
Annual home-price appreciation accelerated, bolstered by shrinking inventory during record sales
activity. Brownsville’s median home price increased to $184,500, averaging 13.7 percent YOY
growth in 2020. The metric in McAllen and El Paso also posted solid annual gains, rising to $177,900
and $182,800, respectively. Compositional changes in sales likely drove the YOY increases, similar
to the statewide acceleration in median home price tempered by more modest growth in the Texas
Repeat Sales Home Price Index. Laredo was the exception, with the median price dropping for the
second consecutive month to $180,900 as sales slowed and inventory expanded.
Historically low interest rates supported increased housing affordability in Texas' border metros
during the third quarter, but elevated home prices slowed the upward climb established within the
past year. El Paso was the most affordable border locale with an index of 1.8, indicating that a
family earning the median income could afford a home 80 percent more than the median sale
6
price. Laredo’s metric inched up to 1.7, while the Rio Grande Valley recorded indexes of 1.6 in both
Brownsville and McAllen. Continued improvement is important to the border’s demographic
advantages that have supported the region's attractiveness compared with the rest of the state.
Note: Pedestrians entering the United States from Mexico. Data collected at ports of entry by U.S. Customs and Border Protection. Trend-cycle component. Source: U.S. Bureau of Transportation Statistics
Note: Personal vehicles entering the United States from Mexico. Data collected at ports of entry by U.S. Customs and Border Protection. Trend-cycle component. Source: U.S. Bureau of Transportation Statistics
0
25
50
75
100
125
150
175
200
225
250
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Brownsville El Paso
Laredo Hidalgo (McAllen)
25
50
75
100
125
150
175
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Brownsville El Paso
Laredo Hidalgo (McAllen)
Figure 1. Pedestrian Crossings (Index Jan 1996 = 100)
Figure 2. Personal Vehicle Crossings (Index Jan 1996 = 100)
7
Note: Seasonally adjusted. Sources: Texas Workforce Commission, U.S. Department of Labor Employment and Training Administration, and Real Estate Center at Texas A&M University calculations
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Mar
21
Mar
28
Ap
r 4
Ap
r 1
1
Ap
r 1
8
Ap
r 2
5
May
2
May
9
May
16
May
23
May
30
Jun
6
Jun
13
Jun
20
Jun
27
Jul 4
Jul 1
1
Jul 1
8
Jul 2
5
Au
g 1
Au
g 8
Au
g 15
Au
g 22
Au
g 29
Sep
5
Sep
12
Sep
19
Sep
26
Brownsville El Paso
Laredo McAllen
Figure 3. Border Metro Weekly Initial Unemployment Claims (2020)
8
Note: Seasonally adjusted. For more information, see Texas Business Cycle Index. Source: Federal Reserve Bank of Dallas
Note: Seasonally adjusted, three-month moving average. September 2020 is preliminary. For more information, see Employment Growth Rate. Source: Bureau of Labor Statistics
-80.0
-60.0
-40.0
-20.0
0.0
20.0
40.0
60.0
2007 2009 2011 2013 2015 2017 2019
Brownsville-Harlingen El Paso
Laredo McAllen-Edinburg-Mission
-45
-35
-25
-15
-5
5
15
25
2007 2009 2011 2013 2015 2017 2019
Brownsville El Paso
Laredo McAllen
Border Variable
Business Cycle Index (Quarter -over- Quarter Percent Change)
Employment Growth Rate (Quarter-over-Quarter Annualized Percent Change)
9
Note: Trend-cycle component. Sources: Federal Reserve Bank of St. Louis and Instituto Nacional de Estadística y Geografiía
Note: Trend-cycle component. Source: Instituto Nacional de Estadística y Geografiía
