The rate of job growth in the Southwest region continued at a healthy pace. In the 12 months ending November 2000 employment increased 2.2 percent, or 322,200 jobs, up only slightly from the rate for the previous 12 months. Texas led the region with a 2.6-percent rate of growth, adding 239,800 jobs. The Dallas-Fort Worth area added 91,200 jobs, or 3.4 percent, in the 12-month period ending November 2000. Employment growth in 2001 is expected to
be in the range of 2.5 to 3 percent.

The existing sales market in the Southwest was very strong during 2000. A total of 816,200 homes were sold in the region, off less than 2 percent from 1999, according to NAR. Single-family building permit activity in the Southwest region totaled 143,032 homes, a 1.5-percent increase from last year. A 6-percent increase in Texas offset losses in the other States. Metropolitan areas with the largest percentage growth in single-family permit activity were Galveston-Texas City (38 percent) and Austin-San Marcos (13 percent). The Dallas and Houston metropolitan areas recorded increases of 12 and 7 percent, respectively. Single-family permits declined by 5 percent in San Antonio.

During the first 11 months of 2000, manufactured home shipments in the Southwest totaled 48,176, a 29-percent decrease. According to the Manufactured Housing Institute, one reason for the decline is that a significant amount of current demand is being met through sales of existing homes.

Regionally, multifamily permit activity declined 34 percent to 36,652 units. All States recorded a decrease in activity. The Dallas metropolitan area recorded the largest absolute decline of the region’s major metropolitan areas. In 2000 permits were issued for only 6,395 multifamily permits compared with 13,107 in 1999. The decline reflects builder cutbacks in response to the large pipeline in development to meet the unchanged volume of demand. Also, increased interest rates, land cost, and construction costs have made a number of projects infeasible. It is anticipated that with a strong market and rapid absorption of new apartments in the coming year, a new round of increased multifamily activity may start in the second half of 2001.

Conditions in the Albuquerque rental market are currently somewhat soft. The Apartment Association of New Mexico reported apartment occupancy at 92.5 percent at year’s end, down slightly from the third quarter. The market is expected to reach a balanced condition during the next 12 months. The average rent for two-bedroom, two-bathroom apartments was reported to be $690 a month. The Austin apartment market continues to be very tight. A big unknown is what impact the dotcom implosion may have on the local job and housing markets. According to Capitol Research, apartment occupancy in the Austin area was 97.5 percent at year’s end, after the absorption of more than 5,700 new units during the year. ALN System’s January survey reported average two-bedroom rent in the Austin area at $878. Rental market conditions in the Dallas-Fort Worth area at year’s end were balanced but competitive. ALN System’s January 2001 Dallas-Fort Worth survey showed occupancy at 94 percent, and rent for a two-bedroom unit averaged $768. The San Antonio market is also balanced. The San Antonio Apartment Association reported year-end occupancy at 94.7 percent and average two-bedroom rent at $669.

The New Orleans metropolitan area apartment market remains somewhat soft, with occupancy at 94 percent and only slight rent increases in 2000. The approximately 1,000 luxury apartments slated to come on the market in the New Orleans area in 2001 should more than meet the demand. Apartment occupancy is reported at 94 percent in Little Rock, and the market is balanced. In the Fayetteville area the occupancy rate is 95 percent, and the market is tightening. Oklahoma City apartment occupancy is at 93 percent, and Tulsa’s is at 92 percent.

Spotlight on Houston, Texas

The Houston metropolitan area had a total population in 1999 of approximately 4 million people, up 21 percent from 1990. Between 1990 and 1999 Houston was the Nation’s fastest growing metropolitan area. Since 1990 the most rapidly growing housing markets in the Houston area have been Fort Bend County in the west, with a 57-percent increase in population, and Montgomery County in the north, with a 58-percent increase. Immigration has accounted for most of the city of Houston’s population growth since 1990.

Houston’s major industries are oil, health care, and aerospace. Major contractions in the energy industry during the past 20 years have concentrated the Nation’s oil and gas industry in the Houston area, making it the “Petroleum Capital of the World.” More than 5,000 energy companies are located within a 100-mile radius of Houston, and nearly 25 percent of the Nation’s refining capacity is located in the area. The Texas Medical Center is the largest medical complex in the world and, with nearly 55,000 employees, is Houston’s largest single employer. Other major economic forces in the area include NASA’s Johnson Space Center and the Port of Houston, first in the Nation in tonnage of foreign cargo and third based on trade value. High-technology industries have become a growing segment of the Houston economy. Because of its importance in the energy and healthcare industries, Houston is an international city. The metropolitan area has 65 consulates, 27 active foreign chambers of commerce and trade associations, 57 foreign bank offices, and 2,400 firms engaged in international business. The Texas Medical Center treats more than 15,000 foreign patients annually.

In 2000, building permits were issued for 23,769 single-family homes in the Houston metropolitan area, a 7-percent increase compared with the same period in 1999. A healthy economy and continued strong demand contributed to the increase. Homebuilding activity continues to be concentrated in Fort Bend County, Montgomery County, and the NASA/Clear Lake area. Based on data from the Texas Real Estate Research Center, the average sales price of an existing home in the Houston metropolitan area increased 11 percent in the 12-month period ending November 2000 to $143,000, and sales were up 1.7 percent.

Multifamily building permit activity in the Houston area for 2000 was down 33 percent compared with 1999. The cutback was expected after 3 years of very strong activity, when permits were issued for more than 42,600 units. The Houston area apartment market is balanced overall, but very competitive conditions are reported in a number of submarkets. Occupancy rates vary widely by submarket. In the Inner Loop and Midtown submarkets occupancy rates of 95 percent are typical for both new and existing developments. Rents for new two-bedroom units in these submarkets are averaging more than $1,000 a month. In the Outer Loop and other more suburban submarkets the occupancy rates range from 85 to 90 percent, and rents are $150 to $200 less than in the Inner Loop submarkets. Occupancy in older projects is declining in the fast-growing sub-urban locations as new Class A properties with rent concessions lure tenants from existing complexes. Demand for affordable rental housing remains high, with the occupancy rate in low-income housing tax credit- (LIHTC-) financed properties currently over 95 percent. In the city of Houston new upscale commercial and residential development has been very successful, especially within the central business district, the Medical District, and the Galleria area. With the strong job market and reduction in the multifamily pipeline, the overall apartment market is expected to tighten in the coming months.