Austin's real estate market looks rosy, experts tout
Jan 9, 2014
Austin Business Journal
The 2014 Austin Housing Forecast drew several hundred Realtors, homebuilders and real estate professionals to the Hyatt Regency Hotel Wednesday and the message was positive: The local real estate market is in for another stellar year
“It’s hard to say anything negative,” said Eldon Rude, one of the speakers and the founder of 360° Real Estate Analytics
Though Rude was joined by Carlos Rubenstein, chairman of the Texas Water Development Board, and Greg Hallman of the McCombs School of Business at the University of Texas, it was Rude’s housing analysis that drew much of the interest
The Austin metro area’s population has been growing throughout the recession and is about 1.87 million today. That number is projected to rise to 2.3 million by 2020
“We have a lot of work to do over the next several years to meet the demand,” Rude said
In his presentation, Rude covered a lot of territory from office space absorption to apartment construction to resale home statistics to new home supply
Here’s a look at some of the data highlights:
• From 2006 through 2013, the area has added 343,832 residents, but apartment construction and single family building permits haven’t come close to reaching the need, though the situation is improving.
• From November 2012 to November 2013, 22,500 new jobs were added to the market and as of November 2013 the unemployment rate was 5.6 percent.
• In 1981 when interest rates were 18 percent, nearly 600,000 homes were built across the country. Yet in 2013 with interest rates at 5 percent or less, about the same number of homes were built nationally. The obvious conclusion is that there is still plenty of room for the housing market to expand.
• About 1.2 million square feet of office space was absorbed in Austin in 2013. Companies are growing and some are relocating here. The commercial market looks healthy.
• 17,736 apartments are under construction in the Austin market with nearly 4,500 of those in the Central Business District and Central Austin. Occupany across the market is averaging 95.8 percent and rents have steadily been on the rise.
• With so many apartments being delivered downtown, there may be an extended lease up period, given the high rental rates approaching $3 per square foot. Marketwide the average in the third quarter of 2013 was just $1.18 per square foot.
• Micro apartments might be the next building trend in Austin. Those units, which are growing in popularity in New York, Los Angeles and San Francisco, are about 300 square feet in size, but usually have large common areas for socializing. They are popular with the younger demographic.
• Home prices have risen dramatically in Austin with the average price of about $280,000. There’s been a dramatic drop in supply and days on the market for listed homes.
• Most of the velocity in home sales has been in categories priced at above $200,000.
• New home prices are likely to increase and already have in certain preferred locations. The cost of land and materials is driving the increase.
• From November 2012 to November 2013, 8,966 single family building permits were issued. That’s still way down from the annual rate in the mid-2000s when about 17,000 building permits were issued.
• Despite all the growth downtown, most of the housing growth has been in suburban markets, particularly Leander, Cedar Park, Round Rock and Georgetown. In Leander alone, about 15,000 single family building permits are in the pipeline.
• There are a few areas of concern: inadequate transportation infrastructure and the possibility of more drought could take the shine off Austin’s reputation. Sufficient, affordable housing for the average income wage earner also is a critical issue.