September 15, 2017

Volume 39, Number 24

Most Austinites complain about traffic problems, but no one seems to be as vociferous and knowledgeable as civic activist Mike Levy, the founder and former publisher of Texas Monthly.  He minces no words, he names names and he tosses out zingers right and left.  Here are some of Levys rants about problems downtown and on The Drag.

About UTAustin’s Drag:  “The city’s transportation department head Robby Spillar plans to reduce the Drag to one lane each way for cars, dedicating the other lanes for usage only by increasingly empty buses (as per Capital Metros own data) and then for trolley cars, for guaranteed gridlock in the UT campus area in addition to the downtown areas, as promoted by Mayor (Steve) Adler and Council Member (Ann) Kitchen.  In addition to increasing congestion, the impact on small business owners stores and restaurants along The Drag will be devastating because of the elimination of parking.”

Levy also zeroed in on downtown traffic:  “Robby, under his ‘Great Streets’ initiative, has already made Colorado and Brazos into two-way streets with loss of vehicular lanes to allow for wider sidewalks and tree pots for cigarettes and benches for sleeping with similar plans for Guadalupe, Lavaca, Trinity, San Jacinto and all streets from the river to 10th.

At 5 pm East 7th is backed up to Brazos with cars headed to IH35.  Make it two way and it will be backed up to Johnson City.  (A big chunk of East 5th between IH-35 and Brazos was quietly made two-way the weekend of August 26.).  More lane elimination is planned throughout the city using money from the last bond election.

“The mayor talks about reducing congestion.  Help me out here.  Please.  How does taking away vehicular lanes throughout the City, and especially in the downtown and UT areas, reduce congestion as per the mayors promise?”

“Under Robby Spillar’s Grand Plan, with the support of the mayor and the Council, has as a ludicrous goal to create intentionally so much congestion people will get out of their cars to ride buses and trolley cars or bikes or walk to downtown,” concluded Levy.  “Hes letting Robby Spillar create gridlock that will make New York Citys look good.”  Check out the next item for more Levy comments about the mayor, council and CapMetro. Read more →

September 8, 2017

Volume 39, Number 23

The City of Austin leaders didnt need a survey to tell them what anyone with a heartbeat understands:  the most important issue facing Austin is traffic.  The survey they conducted anyway confirmed this fact.  But a deeper dive into the recentlycompleted survey also revealed some interesting observations:  such as how longtime residents feel, compared to relative newcomers.

Take the issue of whether residents feel the city is headed in the right direction or wrong direction.  A majority of those surveyed (53%) feel the city is on the right track.  But, a substantial minority (44%) feel it is going in the wrong direction.  When you break it down by how long residents have lived here, there is a dramatic contrast.

EMC Research reporting to the City on its research had this observation:  “There is a stark division based on how long residents have been in Austin, with those who have lived in the city less than twenty years more positive about its direction and more satisfied with it, and those who have lived in the city for longer than two decades more negative about its direction and less satisfied.”

But, what about the city’s taxing and spending priorities?  It’s a much different picture. “There is near unanimous agreement the City has enough money and just needs to do a better job making sure it is spent on the right priorities (82% agree; 17% disagree),” reported the researchers.  But newer residents were still more open to tax increases than long-time Austinites.

Now, back to that bugaboo – traffic.  Taken together, traffic, transportation and roads/infrastructure were by far the major topofmind concern.  Top-of-mind means unprompted.  The question was open-ended, without listing a series of problems.  This approach is a solid gauge of respondent concerns.

