How concerned should Texans be now that the state’s unemployment rate has risen to 8.2 percent and appears to be going higher? The answer is very.
How concerned should the rest of the country feel now that the state’s rate is the highest in 22 years? The answer is critically concerned.
When the housing bubble burst around the country, Texas was barely shaking. The state continued to see housing appreciation, as well as job growth, even though the east and west coast regions were facing the worst economic environment since the Great Depression.
Many Texans credit the conservative nature of its citizens as the reason for its stable economic environment. That is somewhat true, but the primary credit really goes to the state legislature, which protected its own citizens with its tough rules on home equity loans.
These consumer protection rules actually reduced the risk of extreme price depreciation in homes, as well as save many Texas-based financial institutions.
As a matter of fact, Texan real estate law wouldn’t even permit a homeowner from accessing a home equity line of credit until late 1997, and the law was extremely restrictive to what a homeowner could do. For instance — and the rule still applies today — a homeowner cannot hold mortgage debt that exceeds 80 percent of the fair market value of the property.
Think about that: When homeowners in other states were taking out lines of credit that pushed mortgage loans to 100 percent, or more, of the value of the home, lawmakers in Austin were saying “There’s trouble brewing.” And, they were right.
Once the bubble burst, and prices began to fall, homeowners quickly found themselves owing more than the house was worth. The result was a meteoric rise in foreclosures and bankruptcies, and sadly, the elimination of millions of jobs.
Texans were saved. The rest of the country, including the federal government, began to notice as well. In 2006, a Washington, D.C., think-tank published a report showing migration trends in the country where Americans are more likely to move due to job and housing growth. Guess which state came out on top? That’s right, the Lone Star state.
Government officials predicted the great state of Texas will increase in population by 5 million people in the next six years.
I’m certain many in San Antonio will think the population boom already occurred based on the frustrating traffic patterns witnessed on 1604 in the morning. But the outstanding issue with this kind of growth has to do with jobs and where these people are going to work. If Texas companies aren’t hiring, then who is? Washington and Austin are deeply concerned.
Ronny Congleton, who is the work force commissioner representing Texas labor, had this to say recently: The Texas labor force is growing as more people enter the job market, but job seekers are hampered by few jobs.
It’s obvious Texas needs to work. As the octane that will fuel the country’s economic engine, we need companies to begin hiring, not firing. After all, the country depends on it.
Todd Schoenberger is the Managing Director of LandColt Trading, LLC.
