Economic forecast puts focus on transit, housing, jobs for 2017
Monday, January 30, 2017 by Chad Swiatecki
AngelouEconomics’ annual economic forecast for Austin sees the city’s economy slowing its growth somewhat in 2017 and 2018. But roughly 107,000 new residents in that timespan will add more pressure on the local cost of living and transportation systems.
The forecast from local economist Angelos Angelou gathers data from throughout Austin and Texas as a whole. For the past 30 years, it has become an important bellwether for the business health of the region.
Following the release of the report, which was presented by Angelou’s firm and the Austin Business Journal, the Austin Monitor talked to Mayor Steve Adler and newly elected City Council Member Jimmy Flannigan about their policy priorities for the coming year that relate to the city’s economic health.
Among the findings of the report:
- Austin’s economy is still growing at more than 3 percent per year
- Fluctuations in unemployment rates have been in fractions of a percent, which Angelou called “statistically insignificant.” The rate has mostly stayed under 3 percent recently, creating a tight labor market that makes hiring difficult for businesses
- Austin’s median home price has climbed to $280,000, with the average price at $345,000
- The housing market’s equilibrium point is the creation of 15,000 new units per year, but the city currently averages 13,000 new units per year
- The Austin metro area now exceeds 2 million people and is on pace to reach 4 million by 2040
Following his annual State of the City address on Saturday, Adler told the Monitor that increasing housing supply, preserving workforce housing, adding middle-class jobs and studying possibilities for a long-term, ambitious transit system are among his policy priorities for 2017.
Perhaps the most ambitious of those isn’t directly a city initiative, but rather one that Adler is pushing on the private side. It would ask local real estate and investment experts to create a low-return fund of several hundred million dollars to buy middle-class housing stock and cap rental rates to grow in line with middle-class incomes.
Adler said he sees that effort as the best solution to keep the estimated 45,000 units of workforce housing located along transit corridors from being purchased and remodeled for much higher price points.
“If we don’t do something, the forecasts are that in the next 10 years we’ll lose all of that housing for the middle class,” he said, adding that the forecasts for such a fund are that it would generate a 6 to 7 percent return. The attraction, he said, would be the stability of the investment and the pride of keeping Austin a livable city much like the way U.S. savings bonds are marketed as a way to support the U.S.
Adler said continued work to improve the city’s permitting process, which Angelou estimates adds $10,000 to the price of every housing unit, will help to make it easier to add housing stock. And the eventual adoption of CodeNEXT in early 2018 will make it simpler to focus new housing in dense clusters located near transit corridors.
While touting the work that will be completed with last year’s passage of a $720 million bond for some transportation projects – and the skilled labor training programs that could be tied into it – Adler said City Council will work this year on a “regional strategic mobility plan” that will eventually lead to an ambitious region-wide transit plan that could include rail.
“There has to be something more ambitious coming up,” he said. “Or else when we go from 2 million to 4 million in the metro area, our rods and streets are going to fail.”
Transit was one of the biggest concerns for Flannigan, who said the city needs to add capacity to the often-full MetroRail line that runs through his district and direct new development toward vacant land near that and other obvious future transportation corridors.
“(The Red Line) is surrounded by empty land in spots that could be centers for people to live,” he said. “The city has done plans in Plaza Saltillo and along MLK (Boulevard) for people who will never get on the train. As we achieve the housing stock we need, some of it needs to be by the train stations in District 6.”
Photo courtesy of Argash [GFDL or CC BY-SA 3.0] via Wikimedia Commons.
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