What will the real estate market in Austin do for 2015?
Most likely, more of the same. More of what we saw in 2013 and 2014 Spring/Summer selling seasons, which was strong price increases caused by limited supply and increasing demand. Especially in the central core areas of Austin but not limited to just those areas. Even homes in Pflugerville get multiple offers now.
The increasing demand is coming from job growth in Austin, which is showing no signs of abating in 2015. Unemployment in Austin is a low 4%. Simply put, barring a major macroeconomic event that affects our local economy and job growth, our housing market will keep chugging along and prices will continue to rise. Nothing will stop it short term, but it will top out eventually and take a breather. Maybe in 2 or 3 years from now.
The recent drop in oil prices will affect Texas to some small degree, maybe Houston mostly, but represents nothing more than a pothole in the road for Austin currently. If anything, it could free up a bunch of construction labor that fled to the oil fields for higher pay, which would help the new home builders increase volume. New home construction is currently restricted by labor shortage and low availability of build-ready lots, which exasperates the effort to meet demand.
Current, Past and Future Values
The median value of a home in the Austin Metro area is now about $250,000. Average value will probably break $350K this summer. A decade ago median sales price was about $150,000 and the average was $225,000. That’s really only a 5% annual increase roughly, which is what we expect over a decade of time, but so much of it has happened the past few years that it feels like too much too fast.
Also, and of concern, much of the appreciation is concentrated in the central “core” areas of Austin proper, which is no longer affordable to service workers or median income families. I sold a home last summer in 78704 zipcode for $290K which sold for $58K 18 years earlier. That’s bumping a 10% annual appreciation rate over two decades. Same with a home we bought in Westlake in the low $300s in 2010 and sold for $500K in 2014. That’s a 10% annual increase over 4 years.
And wages haven’t kept up, so the median income buyer who wants to live in Austin proper, close in, will continue to be pushed out into the suburbs like Leander where a home at or near $200K is still doable, but where they will have to endure ever worsening and soul crushing commutes on our congested roads.
How Should Austintes feel about this?
The value appreciation of Austin home prices gives me mixed feelings.