Austin and its suburbs should expect a strong year of new home sales – barring a recession, maybe even the biggest year yet.
“It’s really hard to find anything negative about our economy and demand for housing as we look forward,” Eldon Rude, principal with 360 Real Estate Analytics, said Tuesday during the Home Builders Association of Greater Austin’s annual housing forecast. “So, I expect it to be a pretty darn good year.”
That “pretty darn good year” would build on a strong 2019 housing market. Cities in the greater Austin area permitted roughly 18,000 single-family homes, the highest number since 2006. According to a December report from the Texas A&M Real Estate Center, that's up roughly 9% from 2018 and new housing permits are expected to increase another 10% in 2020.
Rude and other analysts had predicted last year that new home sales in the Austin area would actually slow; incomes have not kept up with climbing home prices, he said.
“Those cities that have the biggest disparity between income and home prices during recessionary periods are most likely to lose value in terms of home prices,” Rude said at last year’s annual housing forecast.
That gap has not only persisted, but also widened. In 2018, the median income for a family of four in the Austin metro area was $76,925, while the median home price last year was more than four times that amount, according to 360 Real Estate Analytics.
In other cities where home prices have accelerated faster than incomes, Rude said, home sales have dampened; he cited cities like Portland, Seattle and San Jose.
“But we haven’t seen that in Austin,” he said Tuesday. “Will we at some point? Possibly, but not yet.”
According to Rude, homebuyers in 2019 were looking for home prices in the $225,000–$325,000 range. But because land has been so expensive in Central Austin, builders have had to build farther outside the city to sell homes in this price range.
“That’s been true for a long time,” he said. “Most of the homes that get built in the region are not in the City of Austin, and the reason is because it’s much more expensive to build and purchase a home than it is in some of those outlying communities.”
That presents a transportation challenge, Capital Metro President Randy Clarke said. He told the audience Tuesday that Austin’s bus system is struggling with demand, especially from the suburbs.
“Lakeline, Leander today – our express buses are absolutely packed,” he said. “Standing-room-only on buses or people getting passed by.”
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