The Southwest economy continued to grow by 2.1 percent in the 12 months ending September 2001, a much slower rate compared with 3.8 percent in the 12 months ending September 2000. Texas led the Southwest region with an annual growth rate of 2.6 percent, or 244,900 new jobs. Employment in New Mexico grew by 1.7 percent; Louisiana, 1.4 percent; Oklahoma, 1.1 percent; and Arkansas, 0.8 percent.

Residential building permit activity in the Southwest for the first 9 months of 2001 was still robust, up almost 6 percent compared with the volume in the first 9 months of 2000. Single-family permits totaled approximately 118,000 homes, a gain of more than 5 percent. All States recorded increases; Texas accounted for 75 percent of the total activity. Multifamily building permit activity in the region totaled more than 30,000 units, up 9 percent from the first 9 months of 2000.

According to the NATIONAL ASSOCIATION OF REALTORS^®, existing home sales surged 25.2 percent in New Mexico, 12.9 percent in Oklahoma, 9.3 percent in Louisiana, 1.2 percent in Arkansas, and 1.1 percent in Texas from the second quarter of 2000 to the second quarter of 2001. Significant increases in the median sales price were reported in Dallas at 12.4 percent, Little Rock-North Little Rock at 13.3 percent, and Oklahoma City at 11.6 percent.

Sales of new homes in the Dallas-Fort Worth area for 2001 are expected to finish the year more than 12 percent below 2000’s record of 32,000, according to Myers Group. The market for affordably priced homes for move-up buyers and first-time homebuyers continues to be strong compared with homes in the middle and upper price ranges.

The slowing economy and demand, along with the pipeline of new supply, has resulted in a more balanced market. The apartment occupancy rate in the Dallas-Fort Worth rental market declined to 93.5 percent as of the end of September 2001. In the 12 months ending in September, more than 7,000 new apartments were added to the inventory, but less than 5,000 units were absorbed. Average rents have increased by 4 percent with the average 2-bedroom apartment renting for $794. With more than 11,000 units still under construction, the market is expected to become much more competitive over the next 12 months.

In the past 12 months, the Austin apartment market has gone from tight to soft, losing more than 20,000 jobs in its high-technology sector. As a result of the job losses and the significant slowdown in total employment growth in the area, the unemployment rate has more than doubled from 2.1 percent in September 2000 to 4.6 percent in September 2001. The downturn in the economy has greatly affected the entire rental market. In the 12-month period, more than 7,000 new units entered the market. The Austin apartment occupancy rate fell from 97 percent in the third quarter of 2000 to 91 percent in the third quarter of 2001, an increase of approximately 6,000 vacant rental units. Currently, more than half of the apartment developments in the area are offering concessions, typically 1 or 2 months’ free rent. With an estimated 3,000 units starting construction in the third quarter and a significant economic downturn in the local economy, the rental market is expected to continue to soften, particularly over the next 6 months.

The Houston metropolitan area remains a picture of stability compared with other markets in Texas where high-technology employment affects the local economy more. In the 12 months ending September 2001, single-family permits stood at more than 25,000, up 10 percent over the same period a year ago. Multifamily permits, at 6,300, were down 18 percent. Owing to a limited number of apartment completions in 2000 and early 2001, occupancy remained above 95 percent at the end of the third quarter. The market for in-town housing, including highrise apartments, condominiums, and townhomes, continues to boom as massive traffic congestion makes close-in housing appealing.

In the El Paso area, the economy is stagnant as a result of 50,000 people being laid off by the maquiladora plants in Juarez, Mexico, due to the manufacturing slowdown in the U.S. economy. In September 2001 apartment occupancy was 91 percent, virtually unchanged since September 1991.

The Oklahoma City Metropolitan Association of REALTORS^® reported sales of more than 10,000 houses for the first 9 months of 2001, a 6-percent increase compared with the same period of 2000. Favorable interest rates and a stable local economy are expected to continue bolstering sales for the remainder of the year. The average sales price increased 5 percent to $107,600. Apartment occupancy rates in both Oklahoma City and Tulsa have stabilized near 93 percent. New additions to the rental inventory should remain relatively low in the fourth quarter of the year with 800 new units in Oklahoma City and 200 in Tulsa.

Spotlight on Bryan-College Station, Texas

The Bryan-College Station metropolitan area in south central Texas is heavily influenced by Texas A&M University, the oldest public institution of higher education in Texas and the area’s largest employer. Texas A&M students account for approximately 29 percent of the Bryan-College Station area’s population, and faculty and staff account for 16 percent of metropolitan area’s nonagricultural employment. Enrollment in fall 2001 stood at approximately 44,600 students. Other colleges in the area include Blinn College, with a fall 2001 enrollment of 9,200 students.

In 2000, Texas A&M had a $523.9 million payroll. A study in 1999 by the university reported that the institution’s estimated direct economic impact on the area in 1999 was approximately $766 million annually, with student expenditures accounting for approximately $192 million. Officials estimate the typical Texas A&M student spent $4,418 locally during 2000.

As of the 2000 census, the Bryan-College Station metropolitan area had a population of 152,415, a 25-percent increase, or 30,400, in 10 years. The area’s nonagricultural employment grew 1.1 percent in the 12-month period ending September 2001 to 76,900, compared with 3.4-percent growth in the previous 12-month period, as Texas A&M’s growth slowed. Since 1996 unemployment has remained at less than 2 percent.

Single-family building permit activity in the first 9 months of 2001 reached a total of 648 homes, up 7 percent compared with the first 9 months of 2000. The median sales price for existing homes in the 12-month period ending September 2001 ($116,400) was up 14 percent from the previous 12-month period. Single-family homes sales totaled 1,427, a 3.2-percent increase, during the 12-month period ending September 2001.

Two major golf-centered housing developments targeted to retired Texas A&M alumni are in the pipeline in the area. ClubCorp USA is developing the Traditions Gold Club at University Ranch, a $236 million planned community that will include a golf course, country club, 180-room hotel with 50 villas, conference center, and 1,000 residential units. Construction began in 2001; completion is expected in 2002. A second golf course community is planned on the east side of Bryan. The $100 million Miramount community would include a 27-hole golf course. The first phase will have 314 quarter-acre and 1-acre lots.

Currently the rental market in the Bryan-College Station area is somewhat soft. As of the 2000 census more than 54 percent of the metropolitan area’s households were renters. As expected, a substantial portion of the 30,000 renter households consists of university students. Since adding approximately 900 multifamily units to the market in the past 12 months, apartment occupancy has declined to less than 92 percent as of September 2001 compared with a more normal rate of 95 percent or more in fall 2000. In the first 9 months of 2001, permits were issued for 300 multifamily units, so conditions are not expected to change significantly over the next 12 months. Average rent for a two-bedroom apartment was $637 in fall 2001.