Austin Job Growth 2011

job growth in austin

Austin was recently featured on the CBS Evening News as the city with the strongest job growth in the U.S. This is somewhat of an “all sunshine” puff piece, but it nevertheless highlights some of the good things happening in Austin. Job growth drives real estate demand, so if this year keeps heading in the right direction with jobs in Austin, we should see the Austin real estate demand start picking up as more job seekers move here and more companies relocate to Austin.



Posted by Steve
5 years ago
Steve

Steve is a Real Estate Blogger, Husband and Dad, UT Austin Grad, Runner, Real Estate Broker and owner of Crossland Team and Crossland Real Estate in Austin TX.

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vri - 5 years ago

this is good news for agents, mortgage brokers etc. But not sure it helps the homeowner since the need for houses will be met by a sprawl of new developments. So existing homes would just depreciate in value and home owners would contend with the increased traffic congestion and taxes to pay for more roads and infrastructure.

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Jill Kipnis - 5 years ago

Hi Steve, I’m hoping that 2011 is a great year for real estate in Austin too. Realtor.com research shows that Austin was the No. 8 most searched market in the country in 2010–Austin is certainly a popular market right now!

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Nate - 5 years ago

Austin is very dependent on UT, ISDs and the State for jobs and its economy. All these area are seeing significant cuts due to the 2012-2013 budget ( 2012 starts in sept of 2011). I have to wonder how that will affect the market.Maybe the concentration just reduces volatility in the mkt, i don’t know….

Mind you the state is run from the rear view mirror, so perhaps the economy was synthetically held up in 2009-2010 and will be synthetically weak in the two coming years.

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Steve - 5 years ago

> the need for houses will be met by a sprawl of new developments. So existing homes would just depreciate in value and home owners would contend with the inc

Hi vri, no, existing homes will rise in value due to the inability of the market to deliver sprawling developments. New home inventory is lower than it’s been since 1993. And the number of developed lots upon which to build new homes is extremely low as well. Builders also are moving up price points to build more mid-range homes as the starter end had dried up and now also suffers from stricter loan qualifications. Bottom line, existing homes in good locations will see increased demand in the next year or two and probably for 5-7 years beyond as we enter a new up-cycle.

Jill: Thanks for the stat.

Nate: Yes, government jobs will decrease but the private sector jobs will more than compensate and we’ll have a net gain. Many of the lost jobs will also be through early retirement or non-replaced attrition (people quit for better job and their position remains unfilled), and most of those people are already set with pensions and a home.

Thanks for your comments.

Steve

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vri - 5 years ago

Hi Steve,
sorry if I am skeptical. On my way to work (183A,620, 2222) I see lot of new homes being offered and lots available for development. Anecdotally, several friends who moved here in the last year prefer to rent or have bought or are building new homes in these areas. They had plenty of choices and very attractive pricing and financing options. So I dont think new home inventory is low if you go just outside the Austin city limits. And I dont see anything structural (capital, labor, taxes) to prevent builders from increasing the inventory when the demand picks up. And the large supply of rental housing will siphone off some of the housing demand.
Existing home prices in good locations could go up as you say because ‘good’ implies a boundary which limits supply. But not all locations can be ‘good’. So I think average price of existing homes are unlikely to go up except due to general inflation. So the average homeowner better pray for inflation and hope there is no deflation.

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Steve - 5 years ago

Hi vri,

Those are worthy observations. Time will tell. The hard data underlying the shortage predictions are measurable and real. Permits, number of existing lots, annual new household formations, financing restrictions, etc. I don’t disagree with what you see, but having now lived through 3 major real estate cycle shifts in Austin (late eighties, early 2000s, late 2000s) I’ve seen firsthand many times how fast the market winds shift, literally overnight usually, so we’ll see what 2011/12 bring us.

The macro-economic shifts can happen rapidly also, as in 2008. Now with The middle east unrest in Egypt, which may continue spreading to other OPEC nations, it’s possible a new mindset on domestic oil production will finally hit home which will cause a boom in Texas.

Many things to consider going forward.

Steve

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vri - 5 years ago

Hi Steve,
another point I had made was that new homes are subsidized by existing homeowners thru extra costs (in taxes) for infrastructure. This subsidy is on the order of $36,000 for a single family home per the study below. So unless new developments pay their way(which is probably impossible given the power of developers in Texas politics), this is really a loss in value for existing homes.
http://www.fodorandassociates.com/Reports/Austin_Report_Link.htm

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