Oh sure, there were a number of other concerns mentioned by respondents.  After all, this is Austin where almost everyone has an opinion.  Unprompted responses related to housing came in second – way back in the pack.  But, when prompted, the numbers jumped way up as they expressed concern about the rising cost of living in Austin.  And, housing was the biggest driver of those responses.  Taken as a whole, the responses were not all that surprising – even the ratio between those who have lived in Austin awhile compared to recent residents. Read more →

August 11, 2017

Volume 39, Number 19

Is something wrong with Austin home prices?  For that matter, the same question can be asked about home prices in other major Texas cities.  This sobering question is prompted by recent national reports that area home prices are among the most overvalued in the US.  Those reports have pointed to the recent rapidlyrising home prices in the Austin area as examples that the local residential housing market is overvalued.  However, this week, a longtime, respected Texas economic research outfit took issue with this designation.

While not overtly stated, these national reports saying Austin housing is over-valued imply a housing bubble may be on Austins horizon.  And, a housing bubble further implies a bursting of the bubble could have bad economic consequences.  Therefore, their reports should not be taken lightly.

You may remember two weeks ago (see the 7/28/17 newsletter in our Archives section) we told you the TexasA&M Real Estate Center was looking into these “overvalued” reports.  Well, the Center released preliminary results of its research this week.  Saying such comparisons are “not easy,” it did conclude that “Texas shows no current signals of overheating” – a reference to a possible housing bubble like the one that led to a recession many years ago.

TexasA&M research economist Dr. Luis Torres refers to the discrepancy in calculation as a “misalignment” that suggests “recent price changes cannot be explained by supply and demand fundamentals alone.”  He points to 2014 as the year when the “misalignment” started in Austin, Houston and DFW.  And 2015 when it started in San Antonio.

Torres says “there is no sure way of knowing what prices should be,’ even when considering supply and demand determinants, since they change over time.  Even more difficult is determining with certainty the formation of housing bubbles.”

But, the real estate researcher looked back at conditions present during the last bubble, and concluded they “seem not to be present currently in the Texas housing market or in the major Texas MSAswhich includes Austin.  However, he did caution about the lack of housing inventory, and said the TexasA&M Real Estate Center “will continue to monitor and analyze” this significant supply restraint.  We’ll also watch it for you. Read more →

July 28, 2017

Volume 39, Number 17

During Rick Perrys 14year tenure as the states governor, he regularly touted the Texas Miracle” – his term for the economic dynamism of the Lone Star State.  He was an aggressive advocate for the oil and gas industry, while presiding over Texas leadership in the production of wind and solar power.  Now, with Texas in his rear view mirror, Perry is pushing policies that will greatly enhance his home states energy future.

As the current US Energy Secretary, Perry is making major moves to ensure US dominance in the global energy market.  And just about every action he is taking will have a profoundly positive impact on Texas energy leadership.  He is helped by the fact his energy policies are closely aligned with the man who appointed him to the post, President Donald Trump.

Just as Perry can’t claim total credit for what happened in Texas (credit Houston oilman/developer George Mitchell for the gamechanging fracking approach to the expansion of oil and gas production), he must also nod in Trump’s direction for what is happening to US energy development.  But, Perry is front and center on the advocacy and implementation of those policies.

A major driver of this effort is the push to export Liquefied Natural Gas (LNG).  Fracking in Texas has unleashed massive amounts of natural gas – so much that “overabundance” has been used to describe it.  Well, converting gas into liquid makes it easier to ship to markets around the world.

New and expanding LNG plants along the Texas Gulf Coast are the key to this effort.  So is expansion of the Ports of Houston, Beaumont, Corpus Christi, Texas City and Port Arthur.  And yeah, pipelines to get the gas to the Texas coast.  No longer are there roadblocks in the way of exporting this fossil fuel.  As Perry told the National Press Club:  “If you meet the rules, heres your permit.”

Of course, environmentalists are still battling the reliance upon fossil fuels – urging a move to alternative, sustainable fuel sources such as those derived from wind and solar.  (The City of Austin is one of the nation’s leaders in this direction).  As governor though, Perry was an all-inclusive energy advocate.  The massive wind farms and solar power installations that erupted in Texas during his tenure are testimony to that approach.  Perrys history indicates the US Energy Department may follow his all of the above approach.  If so, Texas will benefit. Read more →

July 14, 2017

Volume 39, Number 15

One of the reasons people are moving to the Austin area at such a rapid clip is they are hearing from current residents who have income increasing at one of the fastest rates in the nation.  Yes, available jobs are important to population growth, as is cost of living and quality of life.  But after newcomers arrive, their income apparently keeps going up over the years.

