September 18 , 2009

D-FW consumer debt is not too bad, study finds

D-FW consumer debt is not too bad, study finds

Friday, September 18, 2009

Dallas Business Journal - by Bill Hethcock Staff writer

Consumer debt levels in the Dallas-Fort Worth area are the least burdensome of any in the nation’s 20 largest metro areas, which should be encouraging news for retailers in the region, according to research by the customer analytics firm Buxton.

Fort Worth-based Buxton’s financial stress index factored in mortgage and nonmortgage debt and household income to assess the market’s health. The study used the rule of thumb that a mortgage payment should not exceed 28% of the household’s monthly income, and other similar guidelines, said Juli Zoota, director of research for Buxton. In Dallas-Fort Worth, 90% of homeowners’ mortgages were within their financial means, compared to only 62% in the Los Angeles metro area.

“We set out to see who was following the rules and who’s not,” Zoota said. “From a debt standpoint, Dallas-Fort Worth looks very good compared to other large markets.”

The research is good news for retailers hoping to rebound from the recession and for shopping center landlords trying to fill holes, said Steve Lieberman, CEO of Dallas-based The Retail Connection.

“It’s significant because consumer debt is so directly tied to consumer spending,” he said. “It’s spending capacity that drives sales in the retail chains and in turn drives the entire retail cycle.”

Lower consumer debt levels may be one reason why the warehouse club Costco and luxury retailer Neiman Marcus both reported Texas was one of their strongest-performing regions when they reported August sales numbers, said Brian Glaser, president of the D/FW Commercial Retail Division of The Weitzman Group.

“Healthy consumer debt levels can be a key component for retail success because they represent available disposable income,” Glaser said.

Charles Wetzel, chief operating officer for Buxton, said the firm will use its research to help retail and restaurant clients understand their customers and their propensity to spend money on shopping or dining out. “This allows retailers to evaluate market by market and decide whether they should stay in the market, retrench or grow,” Wetzel said.