Strong Housing Market in Austin!
We’ve long suspected that Austin is a hidden gem in the housing market, and now the facts are backing it up. The Home Builders Association (HBA) of Greater Austin held our annual Mid-Year Economic Housing Forecast last month. Experts Mark Sprague of Residential Strategies, Inc. and Cathy Coneway of Stanberry Commercial Realtors presented enlightening evidence of a bright future for the Austin area.
The financial and business Web site Bloomberg.com last month named Austin as one of the country’s select few attractive, low-risk housing markets. And according to the Office of Federal Housing Enterprise Oversight (OFHEO), Texas has seen almost a 5% increase in housing prices in the first quarter of 2008 with the Austin-Round Rock metropolitan statistical area (MSA) experiencing an average appreciation of almost 7.75% (ranking 4th in the nation). How can this all be true in the midst of a national economic downturn? According to Sprague, most people pay attention to the national weather, but dress for the local
conditions.
The good news is this: because the housing downturn wasn’t directly caused by a decline in the economy or job losses, but instead by lax lending standards and too much inventory, the market should correct itself over time. In the meantime, local consensus is that slow conditions in Austin and Texas will be short-lived—and you can help your clients take advantage of the great deals. In many ways, says Sprague, Austin is different from the rest of the country:
• Home prices are stable
• Homes are still appreciating
• We have a strong local economy with a growing job market
• Interest rates are low
• Locally, builders have a limited supply of inventory homes
Right now, Austin is one of the most affordable markets in the country and is predicted to remain one of the top real estate markets in the nation. So what does this ultimately mean for you? According
to Sprague, today’s Realtor needs to spend more time finding prospects. His message: quit shopping for your clients and let them buy. Since 2000, the number of MLS subscribers has grown from 13,184 to 27,118, up 106%. And average sales per member have declined from 4.9 to 3.2 per year. But there’s no reason this has to be so.
Based on data provided by the Texas State Data Center and Office of the State Demographer, Austin’s population will grow from an estimated 1,400,000 in 2005 to an estimated 2,700,000 by the year 2040. And this growth, says Cathy Coneway, is spreading all the way along the I-35 corridor from San Marcos to Georgetown. With over 3,000,000 people projected in the Greater Austin-San Antonio corridor, this is one of the fastest growing areas of the country. State Highway (SH) 130 and Interstate 45 are creating additional convenient opportunities for more retail and shopping, thus, more jobs.
That means there are plenty new buyers in the market to go around, and because of the level of finished vacant housing inventory that builders still need to work down, the deals are there. Even better, mortgage rates are at historic lows, and lenders are still offering loans to those with good credit. So you can break some good news to your clients: it’s their time. But, Sprague warns that there are deals today that won’t be there tomorrow. He noted that costs of building have not gone down and builders simply can’t cut the
prices any more than they already are.
So instead of putting all your effort into shopping for that perfect deal for your existing clients, just let them buy: they have more than enough to choose from and plenty of incentive to act now. Focus your energy into finding new clients, the ones new to town, the ones who will need your help to find their dream home after builders have sold the deal houses, worked through their inventory, and the markethas once again reached equilibrium.
By Gary Henley • Henley Homes, Inc.
2008 President • Home Builders Association of Greater Austin
