Austin feels the economy’s pain, but to a lesser degree
AUSTIN, Texas — To an outside observer, it seems Austin has taken a light hit from the recession.
Unemployment here was only 7.2 percent in September, compared with a national average of 9.8 percent and 8.2 percent in the state of Texas.
“As bad as our unemployment numbers are by our standards, we have been quite lucky compared to much of the rest of the country,” said Dave Porter, senior vice president for economic development at the Austin Chamber of Commerce.
And while the housing crisis saw median house prices in the United States down 15.6 percent in the second quarter the median price in Austin was down just 0.1 percent on the year at $194,000 (after sliding to $182,300 in the first quarter), according to the National Association of Realtors.
But when it comes to economic pain, it’s all a matter of perspective.
“Our unemployment numbers are at record levels and what is worrying is that the jobless rate has been above 7 percent for much of the year,” said Angelos Angelou of Austin-based AngelouEconomics, which provides economic development consulting services. “This is the hardest recession we’ve experienced so far.”
Retail sales are down 11 percent on the year, which Angelou said indicates that “people are either saving their money or are concerned about losing their jobs.”
“We haven’t seen a single major transaction in this area this year because no one really knows what properties are really worth,” said Michael Kennedy, president of real estate company Commercial Texas. “What’s affecting us is the same thing that is affecting the whole world right now.”
Austin has grown rapidly in recent years – the population grew 7.6 percent to 709,893 between 2000 and 2006 – thanks to a combination of government jobs (it’s the capital of Texas), education jobs related to the University of Texas and hi-tech companies.
Computer maker Dell Inc was founded here by Michael Dell while he was still at the University of Texas in 1984. IBM, Samsung and Apple all have large operations here. The city consistently ranks as one of the most attractive locations for companies and entrepreneurs to set up shop in the United States.
According to Angelou, Austin’s growth has in large part been based on an inflow of people from elsewhere.
This year he estimates the population will grow by 45,000, down from growth of 66,000 in 2007.
“For meaningful growth we need more people to come here,” he said.
Mark Dotzour, chief economist at the Real Estate Center at Texas A&M University, said that what may have dissuaded more people from moving here is that their homes have lost so much value they are reluctant to sell.
“For people whose homes have lost 20 percent to 30 percent in value, moving in this market is tough,” he said. “But once Austin starts adding jobs again, I think we’ll see some people in badly affected markets decide to walk away from their homes and move here anyway.”
Photos by Lucy Nicholson