Economic Growth in Central Texas: The Promise and Reality of Prosperity in our Region

June 2014

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1. What is driving growth in Austin?2. Where are people coming from?3. How long is this likely to last?4. Is everybody benefitting?5. Discussion

Presentation Overview

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What is driving growth?

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Rank Metro AreaPopulation

2013Pop Change

2000-13 Growth2000-13

1 Houston 6,313,158 1,595,651 34%

2 Dallas 6,810,913 1,575,528 30%

3 Atlanta 5,522,942 1,229,467 29%

4 Phoenix 4,398,762 1,125,285 34%

5 Riverside 4,380,878 1,103,856 34%

6 Washington DC 5,949,859 1,086,471 22%

7 New York 19,949,502 969,492 5%

8 Miami 5,828,191 802,296 16%

9 Los Angeles 13,131,431 738,727 6%

10 Las Vegas 2,027,868 633,959 45%

11 Austin 1,883,051 618,101 49%

Austin is 35th largest US metro but ranks 11th in population growth since 2000

Source: US Census Bureau, Population Estimates. Rank is among metro areas (MSA) with population of one million or more.

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Metro Area 2000-13 Rank Metro Area 2009-13 Rank

Raleigh 51% 1 Austin 12% 1

Austin 49% 2 Raleigh 9% 2

Las Vegas 45% 3 Houston 8% 3

Orlando 37% 4 San Antonio 8% 4

Charlotte 35% 5 Denver 7% 5

Phoenix 34% 6 Dallas 7% 6

Houston 34% 7 Orlando 7% 7

Riverside 34% 8 Washington DC 7% 8

San Antonio 32% 9 Oklahoma City 7% 9

Dallas 30% 10 Charlotte 6% 10

Austin ranks #1 in population growth rate among large metros since recession

Source: US Census Bureau, Population Estimates. Rank is among metro areas (MSA) with population of one million or more.

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20012002

20032004

20052006

20072008

20092010

20112012

20130

10,000

20,000

30,000

40,000

50,000

60,000

70,000

26,506

62,371

45,446

Annual Population Change in Austin MSA, 2001-13

Austin is growing by average of 50,000 per year (roughly size of San Marcos)

Source: US Census Bureau, Population Estimates.

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Source: US Bureau of Economic Analysis. Growth rate adjusted for inflation ($2012). Rank among top 50 US metros by GDP in 2012.

Austin ranks #3 in GDP growth among large metros since end of recession

Rank Metro AreaGDP 2012

(Billions)Real Growth

2009-12

1 Houston $449.4 17.8%

2 New Orleans $84.8 17.7%

3 Austin $98.7 14.5%

4 San Jose $173.9 12.9%

5 San Antonio $92.0 11.9%

6 Portland $147.0 11.3%

7 Dallas $420.3 11.3%

8 Nashville $94.8 10.0%

9 Detroit $208.4 9.6%

10 Louisville $62.8 8.6%

Austin economy has grown by 46% since

dot-com bust in 2001, second only to Houston

among the top 50 US metropolitan areas.

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Austin ranks #1 in job growth among large metros since end of recession

Source: US Bureau of Labor Statistics, Current Employment Statistics. Rank is among top 50 metro areas by total non-farm employment in 2013.

Denver

San Francisco

Columbus

Raleigh

San Antonio

Salt Lake City

Houston

San Jose

Nashville

Austin

7.9%

8.0%

8.1%

8.2%

8.2%

8.6%

10.1%

10.8%

11.3%

13.7%Job Growth, 2009-13 (Top 10 large US metros)

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20022003

20042005

20062007

20082009

20102011

20122013

2014-15,000-12,500-10,000

-7,500-5,000-2,500

02,5005,0007,500

10,000

Annual Change in Tech Employment in Austin MSA

Tech employment in Austin on pace in 2014 to top dot-com era peak

TechJob Growth

2009-13

Austin 23%

US 6%

Jobs Multiplier: 3.5Avg Earnings: $120K

Source: EMSI. Does not include self-employment. Definition of tech sector in Austin is from Austin Technology Council economic impact report. Data for 2014 is an estimate. ATC report: http://civicanalytics.com/portfolio-item/quantifying-the-economic-impact-of-austins-tech-sector/

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Where are people coming from?

Source: Internal Revenue Service. Map by Forbes showing net migration of tax filers (# of exemptions) to Travis County in 2008 tax year.

2008

Source: Internal Revenue Service. Map by Forbes showing net migration of tax filers (# of exemptions) to Wayne County in 2008 tax year.

2008

Source: Internal Revenue Service. Map by Forbes showing net migration of tax filers (# of exemptions) to Orleans Parish in 2006 tax year.

2006

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Roughly 2/3 of population growth in Austin due to people moving here

Source: US Census Bureau, Population Estimates. Rank is among all metro areas (MSA). Net migration includes domestic and international.

Rank Metro AreaNet Migration

2013Share of Total

Pop Growth

1 Houston 81,124 59%

2 Dallas 52,142 48%

3 Miami 42,484 65%

4 Washington DC 41,366 47%

5 Phoenix 40,451 57%

6 San Francisco 40,283 65%

7 Seattle 34,970 61%

8 Orlando 32,041 72%

9 Denver 31,404 62%

10 Austin 31,230 65%

Year

Net MoversAustin MSA

Per Day

2013 86

2012 99

2011 97

83% of net migration to Austin from other places in US—Austin is #5 if international migration excluded.

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Households % Total

From Texas 21,270 58%

From Different State 15,022 41%

California 2,250 6%

From International 266 1%

Total 36,558 100%

Most people moving to Travis County come from other counties in Texas

Source: IRS. Tax returns are used here as proxy for households. This data includes employed college students who report a change of residence to Travis County.