300,000
360,000
420,000
480,000
540,000
600,000
660,000
75
80
85
90
95
100
105
2008 2010 2012 2014 2016 2018 2020
U.S. ManufacturingProduction
Maquiladora Employment(Right axis)
60
80
100
120
140
160
180
200
2008 2010 2012 2014 2016 2018 2020
Ciudad Juárez (El Paso) Reynosa (McAllen)
Matamoros (Brownsville) Nuevo Laredo (Laredo)
Chihuahua Frontera
Mexico Maquiladora and Manufacturing Employment (Index Jan 2008 = 100)
U.S. Manufacturing Production (Index Jan 2008 = 100; Number of Employees)
(Production) (Employment)
10
Note: Seasonally adjusted. September 2020 is preliminary. For more information, see Unemployment Rate. Sources: U.S. Bureau of Labor Statistics
Notes: Inflation adjusted, seasonally adjusted. September 2020 is preliminary. For more information, see Total Private Employee Hourly Earnings. Source: U.S. Bureau of Labor Statistics
3
5
7
9
11
13
15
17
19
21
2007 2009 2011 2013 2015 2017 2019
Brownsville
El Paso
Laredo
McAllen
-20.00
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
2008 2010 2012 2014 2016 2018 2020
Brownsville El Paso
Laredo McAllen
Unemployment Rate (Percent)
Total Private Employee Hourly Earnings (Year-over-Year Percent Change)
11
Note: Inflation-adjusted. Trend-cycle component. Source: Dodge Data & Analytics
Note: Inflation-adjusted. Trend-cycle component. Source: Dodge Data & Analytics
0
30
60
90
120
150
180
210
240
270
300
2008 2010 2012 2014 2016 2018 2020
Brownsville El Paso
Laredo McAllen
-100
0
100
200
300
400
500
600
700
2011 2013 2015 2017 2019
Brownsville
El Paso
Laredo
McAllen
Total Construction Values
(Index Jan 2008= 100)
Nonresidential Construction Values
(Index Jan 2011 = 100)
12
Note: Inflation-adjusted. Trend-cycle component. Source: Dodge Data & Analytics
Note: Deflated using the Texas Trade Weighted Value of the Dollar. Source: Federal Reserve Bank of Dallas
40
50
60
70
80
90
100
110
120
130
2008 2010 2012 2014 2016 2018 2020
Brownsville El Paso
Laredo McAllen
$12
$13
$14
$15
$16
$17
$18
$19
$20
$21
$22
2007 2009 2011 2013 2015 2017 2019
Real Peso per Dollar Exchange Rate ($)
Residential Construction Values
(Index Jan 2008 = 100)
13
Note: Trend-cycle component. Sources: Foreign Trade Division and U.S. Census Bureau
Note: Trend-cycle component. Sources: Foreign Trade Division and U.S. Census Bureau
0
50
100
150
200
250
2007 2009 2011 2013 2015 2017 2019
Brownsville El Paso
Laredo McAllen
0
50
100
150
200
250
2007 2009 2011 2013 2015 2017 2019
Brownsville El Paso
Laredo McAllen
Import Values (Index Jan 2007 = 100)
Export Values (Index Jan 2007 = 100)
14
Note: Trend-cycle component. Source: Real Estate Center at Texas A&M University
Note: Trend-cycle component. Sources: U.S. Census Bureau and Real Estate Center at Texas A&M University
60
70
80
90
100
110
120
130
140
150
160
2007 2009 2011 2013 2015 2017 2019
Brownsville El Paso
Laredo McAllen
0
20
40
60
80
100
120
140
2007 2009 2011 2013 2015 2017 2019
Brownsville El Paso
Laredo McAllen
Housing Sales (Index Jan 2007 = 100)
Single-Family Housing Construction Permits (Index Jan 2007 = 100)
15
Note: Inflation adjusted. Trend-cycle component. Source: Dodge Data & Analytics
Note: Trend-cycle component. Source: Real Estate Center at Texas A&M University
40
55
70
85
100
115
130
145
160
175
2011 2013 2015 2017 2019
Brownsville El Paso
Laredo McAllen
1
3
5
7
9
11
13
15
17
2011 2013 2015 2017 2019
Brownsville El Paso Laredo McAllen
New Home Months of Inventory (Months)
Total New Private Single-Family Construction Value
(Index Jan 2011 = 100)