Recent research shows Austin’s growth in real total personal income in 2015 was the seventh best among the 50 largest US metros, according to Chamber VP/Research Beverly Kerr.  She further reported this week that real per capita personal income growth over the last five years is 17.0%, and only five large metros have seen faster growth.  For comparison purposes, Kerr noted that Dallas-Fort Worth ranked 4th, and Houston and San Antonio (15th and 18th respectively) also saw better growth than the national gain.

Realizing eyes tend to glaze over when reviewing economic statistics (as ours did several times), we were intrigued by Kerr’s analysis of a recent trend to take into account regional price differences and personal consumption expenditures combined with income growth.  This data is not simply inflation-adjusted.  We’ll try to boil down her findings, without downplaying her good work.

She calls it price parity.  With all the local debate criticizing rising costs in the area, she found Austins average prices are still 0.5% lower than the US average.  This puts Austin way below “competitor metros” such as San Jose, San Diego, Boston, Seattle, Denver and Portland, as well as many other big metros.

And, importantly, Austin is still lower but not by much than Houston and DallasFort Worth.  In other words, a dollar earned in the Austin metro is worth more than similar income in more than 20 other big cities.

An important distinction:  inflation rates differ by regions.  When you see common national inflation rates, they are not nearly as relevant as regional inflation rates.  This is why the unique measure used here is significant.

Not only has the areas personal income been increasing at a comparatively fast rate, the lower regional inflation rate has given it enlarged spending capacity.  Caution:  Austin’s regional rate of inflation is creeping higher, compared to the national standard.  Be aware. Read more →

June 9, 2017

Volume 39, Number 10

A shift in Austins economy is taking place as we speak.  It may not be discernible to some, but it is real nonetheless.  Tech jobs are diminishing as a percentage of the employment in the Austin area.  In fact, for the first time since the end of the last recession, tech job growth falls short of overall job growth.  Lets look at what this economic change means.

This is not a crisis, not by any means.  As a matter of fact, some will argue that, even with Austins reputation as a tech job mecca, diversification of the types of jobs is a good thing.  You know, the old don’t-put-all-your-eggs-in-one-basket cliché.  And we’re talking about the percentage of jobs in the tech sector diminishing, not the total number of jobs in a growing job market.  The Austin tech job market is quite healthy.

This week, the Austin Chamber’s VP/Research, Beverly Kerr, said more than 5,800 high tech employers are in the Austin metro.  And, jobs in Austin’s tech industries total nearly 129,700, or 13.6% of all jobs. Compared to 6.7% nationally.  But in 2016, Austin tech jobs grew by only 1.1%.  “Thats a smaller gain than the 3.3% increase for employment across all industries,” noted Kerr.

Kerr tosses out one more example.  She reports that in 2016, high tech jobs represent 13.6% of all Austin area jobs, but only 4.7% of the years net new jobs.  Net new jobs.  This further illustrates that the growth of tech jobs is slowing.

Over the last few months, we have reported on the changing situation of Austin area jobs.  (Check the April 14, 2017 edition in our Archives section, where we pointed out the Registered Nurses category was at the top of Job Listings one month.)  Healthcare jobs (some of them fall into the tech category) will likely grow exponentially in the coming years, if for no other reason than the magnet provided by DellMed.

