LONG RANGE PROSPECTS

FOR TEXAS
EIGHTEENTH ANNUAL OUTLOOK
FOR TEXAS LAND MARKETS
San Antonio, Texas
April 25, 2008

Dr. James P. Gaines

Research Economist
Real Estate Center at Texas A&M University

1
Texas – Poised for a 21st

Century Boom
• Population and Economic growth
• Low cost, available labor
• Pro Growth Attitude
• Migration into State from elsewhere
• Attractive Retirement Area
• Pressure on infrastructure,
government services, public finance
• Most affordable state for land,
housing and overall cost of living
2
Things Are Going to Change!
• Urbanization and concentration of
population: metro areas will get bigger and
so will most of the small/medium-sized towns
• Shift from Anglo to Hispanic majority
• Rapidly increasing public service demands:
education, roads, transit, safety, healthcare
• Local Growth/No-Growth/Controlled Growth
advocates and confrontations
• Main challenge will be to maintain quality-of-
life
3
Top 10 Job-Creating States in 2007
Thousands of jobs created December 2006 to December 2007

Source: BLS 4
15 Top Job-Creating MSAs in 2007
Thousands of jobs created December 2006 to December 2007

Source: BLS 5
 Demographics Overview
„ Texas is fastest growing state in
absolute number of people
„ Texas is a “younger” state than the US
as a whole
„ Immigration – foreign and domestic - is
the major contributor to Texas
population growth and significantly
undercounted
„ Aging Boomers represent a primary
housing target
6
 U. S. Population Pyramids: 2000 and 2020

Boomers: 1946-1964: 54-36 years old Boomers: 1946-1964: 74-56 years old
Prime Income Earning Years Retirees and Near Retirees

Population Pyramid 2000 Population Pyramid 2020

Age Cohort
85+

80 - 84 Male Female
Male Female
75 - 79

70 - 74

65 - 69

60 - 64

55 - 59

50 - 54

45 - 49

40 - 44

35 - 39

30 - 34

25 - 29

20 - 24

15 - 19

10 - 14

5-9

0-4

Percent of Total Population Percent of Total Population

7
US Population Growth 2007-2012
2007-2012

8
Source: Global Insight, Inc.
2000 – 2007 States with Population
Increases > 1 million
Number Percent
Texas 3,052,581 14.6%
California 2,681,560 7.9%
Florida 2,268,419 14.2%
Georgia 1,357,934 16.6%
Arizona 1,208,140 23.5%
North Carolina 1,014,541 12.6%

Source: U.S. Census Bureau

Table 2. Cumulative Estimates of the Components of Population Change for the United States, Regions, States and Puerto Rico:
April 1, 2000 to July 1, 2007 (NST-EST 2007-02), December 27, 2007
9
Leading State Population Increases the Past
Two Years
Total Population Foreign Domestic
2005-2006 Increase Natural Immigration Immigration

Texas 579,275 235,558 125,770 218,745

Florida 321,697 58,566 99,754 165,757
California 303,402 325,333 266,295 -287,684
Georgia 231,388 73,623 37,451 120,953
Arizona 213,311 52,904 31,662 129,987
North Carolina 184,046 48,596 31,907 104,133
Total Population Foreign Domestic
2006-2007 Increase Natural Immigration Immigration

Texas 496,751 246,783 109,086 141,280

California 303,343 328,956 233,810 -263,035
Georgia 202,670 78,223 31,330 94,004
Florida 193,735 69,452 88,111 35,301
North Carolina 191,590 54,620 24,465 111,963
Arizona 173,066 56,036 27,708 90,402
Source: U.S. Census Bureau
Table 5. Estimates of the Components of Population Change for the United States, Regions, and States:
July 1, 2005 to July 1, 2006, December 22, 2006 and December 27, 2007 10
Top and Bottom 10 States by Domestic Migration:
2000 to 2007

11
Sources: "Domestic Net Migration in the United States: 2000 to 2007," US Census Bureau; US Census Population Estimates Program
Texas Population Since 1900
Since 1960, Texas has averaged adding
266,000 people per year

Source: US Census Bureau 12

 Projected US and Texas
Population (millions)
2005 2010 2015 2020 2025 2030
U.S. Census Bureau
US 295.5 308.9 322.4 335.8 349.4 363.6
Texas 22.9 24.6 26.6 28.6 30.9 33.3
Texas State Demographer
50%
Immigration* 22.6 24.3 26.2 28.0 29.9 31.8
100%
Immigration* 23.3 26.1 29.2 32.7 36.7 41.1
2000-2004 22.9 25.1 27.6 30.3 33.2 36.3
Average 22.9 25.2 27.7 30.3 33.2 36.4
Average Texas Increase
Since 2005 2.4 4.9 7.5 10.4 13.6
* Projections are from the 2000 Census, thus 2005 is a projected population for the 50% and the 100% scenarios. All others are based on U. S.
Census Bureau annual estimates.
13
 Projected Texas Population
(000s) 2000 - 2030
At 50% 1990-2000 rate of immigration
At 2000-2004 rate of immigration
At 100% 1990-2000 rate of immigration

Between 8 and 17 million more

residents between 2005 and
2030

14
Source: U.S. Census Bureau, Texas State Demographer
 Averaging the projections results in an
increase of 13.6 million people by 2030.
Over the next 25 years, equivalent of adding:

another Dallas-Ft. Worth

metropolitan area, plus
another Houston
metropolitan area, plus
another San Antonio
metropolitan area, plus
another Corpus Christi

