Greetings from Austin
Austin is considered to be one of America’s fastest growing cities. Its central location in Texas along with a wide variety of employers is well known. The great food, live music, SXSW, ACL, hiking and bike trails and the state capitol don’t hurt either. This increase in the demand to live in Austin has caused the population to nearly double for the past twenty years, as shown in the image below.
Approximately net 110 people move to Austin every day. Although this population growth is great for the economy, as demand for homes increase, prices increase. Anyone who looks around knows there are tons of projects going up to try and keep up with this demand, but we've got a long way to go. What does this all mean for the Austin housing market?
Austin Housing Market
The housing market has responded to this population boom by building more multi-unit living spaces rather than single family dwellings. Austin newcomers seem to be more inclined to rent instead of purchase until they get a feel for the city. All of this growth has lead to big increases in home prices almost every year. In the chart below, the red line is the average price of a home and the blue columns represents home sales year. Home prices have been increasing but it seems that total sales have plateaued a bit.
A lack of lots for developers is leading to not enough units in central Austin. As land becomes more and more limited, buildings will tend to go higher and higher. Austin has an expected economic growth of 6.1%. This far outpaces the country as a whole which will lead to the demand for more labor which equals more people which means more demand for housing. The gap between prices and area incomes is becoming a great concern. Incomes do not seem to be rising as fast as housing costs. Many potential buyers remain in rental homes or apartments. Supply and demand factors, increasing incomes, or out of towners can help continued valuation growth.
Good Time to Invest?
The booming population and lack of sufficient housing and affordable units within a 3-5 mile radius of the city center seem foreshadow a continued strong rental market. For investors, this could equal a lot of opportunities. Talk to your financial professionals to see what makes the most sense for your individual situations.
Sources
http://www.bizjournals.com/austin/print-edition/2013/11/08/austin-cant-afford-this-home.html
http://www.myagentsam.com/2011/11/austin%E2%80%99s-housing-growth-is-lagging-population-growth/