Austin real estate market is and will always be one of the hottest real estate markets in the state. The reason is the location itself. Austin is considered one of the areas with the most promising house market. Yahoo Finance released this information in 2021. It shows significant market growth, even though the home prices have increased by 33%.
Austin itself is a well-known city for its promising future. It is the 11th most populated city in the US. Moreover, Austin is a city where many high-tech companies choose their headquarters, such as Amazon, Apple, and PayPal. Thus, it got the nickname Silicon Hills.
The existence of those companies also attracts many investors to come. Furthermore, the business in various fields keeps growing, from biotechnology to pharmaceuticals. Even though some investors left it during the pandemic, many experts believe they will return this year. So, let’s learn more about this city to get information about its real estate market.
Austin Population and Its Growth
According to U.S. Census Bureau, the austin population, especially in the metro area, is 2,352,426 as of July 1, 2021. This number is larger than the previous year by 53,301. Or, the growth of the population during one year reaches 2.3 percent. That is the fourth position for numeric population growth in one year in the U.S.
The population number above is the result of the births, deaths, move-ins, and move-outs calculation. And, that number also becomes one of the largest populations for the metro area in the U.S. Furthermore, Austin citizen is dominated by fresh college graduates, the young couple, and retiring baby boomers. Mostly, they decided to live in Austin because of the city’s facilities and the job/business opportunity.
Moreover, many of them also move to Austin because of affordable housing. As we mentioned before, even though the price is rising, people still move and live in Austin. It means that the austin metro population also shows that the real estate in this city has a promising future.
On the other hand, we also can see that as other problems. The increasing housing price shows that Austin cannot provide housing following its population growth. Therefore, the supply of real estate is low, which increases its price. The forecast by many experts also stated that Austin’s metro area population may hit around 3.2 million by 2030. And, this could be another problem.
From the investment point of view, you can see it as an opportunity to get austin real estate. It will be in a high-demand situation in the future. That means your property value will increase significantly. Moreover, the technology sector in this area holds an essential role in future business. It will grow and become the backbone of the country and the world. So, you can get more value from your property.
Austin Real Estate Market Condition
To understand more about the condition of the austin real estate market, we should take a look from several perspectives. First of all, we can see that the real estate, especially the housing market, in Austin keep growing for more than two decades.
The data from the Texas Real Estate Research Center shows the growth from 1990 to the latest, 2022. The number of the sold units increases by six times than the early year. In 1990, it was only around 7,468 house unit sold in that year. However, last year, the sold unit reaches more than 41,000 units.
If we include the first quarter of 2022, we can easily find more than 11,000 houses were sold. So, at the end of this year, there is the possibility that we can get a number higher than 2021. That is also the reason why many people see how profitable the real estate market in Austin is.
That is only from the sold unit data. How about the median sales prices? We also can see a significant increase in the price of austin texas homes for sale. But, that doesn’t stop people from buying a house or apartment in Austin.
According to the data from the Austin Board of Realtors (ABOR), the median price for housing in Austin is increasing significantly. By November 2021, it shows that it has been increasing by 29% if we calculate it based on year-over-year changes. Other than that, they also find several things about the austin texas median home price.
- The median sales price in Austin, for a home, is $470,000,
- The highest median sales price is located in Tarrytown, Austin, which reaches $2 million,
- The most affordable median sales price is West University, at $322,000
The number looks promising. However, we still have concerns regarding the availability of the property. From the same source, we also found that the supply for housing or other types of property in the metro area is only available for 0.8 months. It shows that this city can’t fulfill the 30-days demand for property from people.
The less property available also increases the value of the property in Austin. The data from ABOR shows that the value increased by 39.4% from last year. With this trend, we can say that the future of the property business in Austin is promising. Therefore, if you want to invest in property in Austin, you should do it as soon as possible.
Austin Real Estate Market Trends
With the number we got above, we can say that the austin real estate market is on a right track. It will be better and more profitable. Austin also has one of the fastest-growing economic industries in the country. Therefore, the housing demand is also increasing rapidly. More people moving in combined with the fast population growth are two of many factors why it happens.
Despite its promising trend, Zillow releases the opposite prediction regarding Austin real estate. Even though Austin real estate is one of the ten hottest housing markets in the U.S., Austin has fallen from its stop position on the Zillow list. This city is now on the 10th. Zillow chooses Tampa as the first position because of its affordability and high job growth.
