It is no surprise that the San Antonio area will continue to feel the tremors of the energy shock after crude oil prices fell more than 50 percent (from$93/bbl to $45/bbl) by Mid-September 2015. The proximity of San Antonio to the Eagle Ford Shale reservoir certainly benefited its economy at the time of strong energy prices. With the fall in energy prices, the Eagle Ford basin lost about 57 percent of its oil and gas rig count in a year. Consequently, the region started losing jobs in the natural resources and mining sector with a net 440 jobs lost in 2015Q2 alone.
Despite the adversity, the region managed to generate more than 28,500 nonfarm payroll jobs in a year from last September, with most of the jobs (more than 76 percent) coming from the services providing sector. Consequently, the unemployment rate in the region fell to 3.5 percent by July 2015 from 4.7 percent in 2014Q2. This indicates that the San Antonio’s economy is well-diversified and can weather the energy shock, supported by its large non-energy economy. A closer look into 2015Q2 labor market data indicates that the decline in the unemployment rate came from a meager increase in employment of about 0.3 percent and a small decline in the labor force, indicating the potential for outmigration of energy workers. We expect San Antonio’s economy to moderate in the remainder of 2015 and 2016 before rebounding in 2017, depending on the energy sector performance.
The real estate market in the San Antonio area is still hot despite a decline in total housing starts due to falling multifamily housing starts for the first half of 2015. Home prices grew more than 10 percent year-over-year in 2015Q2, thereby supporting household wealth in the area. According to the San Antonio Board of Realtors, home sales grew by 12 percent in August from 2014, largely driven by homes with values less than $200,000 and up to $500,000. Going forward, we expect the home price appreciation rate to moderate as income and job growth softens in the region.
Click here for the complete San Antonio MSA Regional Economic Update: SanAntonio_2015_Q3.