Job diversification is occurring in other areas as well.  Take tourism and travel – just check out all the new hotels that are frequently full.  Oh, yes, and try to move around downtown most weekends when various events draw free-spending travelers.  Of course, underpinning all this job growth are the government paychecks that regularly flow through the Austin economy from state employees, UTAustin faculty and staff, other educational enterprises, city and county employees, etc.  So, while tech jobs as a percentage of the whole may be slipping a bit, the overall continuing job growth balance appears to be a good thing. Read more →

June 2, 2017

Volume 39, Number 9


Some Austinites have been upset by the reduction of street parking especially in the downtown area.  Many retail merchants have been negatively impactedNow, the City of Austin has published an elaborate handbook with detailed instructions on how to remove even more street parking.  The stated purpose:  to convert a parking space into a street patio or a parklet.”  And the handbook is being distributed free of charge.

Two brochures have just been made available by Austin’s Transportation Department:  one outlines the permitting process for setting up a sidewalk café, the other sets out guidelines for a street patio.”  One permit applies to both.  Austin City Council Resolution No. 20120322-067 directed the creation of the street patio program.  Several street patios have already been authorized.  Whats new is the aggressive marketing process, demonstrated this week by publication of the colorful handbook containing step-by-step guidelines.

The new userfriendly handbooks contain a wealth of photos, illustrative drawings, and graphics,” boasts the City.  “An updated, easy-to-use permit application also is available online.”  If you want to personally check out the brochures, go to

The City explains its action this way:  “A street patio (a.k.a. ‘parklet’) is a sidewalk café created in street space formerly devoted to parking.  It is permitted as a type of sidewalk café.  By converting street space to a use that serves people, street patios can help make cities more welcoming and people-friendly.”  Couple this with what it says about sidewalk cafés:

Sidewalk cafés and street patios add vibrancy, amenities and people to Austin streets.  They support local businesses, create a sense of place in neighborhoods and business districts, beautify the streetscape, and create walkable destinations for residents.”

There was no reference to impact on people who drive vehicles, when the City announced the availability of the handbooks.  There was also no indication of a limit on the number of parking spaces that could be converted to Street Patios, except to say they were “temporary,” and because they were a form of sidewalk café, they could be limited to restaurants or other businesses that are licensed to serve food and beverages, including alcohol. Read more →

May 5, 2017

Volume 39, Number 5

Theres a big pot of money that flows regularly into Austins government.  Its growing by millions of dollars each year.  Its not tax money taken from you.  Its tax money paid by people who dont live or work here.  Near the end of this month, the Austin City Council will hear suggestions for how the money could be allocated.  Many local entities want a piece of the pie.  And one big chunk of it could be used to greatly increase the growing annual amount.

We’re talking about the Hotel Occupancy Tax (HOT).  When the Texas Legislature enacted the tax 30 years ago, it allowed cities to increase the tax, with those dollars going directly to the cities.  In Austins first fiscal year of assessing the HOT, the city received almost $6 million.  Not bad.  But after the growth of the lodging industry and a huge increase in tourism and convention business, the most recent full fiscal year ending in August 2016, the HOT had mushroomed to more than $87 million.

The primary push for the HOT was to raise money to promote tourism and to build convention centers.  Over the ensuing years, the uses for those funds expanded to include promotion of the arts that directly promoted tourism and hotel activity.  The same for historical restoration and preservation.

For the last few months, the citys Visitor Impact Task Force has been studying the way the HOT revenue has been spent.  A number of suggestions are being considered, with talk about funds being distributed geographically and culturally throughout the city.  Their report will go to the Council for final consideration.

The current discussion on allocation of the HOT funds also includes a biggie this time around — major expansion of the successful Austin Convention Center (ACC).  It’s a big bucks issue.  The backers point out the ACC is losing business regularly because it is too small to handle the groups that want to meet in Austin.  (Hey, even hometown Dell is going to hold its next big gathering in Las Vegas because it cannot fit into the ACC.)

