Reading the Texas tea leaves
Lots of mixed signals out there.
Interest rates are down, which is usually a sign of uncertainty. But that uncertainty is being taken advantage of by homeowners who are refinancing higherrate mortgages in droves.
Yeah, there’s a trade war, but people keep spending. And there’s talk of a recession, but so far that nervousness hasn’t seeped into the workforce. Texas is boasting record-low unemployment of 3.4 percent — essentially a full employment figure.
“Houston is at an all-time low in unemployment. People look at economic uncertainty in terms of whether they feel good about their jobs. They want to put their kids in their own homes and raise them in a neighborhood they choose,” Joe Mandola, president of Trendmaker Homes, tells contributor Ilene Bassler. “I think people look at their own specific circumstances as opposed to some broader measure, such as the yield curve inverting. I don’t think they say ‘Honey, the yield curve inverted so we better not buy.’
“I think people look at a micro picture when making buying decisions, rather than a more macro picture of what’s going on in the world,” he says.
To be sure, it’s not always that easy.
Our Rebecca Schuetz writes about her homebuying experience, raising a note of caution for other millennials about to plunk down a big chunk of their savings for a down payment.
Younger homebuyers, who have not been working long enough to have large amounts of what we’d call discretionary savings, are often being asked to tap their retirement funds to help them qualify for a mortgage. It’s a risky proposition — and an expensive one, since early withdrawals from 401(k)s not only reduce savings but also come with a hefty tax bill.
Another place we’re seeing what we have been told is a counterintuitive trend is in a rebound of sorts in brick-andmortar retail.
Columnist Chris Tomlinson thinks he knows why.
“Brick-and-mortar retailers are … offering more pleasurable and exciting in-store experiences that provide the perfect setting for an Instagram post. Others are relying more on pop-up strategies, so they open only when there is customer demand,” he observes. “Consumers want convenience, low prices and a pleasant purchasing experience. E-commerce sites offer those things, but that doesn’t mean brick-and-mortar can’t compete.”
One area in which the region no doubt competes is in the market for liquefied natural gas.
The market for LNG is booming around the world, and the Houston area has become its focal point.
Reporter Sergio Chapa tells us that five liquefied natural gas export terminals in the broader region feed tankers that ship the supercooled fuel from the United States to destinations in 33 nations around the world.
More are in the works, as projects capable of producing up nearly 90 million metric tons of LNG per year are expected to reach final investment decisions in the next couple of years. That could spur some $200 billion — yes, with a B — in construction through 2025. That means thousands of construction jobs and hundreds of high-paying permanent jobs.
So, yeah, there are some disturbing clouds on the horizon, but as we’ve seen frequently in Houston, dark clouds quickly give way to bright skies.
Welcome to Texas Inc.