The study by researchers from Florida Atlantic University and Florida International University also supports that information from Zillow. They found that the house value in Austin is not what it is supposed to be. They claim that Austin is the area with the most overvalued homes and property in the U.S.
Their research found that the homebuyers pay 51% more than the real austin housing prices. That number is the average percentage of the wasted money that people spend on Austin real estate. The only city with a higher overvalued house is Boise, Idaho, which has an 81% of overvalued price rate.
Why Does the Price Increase?
As mentioned above, one of many reasons why the average home price in austin tx is high and even overvalued is the availability problem. Property construction is booming. However, the speed to provide the product to supply the demands is not enough.
The inventory level of property in Austin is extremely low. The month of supply only could provide the demands for 0.5 months. Despite that situation, we can still see a promising solution to this problem. In March this year, the listing of the property increased by 46.1%. That caused the inventory capability to also increase by 0.2 months, which is a good sign of recovery.
The other factor that also causes the increase in house prices in Austin is the living cost. According to PayScale, the living cost in Austin is slightly higher than the national average. With the median price at around $470,000 according to ABOR, the median rent following that number at $1,107 per month according to PayScale.
Despite high median rent prices, you can still have leeway in other costs. Most of the cost, other than rent, in Austin, is lower or the same as the national average. Here are some of the data that we got from PayScale:
- Utility cost is around $147 per month (12% lower than the national average),
- Transportation cost is also lower; the fuel cost is around $2.56, which is lower than the national average of $2.86 per gallon. However, with the current economic situation in the United States, there is the possibility that the fuel price could increase that also affects this part.
- Grocery prices are also 12% lower than the national average.
- Healthcare cost in Austin is the same as the national average. This cost includes various health treatments, such as regular check-up, doctor’s visits, veterinary care, and many more.
Then, according to GoBankingRates, you need to make at least $98,007 a year to have a comfortable life in Austin. That number is one of the highest income numbers in the U.S. However, if you can sacrifice one or two comfortable things in your life, you won’t have a problem living in Austin with an income much lower than that number.
As you can see, the living cost in Austin is considered in the high group. Then, combining it with the median prices of the austin tx real estate, we can see more money you need to spend to live in Austin. That means you should prepare everything before you decide to move to this city.
The Solutions
Regarding the high living cost and prices of property in Austin, there are many things that the government can do to solve that problem. The first solution is improving the house construction speed. With more houses available and a higher monthly inventory level, we believe it will cut down the price significantly.
Why is that important? The business growth, especially the technology industry, will keep attracting people to move to Austin. If there is no or less housing available, it could cause a cluster that can create a slum-type area. And, we all know, this area will also affect the safety level, which lowers the comfort level of people who live in Austin.
Other than that, austin real estate news also shows how complicated the process to finish the homeownership is. So, the government also needs to deal with it. Make it easier and we believe it will help the real estate market in this city grow even further.
Pros and Cons of Real Estate Market in Austin
Pros:
- Promising area with great business development,
- Many facilities and interesting spots to visit,
- High-demand property, which is suitable for investment for making a profit in the future,
- Austin is a safe city to live comfortably in.
Cons:
- Low supply of property because of slow construction speed,
- High living cost and median average price for a home in Austin,
FAQs
- Is Austin real estate in a bubble?
Yes, based on fundamental data, Austin is the largest real estate bubble in the United States.
- Will Austin real estate market slow down?
Yes, with the fewer inventories available per month, experts predict that the real estate bubble in Austin will slow down in the second half of 2022.
- Will Austin’s real estate price go down?
Unfortunately, no. The development of the area and business sector, plus the low supply of property will make the prices keep climbing higher in the future.
- Should I buy real estate in Austin in 2022?
Yes, this year is the best time to buy a house or any property in Austin, as next year the price will most likely be much higher than this year.
- Is Austin real estate a good investment?
Yahoo Finance put the austin housing market in the first place. Moreover, the demand will keep coming, so owning real estate today will ensure to multiply its value in the future.
Final Words
Investment in the austin real estate market is kind of risky because it has so many unfavorable factors that may cause a problem in the future. But, following the trend of the business world, the demand will be higher, so it is worth trying. No need to hesitate.