Austin: A Theory of EverythingHow & why Austin is changing and what

we should do about it

2014 Realty Round UpPalmer Events Center

Austin, TXOctober 15, 2014

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• Population change (nom) #10• Population growth (%) #2• Job change (nom)

#7• Job growth (%)

#1• GDP change (nom) #21• GDP growth (%)

#3

Austin rank among U.S. metros since 2000

Source: U.S. Census Bureau, Population Estimates. U.S. Bureau of Labor Statistics, Current Employment Statistics. U.S. Bureau of Economic Analysis. Jobs are from 2000 to 2013. GDP is from 2001 to 2013 (2000 not available). Growth rankings (%) are among large MSAs. Data is for Austin-Round Rock MSA.

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-4%

-2%

0%

2%

4%

6%

8%

10%

12%

Austin MSAU.S.

Austin averaging 5.7% annual GDP growth: nearly 2 percentage points > U.S. economy

Average (2002-13)Austin MSA 5.7%

U.S. 3.9%

% Change in GDP (Nominal)

Source: U.S. Bureau of Economic Analysis. Data is for Austin-Round Rock MSA. Not adjusted for inflation.

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-6%-5%-4%-3%-2%-1%0%1%2%3%4%5%6%7%8%9%

Austin MSAU.S.

This time it really was different: Austin was much better prepared for Great Recession

July 2001

Dec2003

Jan1991

Aug2014

Job Growth, 12-month rolling (SA)

Source: U.S. Bureau of Labor Statistics, Current Employment Statistics. Data is for Austin-Round Rock MSA. Seasonally adjusted.

AUS U.S.

1990s 63% 18%

2000s 13% -1%

2010-13 12% 5%

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19701972

19741976

19781980

19821984

19861988

19901992

19941996

19982000

20022004

20062008

20102012

0%

1%

2%

3%

4%

5%

6%

7%

8%

Austin MSAU.S. (MSA)

Population growth in Austin has picked up the slack in lean economic years

Population Growth, 1970-2012Growth

2011 3.1%

2012 3.0%

2013 2.6%

Source: U.S. Census Bureau, Population Estimates. Data is for Austin-Round Rock MSA. U.S. MSA is all metropolitan areas.

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Bach Degree+Pop Growth

2000-13RankMSA

Total PopGrowth

2000-13RankMSA

Charlotte 102% 1 35% 5Grand Rapids 93% 2 9% 33Las Vegas 91% 3 45% 3Austin 80% 4 49% 2Raleigh 79% 5 51% 1Riverside 74% 6 34% 8Nashville 72% 7 27% 12Orlando 66% 8 37% 4San Antonio 66% 9 32% 9Phoenix 63% 10 34% 6

Austin has added 225,000 people with bachelor’s degree or

higher since 2000 (~17,000 per year), only MSA in top 25 with population of less than 2 million.

Bachelor’s+ made up 36% of Austin’s total population growth during 2000-2013

(Raleigh 37%).

Austin is winning “war for talent”

Source: U.S. Census Bureau, American Community Survey table B15002 and Census 2000 SF3 table P37. Data is for Austin-Round Rock MSA.

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37,740

45,960

55,080

Bachelor’s degree or higher

Some college or associate’s degree

High school diploma or equivalent

No high school diploma

85,608

Average Earnings ($) Per Worker Age 25+ by Educational Attainment in Austin

Source: U.S. Census Bureau, Quarterly Workforce Indicators, Longitudinal-Employer Household Dynamics Program. Data in chart is for Austin-Round Rock MSA, 2013Q3.

Raleigh

Bachelor’s+ 75,228

Some college 49,524

HS diploma 42,132

No HS diploma 36,132

All workers 49,824

All Workers 54,360

Fast growing bachelor’s+ population is driving significant wealth creation

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Age 25+Population

2013Growth

2000-13AverageEarnings

Max MonthlyHousing Cost

Bachelor’s or higher 506,645 80% $85,608 $2,140

Some college 340,908 57% $55,080 $1,377

HS diploma 234,821 54% $45,960 $1,149

No HS diploma 139,786 20% $37,740 $944

All workers 1,222,160 59% $54,360 $1,359

Source: U.S. Census Bureau, American Community Survey table B15002 and Census 2000 SF3 table P37 (Population, Growth, and Educational Attainment). Quarterly Workforce Indicators, Longitudinal-Employer Household Dynamics Program, 2013Q3 (Average Earnings). Maximum monthly housing cost is calculated at 30% of average earnings.

