From a historical perspective, major Texas metros have remained relatively immune to the fluctuations of the economy. While not entirely void of price changes, cities like Austin have traditionally remained consistent. However, all of that changed with the onset of the downturn. For the better part of a decade, the Austin real estate market has outpaced nearly every major metro across the country. For all intents and purposes, Austin has seen itself become one of the hottest real estate markets in the country. Thanks, in large part, to a booming job industry, upwardly mobile residents are flocking to the area, Austin is thriving. These factors, and many more, bode well for the entire Austin housing market in 2015.
Having appreciated nearly twice as fast as the rest of the country over the last year, Austin real estate is soaring. The median home price in the area is now $246,000. As a comparison, the average home in the United States is currently priced around $216,567. In the last 12 months, Austin homes have appreciated 9.3%, whereas the national average was just 4.7 percent. While appreciation rates appear to be tapering across the country, prices for the Austin real estate market continue to grow at a faster rate.
Austin Real Estate Market Statistics
Austin has been the beneficiary of three consecutive years of price growth, each of which have added more equity into the market. Homeowners in Austin have, therefore, been given a lot of extra breathing room. The following highlights how much equity has been gained relative to the year of the home’s purchase:
- Homes purchased in the Austin housing market one year ago have appreciated, on average, by $24,353. The national average was $12,783 over the same period.
- Homes purchased in the Austin housing market three years ago have appreciated, on average, by $60,397. The national average was $55,406 over the same period.
- Homes purchased in the Austin housing market five years ago have appreciated, on average, by $70,721. The national average was $49,675 over the same period.
- Homes purchased in the Austin housing market seven years ago have appreciated, on average, by $74,390. The national average was $9,474 over the same period.
- Homes purchased in the Austin housing market nine years ago have appreciated, on average, by $101,465. The national average increased $3,419 over the same period.
The Austin real estate market owes the majority of its success to the subsequent job sector. Austin has become a hub for large businesses, great careers and a booming tech industry. The tech industry, in particular, contributes much to the strength of the Austin housing market. According to CoreLogic, these factors are responsible for making Central Texas the region with the largest home price gains – outside of coastal markets like San Diego and San Francisco.
Austin’s economy, as a whole, is thriving. At 4.2%, Austin’s unemployment rate is well below the national average of 5.9 percent. However, not only does Austin have a healthier unemployment rate, but experts also believe it will only continue to improve. The unemployment rate has already dropped an entire percentage point over the last 12 months. With that in mind, experts also expect the job growth rate to reach 3.6 percent, which is considerably higher than the national average. Without a doubt, the job sector should continue to support both supply and demand within the housing sector.
With the recent success witnessed in the Austin housing market, new construction is on the rise. Speaking from a historical perspective, local construction is up 22.6% on the year. Single-family housing permits alone have increased 24.6% over the course of a year.
Of course, even with historically high appreciation rates, the Austin housing market has one constant: affordability. In the face of rapid price appreciation, Austin homes are still considered affordable. In fact, real estate in Austin is more affordable than it has been historically. Owners in the Austin market spend about 12.5% of their income on monthly mortgage payments. However, the national average is more than 4% higher. Younger Americans, in particular, have already recognized Austin as one of the top destinations to relocate to.
The demand for Austin real estate has been fueled by increases in the population and a promising job sector. Inventory has remained steady and even contracted in some parts, only serving to create more demand. The conditions resulting from this demand tend to increase home values.
Over the past 12 months, new home construction has served to alleviate some of the tight inventory, but demand is on pace to outrun supply, especially if the tech industry keeps growing at such an exponential rate. Attractive mortgage rates, strong job growth and positive local economic news will continue to make the market even more desirable.
Affordability in the Austin housing market has significantly reduced the amount of delinquencies in the area. In fact, at 1.7%, Austin delinquencies are significantly less than the national average. With approximately 6.4% of all homes across the country late on their payments, Austin is in great shape, comparatively speaking.
The entire city of Austin is in great shape, but some neighborhoods are doing much better than others. Trulia has recognized the following neighborhoods as the most popular:
- Steiner Ranch
- West Oak Hill
- Springfield at Thaxton Road
Outside of the most popular neighborhoods, Valleyside Place warrants its own attention. Over the period of one week, Valleyside Place increased its average listing price by as much as 144 percent.
The Austin housing market is perhaps the hottest market in the country. There are some economists that believe the area is headed for another bubble, but it is important to remember that conditions are not the same as the last recession. For all intents and purposes, Austin is primed to have a great 2015. Bolstered by one of the strongest job sectors, Austin real estate should continue to be the beneficiary of positive trends.
Austin Housing Market Summary:
- Current Median Home Price: $246,000
- 1-Year Appreciation Rate: 9.3%
- Unemployment Rate: 4.2%
- 1-Year Job Growth Rate: 3.6%
- Population: 885,400
- Median Household Income: $61,750
Austin Housing Market Q2 Update:
Not surprisingly, the Austin housing market is leading the recovery. Consistently one of the hottest markets in the country, Austin has seen prices rise for quite some time. Over the course of one-quarter, homes have appreciated by an average of $3,100. The current median home price in the Austin housing market is now $249,100. If that wasn’t enough, the local appreciation rate is almost double that of the national average. Austin real estate investing should continue to see a lot of activity, as there appears to be no signs of slowing down in the area.
Of course, any healthy housing market is typically accompanied by an equally healthy job sector. The Austin real estate market is no exception. Job growth is still above the national average and unemployment has improved a lot in a relatively short period of time. Unemployment in Austin is now at 3.3 percent, well below the national average and more than 1 percent better than last year.
Foreclosures will continue to be the main source of deals for the Austin real estate investing community. According to RealtyTrac, there are about 276 homes in some state of foreclosure (default, auction or bank-owned). While that number is actually 7 percent lower than last month, it is 69 percent higher than this time a year ago. The increase in the last year may be attributed to the uptick in bank-owned repossessions. Those properties sitting on the books of banks increased by 490 percent in 12 months, and represent 63.7 percent of today’s distressed property market. The Austin real estate investing community will find another 34.1 percent of the distressed properties at auction. Either way, smart investors should be able to turn some of these homes into profitable deals.
While home price appreciation has tempered, as it has nearly everywhere else, the Austin housing market is still one of the hottest in the country. Experts expect positive trends to last for the foreseeable future.