Some say the HOT is the “goose that lays the golden egg” and they want to fatten the goose with the ACC expansion, so it can lay even more golden eggs.  But will disparate interests nibble away at the money, stopping the ACC expansion?  Stay tuned to see if the City Council takes a short-sighted or a forward-looking vote. Read more →

April 28, 2017

Volume 39, Number 4

Its probably not accurate to describe it this way, but it seems fitting:  Travis County is, in effect, a laboratory for UTAustins Dell Medical School.  Many activities at DellMed are focused on the health needs of Travis County.  To determine which avenues to pursue, DellMed is relying on recent research about the more than 1.2 million people who live in the county.  The findings of this research are instructive.

For instance, did you know the leading cause of death in Travis County?  Or the second leading cause?  And, according to the 2017 Critical Health Indicators Report, compiled by Austin Public Health, these two causes of death account for a whopping 40% of all deaths in Travis County.

Cancer is the leading cause of death in Travis County, killing 1,131 people in 2014 (the most recent year for which data is available).  Not surprisingly, the #2 cause is heart disease.  So DellMed, partnering with several entities, is “working to position primary care physicians to lead the fight against these and other debilitating illnesses.”

The research also disclosed interesting facts about you and your neighbors.  Can you guess the percentage of the 1.2 million Travis County residents who have a weight problem?  More than half of all residents 58% — are overweight or obese.  What other factors impact the personal health of county residents?  Well, 14% smoke and 8% have diabetes.

On the positive side, the study found fewer highschoolers are using tobacco, and vaccines have reduced the number of Travis County residents with hepatitis and mumps.  Also, lung cancer mortality rates are declining.

DellMed is not only focusing on curing and treating illnesses and disease, but is “developing a model that shifts the focus from treating sickness to helping patients stay healthy.”  It talks about delivering “robust preventive care.”  How is it planning to do this?

It hopes to increase access to vaccines and screenings.  DellMed leaders are focusing on the social, economic and environmental causes of health problems.  As a result, one of its goals is to “reduce the onset of chronic illnesses, helping people to get and stay healthy.”  Travis County is the “laboratory” for these and other initiatives that will ultimately have wider impact. Read more →

February 17, 2017

Volume 38, Number 45

Apartment occupancy is an important element of Austins residential housing picture for a whole range of reasons.  And prior to the past 12 months, the apartment market exuded tremendous growth and vitality for three robust years.  Not anymore.  This is changing right before your eyes.  There are a number of reasons for what is happening, and what will likely happen, in the near term.

No matter how many new units came online, they were gobbled up almost immediately.  In fact, during the three years prior to 2016, “apartment occupancy consistently held up, averaging a very good 94% during that time,” observed longtime apartment tracker Robin Davis with Austin Investor Interests.  “However 2016 was a year of change.”

What changed, Robin?  Occupancy dropped to a level unseen since 2010, resting at 92% by year-end.  Annual absorption barely covered 63% of the 10,348 net conventional units added, and effective rents fell after almost six years of consecutive gains.”  This a big triple whammy.  Not only that, 2016 ended with the smallest rate of growth since 2010 at 4.8%.

So did investors scatter, not wanting any part of owning apartment buildings in the Austin area?  On the contrary.  “The number of sales continued at a vigorous and near record pace with over 22% of the inventory having changed hands in the last 24 months,” Davis reported.  So, what’s going on here?  “Despite the current setbacks, the Austin area is still known as a hot spot’ with continued job and population growth that exceeds other investment alternatives,” she continued.

Because of this ‘hot spot’ reputation, Davis predicts “robust continuity” in the area’s investment and development arenas.  “It appears this trend will continue as investors seek opportunities throughout the market,” she suggests.

Yeah, but what about building more apartments?  “New development activity is expected to remain robust with current deliveries conservatively estimated at over 10,000 units for each of the next two years,” Davis said.  (Uh, oh.  Gotta watch this.)  “For the short run, expect challenges in both rent and occupancy as new units are ushered in,” Davis acknowledged.  After the next two years?  “New starts remain precarious,” she admitted.  It will be interesting to see how market share competition impacts this landscape.  We’ll keep an eye on it for you. Read more →