16
Note: Trend-cycle component. Source: Real Estate Center at Texas A&M University
Note: Trend-cycle component. Source: Real Estate Center at Texas A&M University
0
2
4
6
8
10
12
14
2011 2013 2015 2017 2019
Brownsville El Paso
Laredo McAllen
2
4
6
8
10
12
14
16
18
20
22
24
2011 2013 2015 2017 2019
$0-$99,999 $100,000-$199,999
$200,000-$299,999 $300,000-$399,999
Existing Home Months of Inventory (Months)
Laredo Months of Inventory by Price Cohort (Months)
17
Note: Trend-cycle component. Source: Real Estate Center at Texas A&M University
Note: Trend-cycle component. Source: Real Estate Center at Texas A&M University
0
2
4
6
8
10
12
14
2011 2013 2015 2017 2019
$0-$99,999 $100,000-$199,999
$200,000-$299,999 $300,000-$399,999
0
5
10
15
20
25
30
35
40
2011 2013 2015 2017 2019
$0-$99,999
$100,000-$199,999
$200,000-$299,999
$300,000-$399,999
El Paso Months of Inventory by Price Cohort (Months)
McAllen Months of Inventory by Price Cohort (Months)
18
Note: Trend-cycle component. Source: Real Estate Center at Texas A&M University
Note: Trend-cycle component. For single-family homes. Source: Real Estate Center at Texas A&M University
0
5
10
15
20
25
30
35
2011 2013 2015 2017 2019
$0-$99,999
$100,000-$199,999
$200,000-$299,999
$300,000-$399,999
0
20
40
60
80
100
120
140
160
180
2011 2013 2015 2017 2019
Brownsville El Paso Laredo McAllen
New Home Days on Market (Days)
Brownsville Months of Inventory by Price Cohort (Months)
19
Note: Trend-cycle component. For single-family homes. Source: Real Estate Center at Texas A&M University
Note: Trend-cycle component. For single-family homes. Source: Real Estate Center at Texas A&M University
40
50
60
70
80
90
100
110
120
130
140
150
2011 2013 2015 2017 2019
Brownsville El Paso
Laredo McAllen
125,000
135,000
145,000
155,000
165,000
175,000
185,000
195,000
205,000
215,000
225,000
2011 2013 2015 2017 2019
Brownsville El Paso
Laredo McAllen
Existing Home Days on Market (Days)
New Home Median Sales Price ($)
20
Note: Trend-cycle component. For single-family homes. Source: Real Estate Center at Texas A&M University
Note: Trend-cycle component. For single-family homes. Source: Real Estate Center at Texas A&M University
85,000
105,000
125,000
145,000
165,000
185,000
205,000
2011 2013 2015 2017 2019
Brownsville El Paso
Laredo McAllen
75
85
95
105
115
125
135
145
155
165
175
2011 2013 2015 2017 2019
Brownsville El Paso
Laredo McAllen
New Home Median Price Per Square Foot ($)
Existing Home Median Sales Price ($)
21
Note: Trend-cycle component. For single-family homes. Source: Real Estate Center at Texas A&M University
Note: Trend-Cycle Component. Source: Real Estate Center at Texas A&M University
55
65
75
85
95
105
115
2011 2013 2015 2017 2019
Brownsville El Paso
Laredo McAllen
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2015 2016 2017 2018 2019 2020
Brownsville El Paso
Laredo McAllen
Existing Home Median Price Per Square Foot ($)
Housing Affordability Index (Ratio)
i
ADVISORY COMMITTEE
MAYS BUSINESS SCHOOL
Texas A&M University 2115 TAMU
College Station, TX 77843-2115
http://recenter.tamu.edu 979-845-2031
DIRECTOR
GARY W. MALER
RUSSELL CAIN Port Lavaca
JJ CLEMENCE Sugar Land
DOUG JENNINGS Fort Worth
BESA MARTIN Boerne
TROY ALLEY, JR. CHAIRMAN DeSoto
ALVIN COLLINS, VICE CHAIRMAN Andrews
TED NELSON HoustonDOUG ROBERTS AustinC. CLARK WELDER FredericksburgJAN FITE-MILLER, EX-OFFICIO Dallas
YouTubeYouTube.com/realestatecenter
Twitter@recentertx
FacebookInstagram@recentertx@recentertx
LinkedInlinkedin.com/company/recentertx