15% of households that moved to Travis County from another state in 2011 came

from California.

But Californians made up only 6 out of every 100 new households, compared to 58 from other counties in TX.

Households Moving to Travis County, 2011

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Housing market effects established new “floor” for relocations from California

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

0

500

1,000

1,500

2,000

2,500

3,0002,624

2,250

# of Households Moving from California to Travis County

Source: IRS. Tax returns are used here as proxy for households. This data includes employed college students who report a change of residence to Travis County.

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Households moving to Austin MSA by top in-state & out-of-state metro

Metro AreaHHs

2011Average

HH IncHouston 4,178 $54,564Dallas 4,010 $47,300San Antonio 3,243 $39,516Killeen 1,228 $38,664Corpus Christi 642 $33,210College Station 552 $32,610El Paso 458 $38,432Waco 409 $35,557McAllen 390 $32,415Lubbock 328 $34,850

Metro AreaHHs

2011Average

HH IncLos Angeles 1,134 $52,537New York 866 $81,100Chicago 859 $131,855Washington DC 569 $83,256San Francisco 537 $93,467Phoenix 495 $54,658San Diego 439 $53,419Seattle 381 $62,068Miami 361 $48,905Boston 346 $58,421

Source: IRS. Tax returns are used here as proxy for households. This data includes employed college students who report a change of residence to Travis County.

From Texas From Other State

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How long is this likely to last?

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Housing affordability is still a selling point but Austin is losing ground

Source: BLS, CES, and Zillow. Housing prices are for May 2014.

Metro AreaJob Growth

2009-13Med List Price

Per Sq Ft (Buy)Med List Price

Per Sq Ft (Rent)

San Jose 10.8% $464 $2.52

San Francisco 8.0% $412 $2.53

Denver 7.9% $180 $1.35

Seattle 5.7% $176 $1.46

Portland 6.0% $165 $1.13

Salt Lake City 8.6% $161 $0.96

Austin 13.7% $130 $1.20

Raleigh 8.2% $111 $0.80

Nashville 11.3% $110 $0.86

San Antonio 8.2% $103 $0.84

Dallas 7.8% $100 $0.99

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Higher incomes provide many out-of-state movers ample housing choice

1. Steiner Ranch2. Milwood/Arrowwood3. North Burnet/Domain4. Blackhawk/Hidden Lake5. Canyon Creek6. Hyde Park

7. North Loop8. Onion Creek9. Barton Creek/Hills10. Old West Austin11. Northwest Hills12. Preston Oaks

Source: US Census Bureau, American Community Survey 2007-2011, Five-Year Estimates.

Most popular neighborhoods for people relocating to Austin from out-of-state (2007-11):

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ZIPPop Change

2000-10

78748 15,290

78717 14,390

78732 10,431

78747 9,729

78754 9,614

78738 9,294

78744 9,114

78739 8,149

78726 6,642

78735 6,460

Significant portions of growth pushed to periphery east & south/southeast

Source: US Census Bureau, 2010 Census. Map by ESRI.

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2011 2012 20130

5,000

10,000

15,000

20,000

25,000

20,049

22,854

13,434

10,754 9,94611,047

Travis CountyWilliamson County

Net Migration, # of People (Move In – Move Out)

Source: US Census Bureau, Population Estimates.

…and probably to Williamson County

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1940 1950 1960 1970 1980 1990 2000 2010 2014

41%

52%

62% 63%59%

55%53%

46% 45%

City of Austin Share of Austin MSA Population

Austin (city) share of metro population is back to 1940s level but stabilizing

Source: Ryan Robinson, City Demographer, Department of Planning, City of Austin. January 2014.

Challenges

• Combined cost of housing & transportation is true measure of affordability but overlooked due to focus on housing prices in core

• No compelling long-term vision or real sense of urgency for investing in regional solutions that can scale with growth

• Provision of infrastructure & public services is more expensive w/ low-density development

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Is everybody benefitting?

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Metro GDP Per Capita RankSan Jose $90,594 1San Francisco $79,799 2Seattle $71,693 5Houston $71,191 6Portland $63,500 11Salt Lake City $63,194 12Denver $62,238 13Dallas $61,716 14Nashville $53,921 26Austin $52,403 28Raleigh $50,549 33San Antonio $40,392 49

Overall wealth creation for residents in Austin is lagging benchmark regions

Source: Census, Population Estimates (2013) & BEA, GDP by Metro Area (2012). Rank is among top 50 US metros by GDP per capita.

GDP per capita is imperfect but widely used measure of wealth

in a regional economy.

Innovative, growing regions should be accompanied by

relatively higher levels of GDP per capita, as productivity gains are leveraged to improve living standards for residents through increased wages & amenities.

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Asian

White

Black

Hispanic

30%

45%

73%

80%

Workforce preparedness must improve to achieve inclusive participation

Source: US Census Bureau, 2009 ACS 1-Year Estimates. $17 per hour is the living wage for a family of one adult and one child in Austin.http://www.familybudgets.org/

% of Population Age 25+ in Austin MSA Without a Postsecondary Degree

2/3 of job openings in next 10 years paying average of $17+ per hour will

require a postsecondary degree.

But just 46% of primary working age (25-64) population in Austin MSA

have a postsecondary degree.

Discussion

• What is economic development in Austin?

• Postsecondary education & workforce training are growth management strategies—how can we get more employers investing?

• How can we leverage once-in-a-generation investments (Waller Creek, medical school, urban rail) to create pathways for upward mobility for low-income workers?

@civicanalytics

http://civicanalytics.com

512-731-7851

brian@civicanalytics.com

7600 Burnet Road, Suite 108Austin, Texas 78757