Entrepreneurship and Real Estate

There were a couple of interesting articles in today’s Austin American-Statesman.  First, developers have targeted the Austin area for two new subdivisions, one in North Austin and the other in the Dripping Springs area:

After D.R. Horton announced over the summer that they’re building in Austin again — even building inventory as needed — it is very encouraging to see the Austin area recognized again as a target of opportunity.  A partner in one of the developments says that he doesn’t believe that “robust demand” can be expected “for years to come.”  Nonetheless, these developers are making signficant investments in the belief that our market offers the best potential for a meaningful return.

On the same morning, the Statesman wrote about Gary Hoover, founder of Bookstop and Hoovers, Inc.,  being named the first entrepreneur-in-residence at University of Texas’ McCombs School of Business.  Hoover is a life-long entrepreneur and advocates making entrepreneurial decisions on the basis of historical context and current conditions:

“In order to understand the future, in order to understand trends, you have to know the history — I mean the last 10 years, the last 30 or 50 years, not just the past six months. So many times, we don’t know a lot about what’s going on around us. But it’s that curiosity that positions you to break out.”

And he continues:

“One of the biggest lessons is that you can’t be afraid to fail,” he said. “That’s one of the things I see when I look at government agencies and nonprofits. They’re afraid to fail.

“But if you fail quickly, learn what you did wrong, fix it and move ahead, you’ll end up much stronger,” he said. “You’ve got to be willing to try new things.”

That’s what these developers see in Austin — the opportunity to make well-considered risk-vs.-reward investment decisions based on the knowledge that our local economy has weathered economic storms in the past and is well-positioned to do so again now.  A large part of the reason we are better-off now than many markets in Florida, California, Nevada, and Arizona is that we “paid our dues” in 2000-2001 when the dot-com bubble burst, and then moved into a long period of reasonable, sustainable value appreciation.  As a result, we now have a great housing affordability index, about six months’ inventory of mostly reasonably price housing, and a local economy that continues to create jobs, albeit very slowly in recent months.

For those that follow my quarterly “market updates” via email, you won’t be surprised that I remain bullish about the Central Texas real estate market.  I welcome your comments and questions.