What to expect from Austin's roaring real estate scene during 2014
Jan 14, 2014
Austin Business Journal
Austin's real estate market — residential and commercial — is the talk of the country. Below are 13 data points Austin Business Journal published in its Jan. 3 weekly edition that illustrate what's going on, courtesy of Eldon Rude at 360° Real Estate Analytics. They sum up the state of real estate here, and to complement the stats I recently asked seven heavy hitters in real estate one simple yet daunting question: What should people in or around the real estate industry be on the lookout for in 2014?
Click through the slideshow on this page to see what they forecast. Here's some more key market statistics and trends to watch for:
• 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.
• 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. The market 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 a young 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. 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.