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Tuesday, June 5, 2001
Real estate outlook is brighter
Texas index measures views of those in the know, including lenders, builders and Realtors
By Laura Elder
Caller-Times

David Pellerin/Caller-Times

Lucio Rosales of Rosales Concrete works on a home being built at 13561 Ducat on Padre Island. The Texas Real Estate Confidence Index which measures the confidence of industry insiders is up .09 from the previous quarter.

Texas real estate industry observers are more confident about this quarter than they were about last quarter, or last year for that matter.
   While a growing dot.com death toll has some state commercial Realtors leery, the Corpus Christi commercial real estate industry, dependent on the ebb and flow of the energy industry, is cheering about soaring oil prices.
   Statewide, the Texas Real Estate Confidence Index is .66, up .09 from last quarter and up .03 from the same time in 2000.
   Compiled by the Real Estate Center at Texas A&M University, the index is a gauge of how commercial and residential Realtors, builders and mortgage and commercial lenders feel about the business in the previous and next quarters. An index greater than .50 is considered positive, a lower number is negative and .50 is neutral. Home building on Padre Island and in areas such as Rockport is on the rise, local authorities say.
   The components of the index include an assessment of panelist evaluations for the first quarter (.61) and their expectations for the second quarter (.71), both of which improved .08 and .10 respectively compared to results for the first quarter of 2001, according to the index.
   "The result is particularly strong and points to the expected continued strength in the Texas economy and the positive effects of lower long-term interest rates," said James H. Leigh, the index project coordinator.
   No local report
   Statewide, Leigh said, only commercial Realtors were less optimistic. Their confidence dropped .05 to a still-positive .59. The builder panel had the least-positive index of .56, which was up a modest .02 from last quarter.
   The residential Realtor panel's index of TRECI is .65 up .09 from last quarter. The lending market panels are optimistic about the second quarter, with a mortgage lender TRECI of .79 and a commercial lender score of .61.
   While confidence about the second quarter was measured for Austin, Dallas, El Paso, Fort Worth-Arlington, Houston and San Antonio, a report on Corpus Christi wasn't included.
   But local industry representatives say low interest rates boosted the residential real estate sector. While the national economy has cooled, local home building hasn't, said Amanda Whatley, executive officer of the Builders Association.
   More home starts in April
   In April this year, the city recorded 96 home starts, compared with 67 for the same period last year, according to the city's building division.
   "I've noticed a lot of construction going on," she said. "I'm sure interest rates have a lot to do with it."
   To head off a recession, the Federal Reserve took action early in the year to lower short-term interest rates. The average mortgage rate in Texas during the first quarter was 7.12 percent compared to 8.05 at the beginning of 2000, according to Real Estate Center researchers.
   Joe Adame, who heads locally based commercial real estate firm Joe Adame & Associates , said Corpus Christi is faring better than other Texas cities because of strong energy prices.
   'Area looks good'
   "I think it depends on what part of the state you're in and if you're located near the high-tech industry," Adame said. "For instance, Austin or Dallas which marketed to the cellular business and the high-tech companies, should be concerned, but with energy prices the way they are, our particular area looks good.
   In Austin, confidence has dropped by .02 to .53 from the first quarter, .12 less than the same time last year.
   Given that market's meteoric performance in the past few years, where businesses, followed by highly paid white-collar workers, were flocking to town in record numbers, a cool-down was bound to happen, Leigh said.
   "The Austin real estate market has been the hottest market in the state for as long as we have been compiling the TRECI," he said. An eventual slowdown was inevitable."
   Local market is a maverick
   Matt Cravey, a locally based commercial real estate broker who heads NAI-Cravey Real Estate, said Corpus Christi is always tough to gauge. The city tends to lag behind when the national economy booms, and it tends to do well when everyone else is in a slump, officials say.
   Most of the commercial activity can be attributed to the building of institutional projects, such as government buildings and schools. While the city got a new, $26 million, 172,000-square-foot federal courthouse on the bayfront, it also left an aging structure vacant, Cravey said.
   For the most part, the second quarter in Corpus Christi has been stagnant, he said.
   Still, things aren't so bad. And they could always be worse. The dollar volume in building permits for Corpus Christi in the month of April this year was about $22.5 million, compared with $19.7 million for the same period last year.
   "I feel better than I did a year ago," Cravey said.
   If the energy industry stays strong, the local economy will benefit from a trickle effect, Cravey said. While the oil bust of the 1980s taught local officials to pursue economic diversity, Cravey said, the city still at its core is a blue-collar town.
   "We need diversity, but we can't be what we aren't," Cravey said. "We're not Austin. We're just a working-class town."


Contact Laura Elder at 886-3678 or elderl@caller.com

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