Austin Continues to be Economic Top Performer Nationwide
The Austin Metro area ranks 4th among the country’s largest metropolitan areas on the Milken Institute and Greenstreet Real Estate Partners’ 2008 Best Performing Cities list. Texas as a whole did well, with Dallas, Houston, San Antonio, Killeen, and McAllen joining Austin in the top 25 of large metro areas. The top “small metro” area in the country was Midland TX.
Last year Austin ranked number 20 on the list. The list ranks cities according to metrics such as job creation and salary and technology growth.
Is there are corelation between the economic strength of a metro area and its real estate market? Of course there is. Absent the type of speculation that happened in cities like Merced California, a metro area must have solid job growth and positive net migration figures in order to generate the kind of market buyer demand that sustains or propels a real estate market.
Remember, Texas had a soft economy and no real estate price run up during the early/mid 2000’s, and Texas had a relatively low percentage of sub-prime loans, compared to the areas in the U.S. that saw crazy real estate appreciation during those same years. Those 4 years of zero appreciation in Austin from 2001 through most of 2005 are looking pretty good in retrospect. Bleeding out 30,000+ jobs in 2002/2003 was tough medicine back then, but makes for a healthier economy today.
Let’s take a look at some of the cities on the list compared to the real estate markets they are experiencing.
According to the list of top 25 appreciating real estate markets in the U.S. as presented at the Housing Predictor website, Austin ranks number 6 for projected appreciation for 2008, with 4% being the predicted appreciation.
As of July 31, 2008, our median value in Austin was up 4.32% for single family homes, but the average sales price is up only 0.44%. Nevertheless, Austin is hanging in tough relative to most of the country.
Forbes list of the 10 worst real estate markets in 2008 includes Stockton CA, Las Vegas NV, Bakersfield CA, Santa Ana-Anaheim CA, Los Angeles-Long Beach CA, Miami-Miami Beach FL, Sarasota-Bradenton FL, Oakland CA, Fresno CA and Fort Lauderdale FL. How many of the aforementioned 10 cities with the worst real estate market are listed in the 2008 Best Performing Cities list? None. Zero. How many are listed in the top 50? One – Fresno at number 47.
I guess this isn’t a news flash. People know this, right? As job growth and population growth go, so goes the real estate market? Well, actually most buyers don’t know this. If they did, they would act as if they knew it. Instead, there are a lot of worried buyers on the sidelines in Austin at present, passing up interest rates in the 5’s and a reasonably good buyer’s market, in favor of the belief that the Austin real estate market is a bubble waiting to burst. It’s not. Austin is in a slowdown in some areas and price ranges, but overall, Austin is enjoying a real estate market and an economy that most of the country would gladly trade for at present. Buyers that know this are out there making good purchase decisions.