Austin Area Housing Market Insights For 2018

Posted by Israel Gutierrez on Friday, September 14th, 2018 at 1:53pm.

Cimarron Hills in Georgetown Texas

We had the pleasure of getting an update on the housing market from Eldon Rude, Principal at 360 Real Estate Analytics. The seminar was very informative and these are some of the key points/takeaways.

Be careful with headlines

In a world of instant gratification, and knee-jerk reactions, it's easy to misconstrue headlines or maybe put too much importance on their meaning. For example, there are many headlines relating to an expected "downturn" in the real estate market in 2019. These expectations are sometimes based on small samples of information, and when you look at the big picture and take into account the significant amount of growth the country and the local Austin market have seen in recent years, wouldn't any slow down be considered a significant downturn?

THe Summer Market for 2018 was slow

In spite of rising values and a steady influx of people, the real estate market in the Summer of 2018 showed fewer units sold than the same time last year. While this can be alerting for some, it's important to understand the factors that contribute to this. It's getting more challenging for builders and developers to put new homes on the ground due to a labor shortage, so there's that. We just have less inventory for people to buy. Additionally, we're seeing higher values and higher interest rates. Once again, consumers are used to uber-low interest rates, so as the economy shifts there is a grace period of sorts for consumers to come on board with the new norm. In recent years it has also been apparent that the Spring and Early Summer months are the busiest for the Austin Metro, sometimes spiking as early as January.

THE SUMMER MARKET FOR 2018 WAS SLOW

In spite of rising values and a steady influx of people, the real estate market in the Summer of 2018 showed fewer units sold than the same time last year. While this can be alerting for some, it's important to understand the factors that contribute to this. It's getting more challenging for builders and developers to put new homes on the ground due to a labor shortage, so there's that. We just have less inventory for people to buy. Additionally, we're seeing higher values and higher interest rates. Once again, consumers are used to uber-low interest rates, so as the economy shifts there is a grace period of sorts for consumers to come on board with the new norm. In recent years it has also been apparent that the Spring and Early Summer months are the busiest for the Austin Metro, sometimes spiking as early as January.

REntal Market & Apartments are Booming

More and more people are being driven to Austin by the robust local economy and low unemployment rates in the area. Employers like Indeed, Parsley Energy, HomeAway, Facebook, Sailpoint and WeWork, which have recently signed massive commercial space leases need talent which is not available locally. This is a key factor promoting relocation to the area. While some of these newcomers come to Austin ready to buy a home, a lot of them don't but they still need a place to stay. This is why the lease markets and apartment construction are also booming. Lease rates have seen a 50% rise in the last few years. There are currently about 16,000 apartment units under construction and those are expected to be filled quite quickly with a vacancy rate under 10% in Austin.

Where is the Growth happening

Cedar Park & Leander have been a heavy growth area in the NW Corridor for years and the growth has reached the Hwy 29 and Reagan Blvd area. One constraint that builders are running into is the availability of land that can be quickly and affordably developed into housing. Growth is expected to continue at a high rate in the Leander are spreading into Georgetown and Liberty Hill. Additionally, many builders are developing neighborhoods on the East Side of town near the border of the Austin MSA, including areas like Bastrop, Manor, and Hutto, where land is more affordable allowing builders to offer entry-level product.

IT's Austin, We're going to Keep Growing!

You can expect the NW Corridor, SW Corridor and areas East of Austin to continue to boom over the coming years. There are many new jobs being developed especially in the tech industry, and we have great schools, pro-growth local government, and it's simply a beautiful geographic area.

 If you have any questions about the current market or would like more analytical detail, just shoot us an email at israel@austinhouseco.com. You can also call our office at (512) 299-3809 or message us on FacebookInstagram, or Twitter.

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