Has it really been 40 years already?
Last week, REC Senior Editor David Jones stopped by with the news that Tierra Grande, our flagship magazine, turned 40 this year.
Longtime readers have grown so accustomed to the quarterly publication’s reliable research and beautiful design that starting a magazine back in ’77 probably seemed like a no-brainer. It wasn’t.
Jones said then-director Dr. Alvin B. Wooten was "a bit skeptical." He said Wooten and others on the staff had experience with academic or refereed journals, but they were uncomfortable writing for the public.
"Shortly after the first issue was published," Jones recalled, "Dr. Wooten told me, ‘Well, that’s one magazine in the books. Do you think we can find enough material for a second?’”
The rest, as they say, is history, although Wooten’s concerns didn’t go away entirely.
"He frequently cautioned the staff to avoid the ‘big error,’" Jones said. "He worried that publishing a big mistake would have a long-lasting negative effect on the young Center. We established a formal review and approval process using green cover letters. That process continues today, except the cover sheets are blue.
"It took a couple of years before the staff really understood the concept of popular magazine writing. Although they did not say so to me, I think the staff secretly hoped the magazine would just go away if they ignored it."
It didn’t. In fact, on July 13, 1977, Wooten sent a memo to the staff saying, “Each staff member should now consider the magazine a reality and begin planning accordingly.”
The magazine was an instant hit with readers. The inaugural issue included articles about economic growth, homebuyer demographic, and real estate education. There was even a profile of that most quintessential of Texas towns—Luckenbach.
Some of these topics will undoubtedly ring familiar to today’s readers, but there’s a key difference.
"Articles in early issues were based on data that was months and sometimes years old," Jones said. "Today, data is current, and authors write more about what is going to happen rather than what has happened."
Of course, evolving technology has made a difference in the life of the magazine as well.
"The digital age makes it possible for us to publish electronic versions of articles days, weeks, or even months before they appear in the print version. That keeps content relevant," Jones said.
One other thing changed as well: the size of the magazine’s audience.
In the beginning, Tierra Grande was mailed only to the 35,000 Texas real estate brokers. Today, it goes to all active and inactive licensees. As of this month, that number is about 166,000.
Slicing the real estate pie 100,000 ways
Real estate is hot. But you know that. It’s been in all the newspapers. With so much talk about who is selling what to whom and where, it should come as no surprise more Texans are signing up to become real estate agents.
In May alone, the Texas Real Estate Commission (TREC) issued 16,216 sales agent licenses, slightly more than the same month last year. That brought total Texas active sales agents to 101,382.
If you think that’s a lot of folks trying to get a share of the real estate pie, you’re right. But that’s only part of the picture. Texas also has 43,343 active real estate brokers. With an estimated state population of 27.9 million served by 144,725 real estate licensees, that means there is one real estate agent for every 193 Texans of all ages—renters and homeowners alike.
But, wait. If there are 16,000 new licensees being signed up each month, why aren’t they as thick as fire ants? That’s because 10 percent of the real estate agents make 90 percent of the money. Many new agents don’t make it past their first license renewal, which comes after two years.
The old adage that the three most important ingredients to the real estate pie are location, location, and location, also applies to where a licensee sets up shop.
WalletHub did a report on “2017’s best places to be a real estate agent.” Honolulu was ranked No. 1 based on “real estate market health” (home turnover rate, days on market, etc.) and “job opportunity and competition” (sales per agent, median home price, agent wages, etc.). Austin was the highest ranked Texas city at No. 10 (falling from No. 4 last year).
If you want to know how much real estate agents in each Texas city make, check out salary.com.
Texas beefing up for Chinese
In June, China accepted its first shipment of American beef in 14 years amid advancing trade discussions. An isolated case of mad cow disease in 2003 prompted American beef bans across the globe, shrinking industry exports by 93 percent (see figure). Beef exports did not fully recover until 2010 and have bounced around $360 million since 2013.
U.S. beef producers have long lobbied for renewed access to the massive Chinese market. Rising incomes and dietary shifts pushed China’s beef imports to $2.6 billion in 2016, making it the second largest beef importer (behind the U.S.). However, American beef faces stiff competition from Australia, where exports totaled $600 million to China in a 2016 China-Australia free trade deal.
In 2002 to 2003, China imported just $23 million of American beef, accounting for less than half of a percent of U.S. beef exports. China’s role was even smaller in Texas, accounting for less than one-fifth of a percent of beef exports at $1 million. Unsurprisingly, China’s American beef prohibition was unnoticeable, but bans in Japan and South Korea slashed Texas exports by $249 million in 2004.
Japan and South Korea slowly regained confidence in the American product, surpassing pre-crisis import levels from Texas in 2014 at $296 million combined. While other nations followed suit, the Chinese ban held fast despite growing domestic demand. American beef still found its way into the country through Hong Kong, but quantities were limited.
