Texas Treasure

In the aftermath of the Great Recession, how strong is Texas’ real estate industry?

An ongoing Real Estate Center research program monitors the relative importance of the Texas real estate industry and the state’s real estate wealth. Most recent data show the state’s real estate industry is maintaining its standing among the state’s industries and that real estate wealth continues to grow.

Industry’s Effect on Texas Economy

The real estate industry accounted for 8.4 percent of Texas’ gross domestic product (GDP) in 2011 compared with 11.7 percent for the United States (Table 1). The lower than national average share is mainly attributable to lower than national average Texas home prices.

Real estate was the third largest Texas industry in 2011, after manufacturing and mining (Table 1). It was the second largest in 2010.

Texas’ real estate industry has the largest proportion of self-employed persons. Including the self employed, 521,684 persons worked in the Texas real estate industry in 2011, representing 3.6 percent of statewide employment; nationwide, they were 4.0 percent (Table 2). The corresponding percentages for Florida, California and Arizona were 5.1, 4.8 and 5.5, respectively. Real estate’s share in Texas’ total employment increased from 2.6 percent in 1999 to 3.5 percent in 2011 (Figure 1).

Every $1 million of real estate industry revenue generates:

• just over half a million dollars of revenue in other parts of the Texas economy,
• 5.2 jobs in the state’s real estate industry and
• five jobs in other industries.

Real estate taxes are a big contributor to the state’s overall wealth:

• Taxes paid by the real estate industry accounted for 14.8 percent of total Texas business taxes in 2009.
• Texas’ property tax revenue in 2009 was more than $40 billion or 47.8 percent of the state’s tax revenues.
• Texas school districts levied $21.7 billion in property taxes in 2009, accounting for 54.4 percent of total property tax revenues.

In 2010, the state’s four largest metropolitan areas accounted for a majority of real estate employment (Table 3).

• Dallas-Fort Worth-Arlington, Houston-Sugar Land-Baytown, Austin-Round Rock-San Marcos, and San Antonio-New Braunfels, had 81.4 percent of Texas’ real estate employment.
• 174,141 persons, including those self-employed, were working in Dallas-Fort Worth-Arlington’s real estate, rental and leasing industry, or 33.3 percent of that industry’s Texas employment.
• 149,310 persons, including the self-employed, were working in Houston-Sugar Land-Baytown’s real estate, rental and leasing industry, some 28.6 percent of employment in Texas’ real estate industry

COMMERCIAL PROPERTIES
represent 16.6 percent of Texas’ total real estate wealth. The largest category is single-family residences, which make up 56.3 percent.

Restoring Texas Real Estate Wealth

The total value of Texas real estate wealth in 2011 was more than $1.6 trillion (Table 4). Since 1997, the total value of Texas real estate wealth has increased 2.4 times. Texas’ per capita real estate wealth in 2011 was $65,432, up 86.7 percent from $35,055 in 1997.

Real estate wealth comprises single-family residences, multifamily residences, commercial properties, industrial properties, mineral real estate, utility company properties, rural acreage and vacant lots.

Single-family residential wealth in Texas in 2011 totaled $945.1 billion, accounting for 56.3 percent of the state’s real estate wealth (Figure 2). The total value of single-family residential wealth in 2011 was 2.8 times its value in 1997 (Table 4). Single-family residential wealth includes houses, condominiums and mobile homes on land owned by the occupant.

The total value of Texas’ multiple-family residential wealth in 2011 was $85.1 billion, accounting for 5.1 percent of real estate wealth. The total value of multiplefamily residential wealth in 2011 was 2.5 times its value in 1997 (Table 4).

Multifamily residential real estate includes apartments and residential buildings containing two or more dwelling units belonging to one owner. Hotels and motels are excluded.

Commercial real estate had the largest share of the state’s real estate wealth in 2011 after single-family residential (Table 4). Texas’ commercial real estate wealth was $278.9 billion, 2.5 times its value in 1997. Commercial real estate consists of land and improvements devoted to sales or services to the public.

Texas’ 2011 industrial real estate wealth amounted to $95 billion, or 5.7 percent of the state’s real estate wealth. That was 1.8 times the value in 1997 (Table 4). Industrial real estate wealth consists of land and improvements devoted to the development, processing or storage of a product, excluding utilities.

Texas’ mineral real estate wealth in 2011 totaled $106 billion, accounting for 6.3 percent of real estate wealth. This was 2.9 times its 1997 value (Table 4). Mineral real estate wealth comprises producing and nonproducing oil and natural gas wells, all other mineral interests, and equipment used for extracting and producing minerals.

In 2011, utility company properties in Texas were valued at $50 billion, close to their 1997 value (Table 4). The utilities industry includes gas companies, electric companies, railroads, water companies, pipeline companies and cable television providers.

The total value of Texas’ rural acreage in 2011 was $80.3 billion, 4.8 percent of the state’s real estate wealth and 1.6 times its value in 1997 (Table 4).

The 2011 value of vacant lots was $39.5 billion or 2.4 percent of the state’s real estate wealth. This was twice its value in 1997 (Table 4).

Dr. Anari ([email protected]) is a research economist with the Real Estate Center at Texas A&M University.