Today three great minds came together at the JWMarriott before 700 industry folks for the annual 2017 Home Builders of Austin Housing Forecast: Eldon Rude, Principal of 360* Real Estate Analytics, Dr Greg Hallman, Senior Lecturer in Real Estate Finance at the University of Texas at Austin McCombs School of Business, and Colleen Sharp, VP of Kantar Futures.
Two great hours were spent by a packed ballroom of business leaders listening to the Austin, Texas, US economy, interest rates, job growth, Consumer confidence, housing starts, rents, prices, GDP, and the economic entwining of the US and the world economies in China, India, the EU, etc.
I want to recap my thoughts on this, with a focus on the Austin real estate markets.
- Austin has seen a tremendous run-up in the past ten years. On average, 40,000 jobs are created annually. We now have Austin unemployment at 3.0%, which essentially is "full employment" with talent hard to find to hire now. Projections 20,000 jobs created annually moving forward. Companies can't find talent to hire or office vacancy space to lease and expand in this hot market. Apple has over 6,000 employees in Central TX -their biggest R&D outside Cupertino, CA, and is 100 percent full occupancy in their 1 million square foot space in NW Austin. Oracle has 600,000 square feet under construction off Riverside in SE Austin.
- Austin's population in the SMA for 2016 is 2 million; and by 2020, it will be 2.3 million, and projected by 2030 will be 3 million, etc. That leads me to discuss housing them all. Homes and apartments are needed! (This means 'call me, you investors!') There were 10,000 apartment units and 13,000 single-family homes added in 2016; Nov. 2016, permits issued were 13,375. City-wide apartment occupancy is 93.7% and rents have risen 5.2% in 12 months and 12% over 24 months.
Austin's housing resale market set a new record with 32,933 closings in 2016, up 4.4% with average prices up 5.1% to $348,376, and months of available inventory hovering at 2.0 months in December 2016, now 52 months below 4.0 months of available inventory. (Buyers find it very hard to find housing, bidding wars make it worse, and sales are at a torrid pace. Yes, hire a REALTOR(R) now to make this experience a success.
In the Austin Luxury market, from $750,000 to $1 million, there are 350 active listings, 800 sold in 2016, and there is only a 5.4-month supply. However, as you increase the prices up to $ 2 million, the supply is 10 months, and over $3 million, a 35-month supply of homes on the luxury market.
Nationally, the consumer confidence index is at its best since 2007, currently at 113. It fell in 2008-2009 to a low of less than 30 and has been on a 6-year climb back up to the current 113 level. Confidence drives buying, and a feeling of job security.
Interest rates will stay in the 4-5% range for 2017. Low rates will continue because of the global aging population that is saving. China will have 1 billion people with a 40% savings rate, and this leads to a large supply of capital out there.
I am interested in your thoughts now. How will you plan your investments after reading this? I am here to help people with real estate in your area of interest.
