Austin Real Estate and Local Economy - Alive and Well in 2008

With a name like Sunshine, it is hard to be a contrarian. But we are.

As the national media continues to project an ominous aura around real estate because of the recent reports about the fallout in other major markets, Florida and California most noticeably. . . We are not convinced. While we certainly recognize the affect that predatory lenders, unscrupulous deal makers, and unsophisticated home-buyers can have on the market, the Austin area has not been impacted the same way that other markets have because of strong market fundamentals.

We are seeing population expansion, employment growth, and reasonable price appreciation. Austin has a relatively healthy mix of employment from government, education, manufacturing, and high tech/professional services. While there are some large employers in town, the long-term health of the market does not rely exclusively on one company or one industry.

Residential prices in Austin are increasing, but at a more sustainable 7% annual growth rate vs the meteoric 25+% annual growth seen in California and Florida in the recent past. The inventory of homes for sale has been staying steady or shrinking slightly. Foreclosures are at a manageable level and the number of sub-prime loans extended to buyers remains lower than most major markets.

The Commercial picture is also strong. Although there are new buildings being constructed and new retail, office, and warehouse square footage added every day, we are able to sustain high (85%+) occupancy rates. New hotel space has been added and occupancy and average daily room rates are on the rise there, too.

A national recession, new legislation, higher federal taxes, and the credit crisis could hamper Austin growth, it's true. But, overall, we are part of a vibrant economy. It is a good time to be in Austin.

For more details, charts, graphs and specific data, check out: http://recenter.tamu.edu/mreports/AustinRRock.pdf