In 2016, Texas exported half its beef to Asia; renewed access to China opens another vast market in the region. Increased cargo quantities benefit Texas producers by stimulating economies of scale, thereby driving down average transportation costs—a vital component in transcontinental trade.
No fuel like an old fuel
Texas got a major economic boost on Dec. 18, 2015. That’s the day Congress ended the 40-year-old U.S. export ban on crude oil. Overnight, the market for light sweet Texas crude went from domestic to worldwide.
The decision was a much-needed stimulus for the Texas fracking industry, especially in the Eagle Ford and Permian Basin. European countries were also pleased the ban was lifted because it reduced their dependence on Russian and African oil. Political and economic instability makes light crude supplies from countries such as Libya and Nigeria problematic. Even China is looking at U.S. crude oil to reduce its dependence on Middle Eastern oil.
U.S. crude oil exports soared from 392,000 barrels per day in December 2015 to one million in April. That’s an increase of approximately 155 percent in less than two years (Figure 1) and is 11 percent of the nation’s total output.
Canada was exempt from the ban. The U.S. had been exporting crude oil to our northern neighbor in limited amounts since the early 1990s and sporadically to other countries. In 2016, the top export destinations for U.S. crude oil were Canada (57.9 percent), the Netherlands (7.3 percent), Curacao (5.7 percent), China (4.3 percent), Italy (4.1 percent), and the United Kingdom (3.1 percent).
Rising crude oil exports allow the U.S. to gain international market share at a time when the Organization of Petroleum Exporting Countries (OPEC) is reducing output in an attempt to shrink the global oil supply. If strong U.S. export growth continues, West Texas Intermediate (WTI) may replace Brent Crude as the global benchmark for sweet light high-grade crude oil.
Texas crude oil exports gushed from approximately $319.3 million in December 2015 to $1,061.4 million in May (Figure 2). This was 65 percent of U.S. crude exports. In 2016, Texas oil traveled to Canada (28.3 percent), the Netherlands (15.4 percent), Curacao (10.7 percent), Italy (7.3 percent), and China and the United Kingdom (5.1 percent each). Year to date (May), however, China is the top export market for Texas crude oil.
Finding the purrrr-fect home for you (and Fido, too!)
SunTrust Mortgage recently asked millennial homeowners what influenced their decision to buy a home. I imagine we can all relate to the top response: a desire for more living space (66 percent). The second-most-popular response—to build equity (36 percent) —showed their more financially pragmatic side.
Then there was the third-most-cited reason, which I found surprising but also delightful: better space/yard for a dog (33 percent).
Meanwhile, 42 percent of millennials who have never purchased a home said their dog—or the desire to have a dog—is a key factor in their wish to buy a home in the future.
Since many RECON subscribers are residential real estate agents, I thought I’d ask them to weigh in on this. Of the 95 who responded to our informal poll in Tuesday’s edition, only 16.8 percent said millennial buyers’ chief concern was space/yard for a dog. Equity (25.3 percent), recent marriages (20 percent), and recent births (20 percent) were the top reasons.
Obviously pets are family to many people. Like any other member of the family, they can influence not only when a person decides to buy a home but what features the home absolutely must have.
Bryan-College Station Realtor Keta Jones said the lack of a fence (or even the presence of one simply in need of repair) has been a dealbreaker for some dog owners. She said others passed on homes that didn’t have a room with a view—for the pet.
“I’ve had clients not buy a house because there is not a low window for the dog to look out,” Jones said. “For some people, especially those with small dogs, low windows are very important.”
For some pet owners, the location of the window is just as important.
“One client ruled out a house because it didn’t have a window in the utility room,” Jones said, “The utility room was where their cat liked to stay, and the cat ‘preferred’ a window there.”
Jones said she once suggested that a client’s dog could look out a sliding glass door that opened onto the backyard, but the buyer said Fifi “wouldn’t like that.”
Among other reasons she said buyers have cited for not buying a specific home: no sidewalks to walk their dogs and no nearby, dog-friendly parks.
“If I know a client has a dog, I point out features that their pet would like when I show a house," Jones said.
For folks in the business of selling homes, that’s a good rule of thumb, er, paw.
Just because it's Tuesday
David S. Jones
It has been my experience that Tuesday is a great day of the week.
Need to ask someone for a favor? Ask on Tuesday. As president of the local Lions Club, church board, and professional communications group, I have asked many people to chair committees or help with events. When I ask on Tuesday, the reply is overwhelmingly “yes."
Have an email to send? Do it on Tuesday. The Real Estate Center’s twice-weekly e-newsletter RECON goes to 15,000 subscribers on Tuesdays and Fridays. It just so happens that visitors to our website peak on Tuesdays (see graphic), and I think RECON has a lot to do with that.
