It looks as though the Texas real estate market— and in particular, the Austin real estate market—is going to once again break records in all facets in 2016. The latest reports from the Texas Association of REALTORS® and the Austin Board of REALTORS® show records in both home sales and prices, which could be good news, but it may also cause questions about the future of the market for potential buyers and sellers.
A staggering 247,931 homes were sold across the state in the first three quarters of 2016, with the median home price currently at $214,000 (a seven percent increase from this time last year). These statistics increase when it comes to Austin homes for sale. The median home price in the Austin-Round Rock area is at $279,900 (a 7.7 percent increase from this time last year) and single-family home sales jumped to 2,055 in November alone (a 15.8 percent year-over-year increase).
When these numbers continue to soar despite a downturn in Texas' energy sector and the fact that home sales in Central Texas usually decrease during the latter months of year, it begs a common question.
Should I Buy A Home Now Or Is Austin In A Housing Bubble?
While some think that rising prices make Austin a housing bubble, home sales statistics show that Austin home prices have been rising steadily for decades. The chart below goes back as far as 1980 and shows that other than minor turns alonside national recessions, Austin real estate has been a consistently growing market for 37 years (data provided by the Texas A&M Real Estate Center).
Rather than fearing rising prices, Austin home owners and potential buyers should focus more on the biggest reason why the real estate market is booming: sustained job growth in many industries aside from energy, which has led to more new residents.
Austin Jobs And Economy
Austin's job market has been growing for years and it doesn't appear it will slow down anytime soon. The local tech sector continues to grow and the city of Austin ranks first in the country in startup business activity, according to a recent study by the Kauffman Foundation. As long as these trends continue, the increase in people and salaries will follow, which should lead to a healthy housing demand.
The economy is also more balanced in Austin than in other cities. Its success isn't just dependent on the tech sector, but rather on a variety of industries such as education, entertainment, and tourism. This is most likely the reason why the area wasn't hit as hard by the recession and hasn't been hit as hard as other parts of Texas by the slumping oil industry. A balanced economy means a steady stream of jobs, which means a steady stream of potential home buyers.
The only drawback to a big demand for homes is if the supply doesn't meet the demand. The latest numbers from the Austin Board of REALTORS® show housing inventory levels at 2.3 months in the entire Austin-Round Rock area. Most economists believe inventory levels in a balanced housing market should fall between 6.0 and 6.5 months, so it's clear that the builders in the area have some work to do.
However, that presents a major opportunity for those in the development and construction industries. There is still plenty of room to grow throughout the Austin area, as it isn't bound by water like some other metropolitan areas, so if builders are able to meet the growing demand for homes it will likely create even more local jobs.
International Home Buyers
Perhaps the most interesting aspect of the latest housing boom in Texas is the amount of home buyers from foreign countries, which could potentially drive up the price of homes. According to the latest Texas International Homebuyers Report, Texas real estate is increasingly in demand from home buyers around the world to the point where they're contributing more than $10 billion to the state's economy.
What might surprise some people is that the amount of homes purchased by buyers from Asia are now almost equal to the amount of homes purchased by buyers from Latin America. Since buyers from Asia have developed a reputation for paying a lot of money for homes outside of their own countries, this could be contributing to the price increase of homes in Austin. It's also most likely a contributing factor to reported increase in luxury homes being sold in the Austin area in 2016. However, international home buyers are still most likely not as strong of a contributor to the price of Austin homes as the local economy and job growth.
Why You Should Buy
Due to the consistent job growth and balanced economy through the Austin-Round Rock area, the consensus is that Austin is not in a housing bubble and the local housing demand isn't going to slow down any time soon.
Americans from other states continue to move into the area and there is plenty of room to build, so if you're considering buying a home your best bet is to do it soon. The latest stats show sales among first-time home buyers also increased over the past year throughout the state, so you won't be alone if you do decide to get into the market for the first time in the coming months.