Coming Back

The word "rebound" doesn't always have a good connotation. For example, no one wants to be the rebound partner in a relationship. Some celebrities have been rallying for years attempting a rebound while few achieve a full come back – one could say they are on rebound. However, sometimes rebounding is a good thing. It can mean things are making a recovery and being restored. Maybe things are not quite where they once were, but they are picking up. And there is hope that they could even be better than before. World-renowned economist Ray Perryman, president of the Perryman Group an economic research firm in Waco, says that East Texas is poised and on the rebound both in the real estate market an in the overall economy.

Perryman said if he could offer up one word to describe the current economy in East Texas it would be “rebounding.” In the past several years, he says that obviously the Tyler market – like many others – went through some major adjustments. He added the housing market was no exception and though the local markets held up better than most they were still affected. “Housing sales went down, there was some price pressure and there were some foreclosures … So, it’s been through the mill like most places, but not as bad as most places.”

While real estate has been down, comparatively, Perryman says other parts of the country are far worse.

“The last couple years have been pretty difficult. I spoke in California and in the zip code in which I was speaking, in Orange county, the average price of a house was down 40 percent! You just have to put things in perspective.”

Some other things that affect the housing market include the decisions of homeowners to hold out until the market gets better. For now, many homeowners are opting to not list their home until the value goes up some. Foreclosures also affect the prices of housing, and right now banks are selling many of the foreclosed properties. “A lot of people want to wait until that process is over because it has such a huge impact on their value,” Perryman said. Consequently, nobody escapes this recession and Tyler is no exception. It has held up well compared to other areas, and Perryman says the population is already growing in this area. Tyler in particular, more development is taking place, dirt is being moved to build new businesses and properties. For future development, Perryman says that the areas surrounding Tyler will experience expansion and growth – areas such as Whitehouse, Bullard, etc.

“The most important thing is incomes are up, employment is going up, population is going up – and those things ultimately mean people need places to live, places to work, places to eat and places to shop,” he said. “When that happens you start to get some recovery in the real estate market.”

Essentially, things will be restored to the way they were before, but Perryman says he hopes they don’t bounce bounce back quite as much as they did prior to the recession – although he predicts they probably will. “Real estate markets are always cyclical and usually run about a 5 to 7 year cycle,” he said. When asked at what point we are within the real estate market cycle, Perryman said we are at a turning point. “We’re seeing a little more sales activity and more development on projects that were put on hold. People are still cautious. The lending environment is still difficult. People are still gun-shy because it is/was a severe recession, but you are starting to see some things happen. Projects are taking shape.”

Evidence that the economy is turning the corner includes lots of planting. Perryman says many projects that have been on hold are now redeveloping and new retailers are coming to the area. “Its going to be slow. Lending is difficult. [It’s] tougher to get mortgages, tougher to get financing for commercial [properties],” he explained. “It’s better than it has been but not like it was – but we don’t want it to be like it was 3 to 4 years ago (the market was inflated) … but it is getting better.” And as long as the community is expanding and people are looking for opportunities, people will begin to overcome the cautious spending breed by the economic downturn.

Outside of the real estate realm, Perryman says he feels very good about what’s going to happen to Tyler’s economy in the near future. He says this area is looking at a 2 percent growth in employment (per year) during the next five years as an annual average and a 4 percent growth in output, “what I would call a good, steady state of growth, a very healthy level of growth; not one too fast that causes problems.”

Fundamentally, he explains that Tyler’s overall good economy is fueling the come back. The strong economic base and underlying energy, and diverse economy all help fuel the rebound. And Perryman also predicts that by the end of this year the job growth will be fully recovered. Longview is also primed for growth both in population and business, and numbers will help show exactly how much growth when the more of the census numbers come in.

“In fact, among the counties of the East Texas, Smith was one of the ones that (the population) grew faster than others. Smith county was the fastest with Gregg pretty close behind."
He reports that other East Texas areas are experiencing growth also. And while the Nacodoches/Lufkin area is slightly smaller than Tyler, they are experiencing modest growth. “It is dependent on the timber industry, which is in turn dependent on the construction industry. That area was hit harder than some of the other areas,” Perryman said. “It’s not as diverse as other economies, but recently the numbers suggest job growth in those areas … their core industry will come back when the construction industry comes back.”

Perhaps the most looming worry for the real estate market on the road to recovery are the current and possible foreclosures that continue to affect the market (a.k.a. leftovers from the mortgage crisis).

Perryman says on the positive side, Texas doesn’t have as many as other states. He also reports that banks are currently trying to clean up their balance sheets and work through the process which takes time and hopefully won’t repeat this exact crisis.

“Texas did better this go round because it was so bad in the ‘80s. I do think we learned a lesson from that,” Perryman reported. “Real estate has always been a cyclical industry so [lending] will likely be a cyclical industry.”