DATA POINTS

By

THE CAPITAL AREA COUNCIL OF GOVERNMENTS

www.datapoints.org NOVEMBER 2011 WHY EVERYONE IN AUSTIN SHOULD CARE ABOUT HOME PRICES IN SAN JOSE
Few regions have benefitted from domestic migration more than Austin. Since 2000, the Austin metropolitan area has been one of countrys fastest growing regions; migration is the responsible for approximately two-thirds of this growth. Crucially, Austin isnt simply luring people to the region, its importing extraordinary levels of human capital. Among major metropolitan areas, Austin features the highest in-migration rate of adults with a bachelor degree. The mobility of Americas labor force continues to decline. Historically, high levels of labor mobility allowed workers in economically depressed regions to pursue greater opportunities in thriving communities elsewhere. During the early 1950s, for example, one in five Americans moved every year. In November, the U.S. Census Bureau announced that just 11 percent of Americans moved in 2010the smallest figure reported since record keeping began in 1948. Although some observers have expressed skepticism that declining home prices have produced geographic mismatches between available workers and jobs vacancies at the national scale, regional data suggest a strong relationship between home prices and migration patterns. While Texas continues to lead the country in attracting new residents, this figure has fallen in recent years. Between 2009 and 2010, 69,000 Californians moved to Texasa 15 percent drop since 2006. Similar declines have been observed in Austin. According to IRS data, the total number of out-of-state in-migrants has fallen by 4 percent since 2007. The declines have been especially pronounced in regions suffering from the severe housing busts. Take California, the leading source of non-Texas migrants to the Austin region. The number of migrants moving from Los Angeles to Travis County has dropped 30 percent since 2007. In Santa Clara County, where San Jose is located, migration into Travis County has fallen 23 percent. To illustrate the impact of this change on Austin, take the (fictional) story of two colleagues working in California. U.S. MIGRATION INTO TRAVIS COUNTY (2009)

EMPLOYMENT UPDATE OCTOBER

7.1% +0.2%
COUNTY

CAPCOG UNEMPLOYMENT RATE CHANGE SINCE OCT 2010

+ 10,928 JOBS GAINED DURING PAST YEAR

UNEMPLOYMENT JOBS + / -

Bastrop Blanco Burnet Caldwell Fayette Hays Lee Llano Travis Williamson

8.0% 5.9% 6.7% 8.6% 5.8% 7.0% 6.4% 7.7% 6.9% 7.3%

425 -121 -144 194 -98 994 251 -82 6,886 2,623

SOURCE: Texas Workforce Commission

RETAIL SALES TAX COLLECTION - NOV

TOTAL Bastrop $495,550 Blanco $88,105 Burnet $767,054 Caldwell $279,621 Fayette $241,822 Hays $2,460,894 Lee $164,353 Llano $69,022 Travis $15,136,599 Williamson $8,759,072
SOURCE: Texas Comptroller

COUNTY

CHANGE SINCE OCT 2010 2.1% 5.9% -4.3% 6.9% 5.9% 2.9% 17.1% -8.5% 4.2% 1.9%

AUSTIN METRO REAL ESTATE - OCT

OCT '11 OCT '10 CHANGE Sales 1,616 1,336 Average Price $249,500 $256,600 Total Listings 8,874 11,003 INBOUND MIGRATON OUTBOUND MIGRATON Inventory (Months)
5.1 6.5
21.0% -2.8% -19.3%

-21.5%

SOURCE: Texas State Realty Center For questions about Data Points, please contact John Rees 512.916.6183 jrees@capcog.org

Source: Brookings Institution

DATA POINTS
By

THE CAPITAL AREA COUNCIL OF GOVERNMENTS

www.datapoints.org NOVEMBER 2011
U.S. MIGRATION PATTERNS
PERCENTAGE OF AMERICANS MOVING EACH YEAR

WHY EVERYONE IN AUSTIN SHOULD CARE ABOUT HOME PRICES IN JOSE (continued)
Picture Jane in 2007. She lives in San Jose, California where she works as a software engineer. Jane makes $85,000 a year, the median household income for region. She lives well, though housing is a significant expense; her mortgage payment is more than $2,000 a month for a rather humble home. Shed like more room and a bigger yard, but the median home price in San Jose is nearly $700,000. Still, her home is worth $65,000 more than when she purchased it three years earlier. Although Jane enjoys her current job, theres an exciting startup in Austin shes become increasingly interested in joining. She doesnt know much about Texas, but hears that Austin is a cool town. And though she would likely take a pay cut (Austins median wage is about a third less than San Joses), she can buy a place for $200,000 (the median home price in Austin). With the proceeds of selling her San Jose home, Jane could likely purchase a home in Austin outright. No more monthly mortgage payments! Jane discusses her options with her co-worker, William. Hes encouraging; the job in Austin seems like a great opportunity. William tells Jane that hed actually considered applying for another position with the same company, but he and his wife just bought a home and are expecting their first child soon. In a few years, once things settle down, William tells Jane he may eventually join her in Texas. Fast forward three years. William is unhappy at his job. Since the first round of layoffs several years ago, hes become increasingly overworked and underpaid. And his mortgage is killing him--$5,000 a month. His old colleague Jane is constantly trying to persuade him to consider relocating to Austin. Her startup is doing great and the firm could really use someone with his experience. Unfortunately, his home is now worth $150,000 less than when he purchased it. As much as he would like to pursue the Austin opportunity, he just cant do it. The story of Jane and William is the story of the national and regional migration dynamics writ small. The Austin region remains deeply compelling for many talented individuals throughout the country. As the economic recovery proceeds at a seemingly glacier pace, however, it is clear that for some individuals, economic weaknesses within their own communities prevent them from contributing to the vibrancy of Austins economy. While Austin will continue to attract skilled workers from around the country, the regions magnetism may remain slightly muted until the rest of the country fully emerges from the lingering effects of the recession.
California 25.0% Florida Arizona 20.0% New York 15.0% Illinois

