Collin County has had its share of financial woes, but experts say the area might emerge from slump stronger than before

09:49 PM CDT on Sunday, August 14, 2005

By PAULA LAVIGNE / The Dallas Morning News

Growth keeps the Collin County area's economy humming. Yet foreclosures and bankruptcies climb. Credit card debt balloons. Existing home values remain flat.

Despite those symptoms foretelling rocky times, local economic experts say this area will probably maintain its status as one of the wealthiest in the nation.

Dr. Kathy Hayes, economics professor and associate dean for academic affairs at Southern Methodist University, said there's enough stability in Collin County.

"I think it's really a short-term problem. I don't see any real warning signs," she said. "I know they've had it rough for a few years."

The recession hit North Texas harder than most places in the country, primarily because of the impact on the area's largest industries: airlines, technology and telecommunications.

In the Collin County area, bankruptcies became increasingly common among former telecom workers. The bust hurt more here than in some other high tech areas, such as Silicon Valley in Northern California, because it devastated an entire industry, said Fiona Sigalla, economist with the Federal Reserve in Dallas.

"Silicon Valley is known for having a lot of high-tech companies, and it might be easier to jump from [one company to another]," she said. "We saw an entire industry that had been growing very rapidly contract very rapidly. We didn't have as many other opportunities for people within the high-tech sector to go into."

While the information and telecommunication sectors haven't posted big gains in North Texas, other industries are starting to create more jobs. Ms. Sigalla said there are signs that overall employment will continue to grow.

As of May, the Dallas metropolitan area added at least 37,500 jobs from the year before. Overall, the average annual pay is up 25 percent since 1996, a smaller increase than other high-income counties around the country, according to the U.S. Bureau of Labor Statistics.

"You can look at Collin and say there are some unemployed workers and some open office space, and that's not as healthy as it was three to four years ago, but you can also say that's much more attractive for companies looking to expand," she said.

Another sign of the county's continued prosperity – retail spending. Though sales in Collin County dipped from 2002 to 2003, they rebounded in 2004. Overall buying is up almost 30 percent since 1999, according to a News analysis of state comptroller records.

John McGrane, Plano's finance director, said earlier this year that sales tax revenue was doing better than expected.

Plano and other cities continue to attract businesses, retail and commercial. Officials are trying to diversify their employment base so the cities don't suffer as much if one industry takes a hit.

While consumer spending is good for the region, is it good for the people racking up the bills?

What really matters is debt relative to wealth, said Michael L. Davis, a lecturer who teaches economics and finance at Southern Methodist University's Cox School of Business.

"For a lot of people nowadays, much of their wealth isn't what you can measure in a bank account or housing value," he said. "There are a lot of people who are highly trained and highly skilled and have wonderful future employment opportunities."

That paradox also applies to other economic indicators.

There's a stigma to filing for bankruptcy, but trustees and attorneys say people who've had their debt erased actually become better consumers and investors.

A Plano mom, who spoke only on the condition her name not be published, filed for bankruptcy after accumulating $60,000 in debt. She said she's now putting 30 percent of her income into savings and holding off on some home repairs until she can pay for them outright.

"If there's something you want, and it's not a necessity, you don't buy it unless you can pay cash," she said. "If Foley's is having a Red Apple Sale, don't go."

In five years, more than 7,000 Collin-area residents left creditors hanging with millions of dollars in forgiven charges. Even so, economists here say, the area's financial health has not suffered as a result.

People struggling with debt had been trying to get home equity loans to pay off their credit cards. In 2003, more than half of Republic Title's residential business was home loan refinancing, and in 2004 that dropped to 20 percent, said Patience Francis, vice president of training and education with the company's Plano headquarters.

In many cases, people had not built up enough equity in their homes to make refinancing worthwhile, and flat home values further stalled their progress, said Ms. Sigalla, the Federal Reserve economist.

But she said lower home prices would benefit the Dallas area in the long run because they reflect their true values.

In other regions of the country, people fear that out-of-control values are creating a housing bubble that could eventually pop.

City and business leaders share in the optimism. They expect their communities to prosper and diversify. Frisco City Manager George Purefoy said his city's challenge is to sustain its high standard of living as development moves north. That's why the city worked hard to attract a mall, a minor league baseball ballpark, a soccer complex and a mix of retail.

"We don't want to create something here so that when the newness falls off that it falls on hard times," he said. "We always wanted to be a complete city and not just somewhere where people sleep at night."

E-mail plavigne@dallasnews.com