15
Population Growth Rate by Race

Source: Texas State Data Center and Demographer, Average of Projections 16

Percent of Total Texas Population by Race
Anglo and Hispanic Proportions Reverse by 2030

17
Source: Texas State Data Center and Demographer, Average of Projections
Percent of Texas Population by Age Group
and Ethnicity, 2000

Source: Texas State Data Center and Office of the State Demographer; Real Estate Center 18
Percent of Texas Population by Age Group
and Ethnicity, 2040*

Source: Texas State Data Center and Office of the State Demographer; Real Estate Center
*Projections for the 1.0 scenario
19
Top Growth MSAs 2000-2007

20
Source: U.S. Census Bureau
Major Texas MSAs Population to
2030

s
Dalla
o n
Houst

San Antonio
Austin

21
Source: US Census Bureau, Texas State Data Center and Demographer
 Austin MSA Population
Austin MSA: Bastrop, Caldwell, Hays, Travis & Williamson Counties

Between 815,000 and 2 million more people by 2030

22
Source: US Census Bureau, Texas State Data Center and Demographer
 D-FW MSA Population
12-Counties: Collin, Dallas, Delta, Denton, Ellis, Hunt, Kaufman, Rockwall & Johnson, Parker,
Tarrant, Wise

Between 2.8 and 6.7 million more people by 2030

23
Source: US Census Bureau, Texas State Data Center and Demographer
 Houston MSA Population
10 Counties: Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, San Jacinto
& Waller

Between 2.1 and 4.7 million more people by 2030

24
Source: US Census Bureau, Texas State Data Center and Demographer
San Antonio MSA Population
Atascosa, Bandera, Bexar, Comal, Guadalupe, Kendall, Medina, Wilson Counties

Between 425,000 and 800,000 more people by 2030

25
Source: US Census Bureau, Texas State Data Center and Demographer
 Changing Face of Housing:
Future Homebuyers & Sellers
During the next
two decades,
minorities will
account for
approximately
two-thirds of
household growth
… and half of all
first-time
homebuyers

Source: Social Science Data Analysis Network; NAR Forecast 26

 Five Generational Groups
to Watch

„ Baby Boomers
„ Young and Hip
„ Retired and Hip
„ Immigrants with Aspirations
„ International Vacationers
27
The Aging Boomers

28
 Live Births in the U.S.
Millions

Baby Boomers

Echo Boomers
Entering 20s

29
Source: National Center for Health Statistics
 U.S. Population Groups
Millions
Echo Boom
Baby Boom

Pre-boom
Baby Bust

Source: National Center for Health Statistics

30
millions
Baby Boomers

Source: Census Bureau

31
Age Distribution of the United States 2005-2030

Boomers Boomers
2005 41-59 2010 46-64

Boomers 2030 Boomers

2020 56-74 66-84

32
 Texas Age Distribution 2005-2030
2005 2010
650,000 650,000

600,000 600,000
Boomers
550,000 550,000
Boomers
500,000 500,000

450,000 450,000

400,000 400,000

350,000 350,000

300,000 300,000

250,000 250,000

200,000 200,000

150,000 150,000

100,000 100,000

50,000 50,000

0 0

85+
0

10

15

20

25

30

35

40

45

50

55

60

65

70

75

80

85+
0

10

15

20

25

30

35

40

45

50

55

60

65

70

75

80
Age Age

2020 2030
650,000 650,000

600,000 600,000

550,000 550,000
Boomers Boomers
500,000 500,000

450,000 450,000

400,000 400,000

350,000 350,000

300,000 300,000

250,000 250,000

200,000 200,000

150,000 150,000

100,000 100,000

50,000 50,000

0 0
33

85+
0

10

15

20

25

30

35

40

45

50

55

60

65

70

75

80
85+
0

10

15

20

25

30

35

40

45

50

55

60

65

70

75

80

Age Age
 US and Texas Age Distribution 2000
Percent of Total
Population

Texas > U. S.

Texas < U. S.

Source: U. S. Census Bureau 34

 US and Texas Age Distribution 2010
Percent of Total
Population

Texas > U. S.

Texas < U. S.

Source: U. S. Census Bureau 35

 Population 65 and Over
„ Number 65+ in 2000 = 35 million, 12.4%
„ Number 65+ in 2010 = 40.2 million, 13.0%
„ Number 65+ in 2020 = 54.6 million, 16.3%

„ Texas 65+ in 2000 = 2.07 million, 9.9%

„ Texas 65+ in 2010 = 2.59 million, 10.5%
„ Texas 65+ in 2020 = 3.76 million, 13.1%

36
Projected Texas Households

Source: US Census Bureau, Texas State Data Center and Demographer 37

Texas Median Household Income

Source: US Census Bureau 38

Annual estimated median income; Current Dollars
Texas Median Household Income
Annual estimated median income; 2005 Dollars

Source: US Census Bureau 39

LONG RANGE PROSPECTS
FOR TEXAS
EIGHTEENTH ANNUAL OUTLOOK
FOR TEXAS LAND MARKETS
San Antonio, Texas
April 25, 2008

Dr. James P. Gaines

Research Economist
Real Estate Center at Texas A&M University

40