Blog Post
4 Mar



As Laredoans we should consider ourselves fortunate. Very fortunate that we are not Californians or Floridians because these markets had unsustainable real estate appreciation and were the first markets to lead us into the depths of one of the largest recessions since the Great Depression of 1929.  It is often said, “what goes up must come down and the higher the run up the lower the fall” this was clearly evident where double-digit appreciation and euphoria was followed by gut wrenching double-digit losses. These volatile roller coaster type markets were great on the way up and lead many unfortunate home owners and commercial investors to their doom as they took on second mortgages and overleveraged their proprieties. In addition this feeding frenzy also attracted out of town and international investors who also jumped in, drove up prices and exacerbated the problem. And let’s not forget to pin the badge of responsibility on the lenders of last resort who made loans to unqualified applicants whose primary qualifying criteria was a heartbeat and the ability to spell their name correctly.

While all the media fireworks were going on Laredo existed in a bubble of its own or more like a vacuum of installation that protected our market from all the hype and hoopla that was burning up the national scene. Sometimes being under the radar has its advantages.  Laredo may not have the sexiest real estate market (no double digit gains here) and does not  always receive the same positive press coverage other larger markets receive but for now that appears to have been a mixed blessing as we may be the beneficiaries of a less painful downside and a shorter recovery.

What are the positive signs of a local recovery?

In order to answer the question we have to look closely at our economic data and statistics. Real estate is a cyclical investment, with periods of booms (expansions) followed by periods of busts (contractions) both are normal components of the greater cycle. Generally real estate recovery is led by job growth and jobs are the single most important factor that impacts all real estate types and categories. In other words it’s all about jobs. Laredo economic statistics are showing signs of recovery and positive job growth in the following sectors:


  • Educational and Health Services Jobs – the educational and health services sector is the strongest job sector with a 4.6% increase for 2009 and is expected to continue to post positive gains thru 2010 according to the Texas Workforce Commission. The educational and health sector at 4.6% lead Texas averages for the same at 3.7% respectively. This sector is known for producing strong qualifying buyers with higher median household incomes who can afford luxury apartments, condos and homes.
  • Government Jobs – the government job sector also contributed positive gains with a 2.8% increase for 2009 and is expected to remain consistent for 2010. The government job sector at 2.8% was also ahead of state averages for the same period at 2.3% respectively. This job sector is comprised primarily of state, city and school district employees all of which are very good earners and qualify for multiple housing options. This sector also provides great stability for the Laredo real estate market as government jobs tend to be long-term and these worker types can fulfill leases and long-term mortgage obligations.

Some of our hardest hit job sectors were construction down -17.8%, manufacturing -15.4% and Trade -8.0% all of which posted double-digit losses in excess of state averages for the same. With the exclusion of manufacturing and trade the construction sector tends to be a lagging indicator as construction is usually a byproduct of healthy real estate and economic conditions. Expansion in the construction sector tends to validate a market recovery and can be used as an indication of a strengthening trend or what could be the beginning of a new market boom. With government, educational and health jobs leading the way the fundamentals and economic outlook for Laredo seem to be positive. The only question is whether the demand is significant enough in these sectors to spark and sustain a full recovery. If not at the very least these sectors will do well to help stabilize our market and possibly limit our downside the result of which only time will tell so we’ll have to wait and see.LMT-12-2-2010-300x225

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