Affordable means monthly housing costs < $1,400 for majority of Austin workers

9Note: Search conducted on October 14, 2014.

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Earnings for < bachelor’s degree workforce not keeping up w/ housing costs in Austin

944

1,149

1,359

1,377

2,140

AustinMetro1,614

AustinCity

1,770

AustinDowntown

2,322Bachelor’s degree or higher

Some college or associate’s degree

All workers

High school diploma or equivalent

No high school diploma

Housing Affordability ($) by Educational Attainment

Max. monthly housing cost at average earnings

Medianrent

Source: Zillow Rent Index (ZRI), All Homes (SFR, Condo/Co-op), August 2014. ZRI is the median of the estimated rent price for all homes in a given region. ZRI may not reflect actual listings at any given point in time. Maximum monthly housing cost is calculated as 30% of average earnings by educational attainment from U.S. Census

Bureau, Quarterly Workforce Indicators, Longitudinal-Employer Household Dynamics Program, 2013Q3. Data is for Austin-Round Rock MSA.

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Max MonthlyHousing Cost

Bachelor’s+Metro Area

Med RentCity LimitsMed Rent

DowntownMed Rent

Austin 2,140 1,614 1,770 2,322

Raleigh 1,881 1,307 1,300 1,594

Orlando 1,880 1,305 1,176 1,474

Nashville 2,124 1,292 1,306 1,758

Charlotte 2,695 1,207 1,183 1,486

Denver 2,092 1,737 1,730 2,348

Portland 1,928 1,511 1,539 1,802

Housing is expensive in Austin relative to other high-performing metro areas

Source: Zillow Rent Index (ZRI), All Homes (SFR, Condo/Co-op), August 2014. ZRI is the median of the estimated rent price for all homes in a given region. ZRI may not reflect actual listings at any given point in time. Maximum monthly housing cost is calculated as 30% of average earnings by educational attainment from U.S. Census

Bureau, Quarterly Workforce Indicators, Longitudinal-Employer Household Dynamics Program, most recent quarter available. Data is for Austin-Round Rock MSA. Downtown defined as following zip codes: Austin (78701), Raleigh (27607), Orlando (32801), Nashville (37201), Charlotte (28202), Denver (80202), Portland (97201).

Several downtowns in table have multiple zip codes. The zip code that best reflected majority of downtown properties based on ZRI was selected.

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Average monthly earnings for workers with a bachelor’s degree or higher in Austin increased by $166 during 2011-2013.

Median monthly rent in city of Austin increased by $331.

Source: Zillow Rent Index (ZRI), All Homes (SFR, Condo/Co-op), August 2011-August 2013. ZRI is the median of the estimated rent price for all homes in a given region. ZRI may not reflect actual listings at any given point in time. Average earnings are from U.S. Census Bureau, Quarterly Workforce Indicators, Longitudinal-Employer

Household Dynamics Program, 2011Q3-2013Q3. Earnings data is for Austin-Round Rock MSA. ZRI rent estimate is for city of Austin. Not adjusted for inflation.

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Race/Ethnicity

AverageMonthlyEarnings

Max MonthlyHousing Cost30% Earnings

Percent withBachelor's+Austin MSA

Percent withBachelor's+

U.S.

Asian 5,661 1,698 67% 50%

White 4,644 1,393 49% 32%

Black 3,256 977 23% 18%

Hispanic 3,251 975 17% 13%

Source: Educational attainment rates by race/ethnicity are from U.S. Census Bureau, 2012 American Community Survey, Five-Year Estimates, table C15002. Average earnings are from U.S. Census Bureau, Quarterly Workforce Indicators, Longitudinal-Employer Household Dynamics Program, 2013Q3. Data is for Austin-Round Rock MSA.

Workforce Demographics by Race/Ethnicity in Austin

Education & wage inequality + rising housing costs contributes to residential segregation

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Austin is the most expensive housing market in Texas.