10.0% 5.0% 0.0% 1952 1962 1971 1982 1992 2000 2010

Source: U.S. Census Bureau

MIGRATION & HOME PRICES

CHANGE IN MIGRATION INTO TRAVIS COUNTY, TEXAS & CHANGE IN MEDIAN HOME PRICE (2007-2009)

0.0% -10.0% -20.0% -30.0% -40.0%

MIGRATION MEDIAN HOME PRICE

-50.0% Los Angeles San Diego San Jose

Source: Source: U.S. Census Bureau / National Association of Realtors

LEADING SOURCES OF MIGRATION INTO TEXAS (2010) 75,000 50,000 25,000 0

Source: Source: U.S. Census Bureau

DATA POINTS
By

THE CAPITAL AREA COUNCIL OF GOVERNMENTS

www.datapoints.org IMAGINE FULL EMPLOYMENT IN AUSTIN
Imagine 5.5 percent unemployment in Austin. True, it seems like a very long time since we enjoyed such a promising economic environment. Before billion dollar federal bailouts. Before General Motors and Chrysler declared bankruptcy. Before four straight years of national housing price declines. Though only three years have past since local unemployment was below six percent, it now seems like ancient history. While it will take several years before similar levels of unemployment return, it could be possible today. There are currently more than 69,000 unemployed workers in the Austin metropolitan region. A search look on Indeed.com, however, reveals nearly 18,000 open positions. Assuming that each of these job is a unique opportunity that could be filled by a current resident looking for work, our regional unemployment rate could drop from 7.4 percent to 5.5 percent tomorrow. Unfortunately, the prospect of six percent unemployment will continue to be stymied by reality. While the absence of aggregate demand remains a very real drag on job growth, the countrys (and the Austin regions) unemployment problem is also appears increasingly structural in nature. Simply put, there is a mismatch between the skills demanded by employers and the skills available in the workforce. According to a recent survey of 2,000 companies by the McKinsey Global Institute, for example, 40 percent of firms reported leaving positions open at least six months because they couldnt find suitable candidates. A similar survey by ManPower showed even higher levels of a skills mismatch more than half of all employers reported difficulty filling critical positions within their organizations. Regional wage data further underscores the scarcity of skilled workers. With demand for high-skill workers outstripping supply, regional employers are forced to increase salaries if they wish to obtain (and retain) the best employees. Average wages among some of the regions highest-paying occupations topped $130,000 in 2010a 28 percent increase during the past five years. During the same period, the average wage of the regions lowest paying occupations rose just 17 percent. The talent premium will only grow in the years ahead. While positions such as dishwashers and personal care aids cant be outsourced or automated, the availability of low-skill workers precludes significant wage gain. Conversely, the scarcity of skilled workers will drive wages higher. According to the McKinsey Global Institute, there will be a shortage of up to 1.5 million college graduate by 2020. Austin must continue to. Imagine that.

NOVEMBER 2011
AUSTIN METRO HIGHEST PAYING NON-MEDICAL OCCUPATIONS
OCCUPATION 06 WAGE 10 WAGE $145,570 $98,950 $101,430 $117,060 $110,640 $102,360 $97,990 $90,050 $91,980 $73,460 $176,710 $130,890 $129,050 $128,460 $128,330 $123,870 $122,910 $120,810 $120,440 $120,370 CHANGE 21.4% 32.3% 27.2% 9.7% 16.0% 21.0% 25.4% 34.2% 30.9% 63.9%

California Chief Executives Florida Natural Sciences Managers Arizona Sales Managers New York Computer & Information Systems Managers Illinois Marketing Managers Human Resources Managers Purchasing Managers Managers, All Other Economists Petroleum Engineers AVERAGE

$102,949 $130,184

28.2%

Source: U.S. Patent Office

AUSTIN METRO LOWEST PAYING OCCUPATIONS

OCCUPATION Dishwashers Attendants & Bartender Helpers Amusement and Recreation Attendants Counter Attendants Waiters and Waitresses Maids and Housekeeping Cleaners Personal Care Aides Cooks, Fast Food Ushers, Lobby Attendants, & Ticket Takers Crossing Guards Dishwashers 06 WAGE 10 WAGE $14,240 $17,350 $14,020 $17,410 $17,170 $17,700 $15,710 $17,870 $14,610 $17,880 $17,280 $18,280 $14,460 $18,300 $15,700 $18,480 $13,940 $18,600 $17,370 $18,700 $14,240 $17,350 CHANGE 21.8% 24.2% 3.1% 13.7% 22.4% 5.8% 26.6% 17.7% 33.4% 7.7% 21.8%

AVERAGE

$15,399

$17,909

16.9%

Source: U.S. Patent Office

U.S. LABOR DEMAND AND SUPPLY PROJECTIONS (2020)

100% 80% 60% 40% 20% 0%

13.6% NO HIGH SCHOOL 19.5% 43.3%

HIGH SCHOOL

44.1%

30.7% SOME COLLEGE 29.1% 17.7% ASSOCIATE DEGREE 19.6%

58.0% Demand
BACHELOR OR HIGHER

56.5% Supply

*Among metros with at least 1 million residents

Source: U.S. Patent Office