Austin Real Estate and General Economic Forecast Continues to Outpace Other Markets

Despite the many pessimistic reports coming out of the national press at this time the good news for Central Texas is that we appear to be bucking the current downward economic trend being felt in other US cities.

Here are a few examples of recent media announcements that pertain to Austin and Central Texas Real Estate as well as other general economic news.

- According to Forbes.com, Austin is the 3rd fastest growing city in the United States:

3. Austin, Texas
Population: 1.51 million
Growth since 2000: 21.1%
Median home price: $186,600

Part of what's driving the growth of Austin is the affordability of housing and the cost of living. A prime example is this single-story, three-bedroom, two-bathroom stone home, which is set back from the street by a large front lawn and boasts 1,879 square feet of interior space.

It is listed for $186,500 through Keller Williams Realty.

- The Austin Business Journal recently reported that the local unemployment rate is 3.3% which is a full point lower than the national average:

Central Texas reports job growth in October
Austin Business Journal
Friday, November 16, 2007

The Austin/Round Rock area added 2,600 new jobs in October, according to the latest figures from the Texas Workforce Commission.

Unemployment in the region stands at 3.3 percent, still below the statewide rate of 3.9 percent and the national rate of 4.4 percent.

The total number of nonagricultural jobs in the area hit 757,400 in October, up 3.1 percent from October 2006. The largest year-over-year gains were in other services (7.8 percent), leisure and hospitality (5.4 percent) and mining and construction (4.8 percent).

Employers added 24,200 jobs in October and about 206,400 in the last 12 months. The Texas job growth rate is holding steady at 2 percent.

- And the Austin American Statesman recently had this to say:
Austin housing market
Austin American Statesman
Wednesday, October 10, 2007,

A new release from the National Association of Realtors has some good news about Austin real estate, amid all the national gloom and doom.
The release follows:

Conditions in the mortgage market are improving for consumers, which should help to release some pent-up demand in early 2008, according to the latest forecast by the National Association of Realtors.

Lawrence Yun, NAR senior economist, notes that widening credit availability will help turn around home sales. "Conforming loans are abundantly available at historically favorable mortgage rates. Pricing has steadily improved on jumbo mortgages since the August credit crunch, and FHA loans are replacing subprime mortgages," he said.

Yun said it's important to place the current housing market in perspective, and that 2007 will be the fifth highest year on record for existing-home sales. "Although sales are off from an unsustainable peak in 2005, there is a historically high level of home sales taking place this year - a lot of people are, in fact, buying homes," he said. "One out of 16 American households is buying a home this year. The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains."

He emphasized all real estate is local with naturally large variations within a given area. "Markets like Austin, Salt Lake City and Raleigh have been outperforming recently and will continue to do well next year," Yun said. "Other areas like Denver and Wichita will likely move up in the price growth rankings due to very positive local economic developments."

Existing-home sales are expected to total 5.78 million in 2007 and then rise to 6.12 million next year, in contrast with 6.48 million in 2006. New-home sales are forecast at 804,000 this year and 752,000 in 2008, down from 1.05 million in 2006; a recovery for new homes will be delayed until next spring.

"A cutback in housing construction is a positive sign for the market because it will help lower inventory and firm up home prices," Yun said. Housing starts, including multifamily units, are likely to total 1.37 million in 2007 and 1.24 million next year, down from 1.80 million in 2006.

Relators President Pat V. Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said, "Housing is still a good long-term investment, and we'll be seeing a broad, modest improvement in home prices in 2008. With widely varying conditions, the best advice for consumers is to consult a Realtor in their area to learn about local market conditions because supply and demand can change from one neighborhood to the next."

Existing-home prices will probably slip 1.3 percent to a median of $219,000 in 2007 before rising 1.3 percent next year to $221,800. The median new-home price should drop 2.1 percent to $241,400 this year, and then increase 1.0 percent in 2008 to $243,900.

The 30-year fixed-rate mortgage is expected to average 6.4 percent for the next two quarters and then edge up to the 6.6 percent range in the second half 2008. Additional cuts expected in the Fed funds rate will help to keep mortgage interest rates historically favorable.

Growth in the U.S. gross domestic product (GDP) is estimated at 2.0 percent this year, below the 2.9 percent growth rate in 2006; GDP is likely to grow 2.7 percent next year. The unemployment rate is forecast to average 4.6 percent this year, unchanged from 2006. Inflation, as measured by the Consumer Price Index, is expected to be 2.8 percent in 2007, compared with 3.2 percent last year. Inflation-adjusted disposable personal income will probably increase 3.6 percent in 2007, up from 3.1 percent last year.

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All in all the economic health and growth conditions look favorable for Austin and the greater Central Texas region. We'll continue to monitor the media, statistics and publications of note and update the information posted here.

Please feel free to contact us with comments and questions. We look forward to your replies.