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Average SFSale Price

Metro AreaMed Rent

City LimitsMed Rent

Urban CoreMed Rent

Austin 311,414 1,614 1,770 2,322

Dallas 295,350 1,407 1,226 2,982

Houston 275,369 1,463 1,330 2,299

San Antonio 220,366 1,276 1,180 1,830

Source: Average sale price from ABoR, MetroTex (Dallas County), SABOR, HAR, most recent month available. Median rent from Zillow Rent Index (ZRI), All Homes (SFR, Condo/Co-op), August 2014. ZRI is the median of the estimated rent price for all homes in a given region. ZRI may not reflect actual listings at any given point in time. Urban core

was roughly defined as Austin (78701), Dallas (75201), Houston (77006), and San Antonio (78209). Rent estimate in San Antonio is median list price (ZRI N/A).

Housing costs are higher in Austin but geographic perspective is important

Housing Costs in Selected Texas Metro Areas, 2014

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Austin is not creating enough “middle-wage” jobs.

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OccupationAverage Wage

2013Jobs

2014% Total

2014Change

2009-14Growth

2009-14

Low-wage ≤ 13.83 per hr 292,732 32% 47,016 19%

Middle-wage 13.84-21.13 232,807 26% 31,562 16%

High-wage ≥ 21.14 per hr 384,992 42% 57,242 17%

Total ** 910,531 100% 135,820 18%

Source: EMSI, 2014.3 Data Release. Excludes self-employment. Data is for Austin-Round Rock MSA and includes all jobs for which average wage data was available. Average wage is the mean wage (2013) for all jobs classified by occupation—i.e. all jobs per occupation were assigned to one category based on the average wage.

Calculations using median wage by occupation or other breaks could yield different results. Wage categories are from the National Employment Law Project. http://www.economicmodeling.com/2013/10/03/middle-skill-jobs-that-have-survived-and-the-states-that-are-fostering-them/.

Job Growth by Wage Range in Austin, 2009-2014

Middle-wage jobs are smaller share but keeping pace with overall job growth

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We have more Ph.D. taxi drivers than anywhere else in America

(underemployment).

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PopulationAge 25+

2012

Pop GrowthAvg Annual2000-2012

Job GrowthAvg Annual2001-2014

Job Growth“Boom” Year

2013-2014

Bachelor’s Degree 321,536 11,265 3,488 7,424

Some College 332,076 9,599 1,694 2,856

High School Diploma 227,965 6,278 5,418 13,366

Graduate or Prof Degree 155,522 5,004 797 829

No High School Diploma 139,522 1,893 5,346 12,731

The Human Capital is getting crowded

Source: Population data from U.S. Census Bureau, American Community Survey table B15002 and Census 2000 SF3 table P37. Employment data, including 2014 projection, from EMSI. Some College category includes certificates, associate’s degree, and people

w/ higher education credits but no completed postsecondary degree. Data is for Austin-Round Rock MSA.

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People moving here from California are to blame for

______________.

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

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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19961997199819992000200120022003200420052006200720082009201020110

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000 Households Moving to Austin from California

1996-2011

Texas 288,868

California 39,886

Florida 9,163

Source: Internal Revenue Service. Includes only people filing federal tax returns. Number of returns used as proxy for number of households. Actual number of households may be different. Data is for Austin-Round Rock MSA.

25,274 moved Austin to CA

California is big but majority of people moving to Austin come from Texas

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110 people move to Austin every day.

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It really doesn’t matter.It’s a lot.

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But if you must know:

Austin MSA: 2011(latest available)

201 moved in147 moved out

+54 net

Source: Internal Revenue Service. Includes only people filing federal tax returns. Number of exemptions reported on tax returns used as proxy for number of people. Actual number of people may be different. Data is for Austin-Round Rock MSA.

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• Celebrate

• Stop comparing Austin to New York, San Francisco, and Washington DC

• Educate people about urban core vs. periphery markets

What should we do about all of this?

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• Support and invest in career and technical education

• Pay equal attention to supply and demand sides of Austin’s affordability challenge

• Advocate for publicly-funded Austin research program

What should we do about all of this?

@civicanalytics

http://civicanalytics.com

866-512-3835

brian@civicanalytics.com

7600 Burnet RoadSuite 108Austin, TX 78757