Tuesday is the most popular day of the week to work out, according to ClassPass, with the most popular gym time being 5:30 to 6:30 p.m.
Tuesday is the best day to buy cheap airline tickets online, according to digital expert Kim Komando. She touts Tuesday “because airlines often announce deals on Monday evenings. By Tuesday at noon, other airlines are scrambling to match those deals."
Monster.com says Tuesday is the best day to find a job. Not only is it the best day to look, it is the day most people are hired. It’s the day most companies post jobs. Nearly 58 percent of jobs are posted Monday through Wednesday, with most of the action on Tuesday (18.5 percent of applications).
Writing in The Sydney Morning Herald, Caitlin Fitzsimmons explains why Tuesday is the most productive day of the week. For one thing, she says 90 percent of sick days in Australia are taken on Monday or Friday. She notes, “It’s logical to infer a good proportion of . . . sick days are actually people chucking a sickie." Wednesday is “hump day," and Thursday is when we clear the decks for the weekend. A 2013 survey by Accountemps shows 39 percent of HR managers rank Tuesday tops in productivity.
If you want to hold a meeting, do it on Tuesday, according to Quartz Media. A study by YouCanBookMe in England found that 2:30 pm on Tuesday is the time most people are free.
For those of you who do cold calling and hate it, TheBalance.com offers hints to turn cold calls into sales. “Tuesdays have proven to be the best day for sales professionals to send emails, mail, and cold call." People are into their weekly routine, cranking out work, and aren’t looking forward to the weekend yet.
Apparently, Tuesday is just about the best day for anything, except buying or selling a house.
The 33.19-carat Elizabeth Taylor Diamond sold in 2011 for $8.8 million. In 1968, it was known as the Krupp Diamond when Richard Burton bought it for $305,000. When asked why he gave it to Elizabeth Taylor, he said, “just because it’s Tuesday."
(Don't) Curb your enthusiasm
For many homeowners, a home’s "curb appeal" is a source of pride. Certainly it is to me, although often the best I can usually hope for is to keep the lawn mowed, the dead plants removed from the flower bed, and the driveway reasonably well swept.
Sometimes, though, the situation calls for more. If, for example, you’re planning to put your house on the market. Obviously you want your home to be as attractive as possible to potential buyers. On the other hand, you don’t want to put too much cash behind the effort. So what do you do?
This being National Curb Appeal Month, I asked RECON subscribers who are in the business of selling houses to share their best tips for sprucing up a home’s front exterior quickly and inexpensively. All of the respondents agreed that a fresh coat of paint on the door and shutters, along with fresh plants and mulch in the flower beds, is the best way to make a strong first impression.
For the homeowner who wants to put just a little more effort and money into it, DIYNetwork.com also suggests:
- replacing your old mailbox, making sure you follow city regulations;
- putting up new house numbers if your old ones are faded;
- planting a tree, keeping in mind how big it will get and whether it will eventually encroach on your home;
- installing exterior lighting that fits the style of your home and makes your entryway safer; and
- adding flower boxes to your front windows, especially if your house lacks color.
Need more ideas? Looking for inspiration? Chances are you’ve seen HGTV’s program, ‘Curb Appeal.’ It’s been around for years. Their website
has galleries and videos to point you in the right direction.
What's keeping nominal wages down?
For the past year, the U.S. labor market has moved toward full employment. This hasn’t spurred rapid nominal wage growth (Figure 1). The reason is low inflation and dismal productivity growth.
Nominal wages are real wages plus inflation. Nominal wage is measured in dollars, while real wage is measured in purchasing power. Workers care about the real wage because it measures actual purchasing power of goods and services. Firms also care about the real wage because it captures the cost of hiring labor and is determined by productivity.
Why is measuring real wages important? Let’s say that nominal wages and overall inflation both go up by 5 percent. That means there is no change in the amount of goods and services you can purchase. In other words, you’re no better or worse off. But if overall inflation would have risen by 7 percent, you would be worse off because you could purchase fewer goods and services. In other words, “inflation ate your raise.”
The phrase “inflation ate your raise” was common during the ’70s when inflation was high and obstinate. That’s why nominal wages rose at a higher rate during that time. Inflation has systematically trended down since then, accompanied by a decline in nominal wages (Figure 2). Don’t expect a big increase in nominal wages when inflation is currently below 2 percent.
So how about real wages? Real wage growth peaked during the late ’90s, boosted by the surge in productivity. It has since fallen as productivity has declined. Real wages are still increasing (meaning real purchasing power is increasing) but at a lower rate than in the ’90s.
Going forward, if productivity does not increase at a higher rate, neither will real wages. This will cause nominal wages to grow basically at the current rate if inflation continues to be low.
Higher productivity means higher real wages, which translates into an increase in purchasing power.