Overview of Austin Housing Market
With the recent economic turmoil, many consumers may find the idea of building a home too risky. While that risk is subtantiated in some markets, overall the housing market is relatively stable and growing. This is especially true in the Austin real estate market, which continues to stand out as one of the best in the country. In contrast to the national housing and lending dilemmas, the Austin market continues to show strong numbers in relation to accumulated inventory, home purchases and overall home values.
During 2008, the Austin real estate market slowed down in response to the credit crisis affecting the country. (3) The collapse of the subprime mortgage market has led to more restrictive mortgage qualification standards, including the elimination of many down payment assistance programs and higher equity requirements for jumbo loans. The outlook may appear grim, but Austin shows more than one sign of changing that image. (1)
In the Austin area, the housing inventory stands at a 6.3-month supply, just over the standard equilibrium of 6.0 and much lower than the whopping 10.9-month supply nationally. What does this mean? It shows that our region remains relatively unharmed by the current economic crisis. It is estimated that the national real estate economy will show signs of recovery within the next three to five years. This is in stark contrast to Austin’s real estate market, which is expected to recover within the next 18 to 24 months. Signs of recovery will begin to show by next summer.
The continued strength of Austin’s housing market now is in large part due to builders making up for the slowing economy. Record numbers of homes were built in Central Texas just two years ago, providing a large inventory of homes that went unsold. This led to a dramatic decrease in new homes built the following two years. While this is an unfavorable position for builders, it is great for consumers. Increased inventory and slowing sales lead to great buyer incentives from builders hoping to get consumers into their homes. These incentives can range from free upgrades and appliances, to extended warranties and services, to large discounts that can save consumers a substantial amount of money on their loans and down payments. Opportunities like this will not last long, though and most will fade quickly as the economy regains strength. (2)
The estimates of a quicker recovery, combined with the availability of current inventory and builders’ willingness to sell for lower prices led the experts at Forbes magazine to name Austin one of just three cities in the country to “Buy Now.”(1)
Behind the raw numbers of home sales, remaining inventory and solid values, experts are looking at the strength of Austin’s job market. As a leading region for technology and research-based jobs, the Austin boasts a strong supply of new jobs, plenty of residents with dependable salaries and strong credit, and a strong cultural atmosphere that attracts new talent. Much like the Dot-Com bust in 2000, the current economic crisis has left Austin relatively untouched when compared to other parts of the nation. The city’s unique blend of great weather, distinctive culture and entertainment, and continued job growth and economic strength help Austin hold its place as one of the best places to buy. Add to that the benefits of increased inventory and many builders offering incentives to maintain their sales, now is a great time build your home in Austin.
1. Shonda Novak, Kate Morton. “Credit Crunch Squeezes Central Texas Home Starts.” American Statesman. Oct. 2008. Statesman. 12 Oct. 2008.
2. “Austin Builders Are Cutting Back, Confident of Rebound.” American Statesman. Oct. 2008. Statesman. 17 Oct. 2008.
3. Roselind Hejl “Real Estate Market Update.” Roselind Hejl’s Austin Real Estate Guide. Oct. 2008. 9 Oct. 2008.