I have watched and written about this for a long time. In this market cycle, see Housing Bubble (January 2014) and Case-Shiller and Market Bubbles (November 2014). It’s already time to comment again because the Austin Business Journal posted an alert on the subject today:
As I have pointed out before, there is a difference between home prices being bid up to unrealistic levels through sheer speculation, and the way Central Texas home values are being driven by real supply and demand forces, supported by strong employment and population growth and buying power provided by a still very conservative mortgage lending industry.
Austin’s demographer still estimates that the region is gaining 110 net new Austinites per day. Even with that growth, though, the Austin Business Journal also published this today:
Notice the chart in that article, showing that the direction and slope of the unemployment rate trends in the US, Texas, and Austin are essentially the same, but the level of unemployment in Texas is lower than the national average, and the Austin unemployment rate is well below both.
One last point that I also made recently (see More on Austin-area home prices and affordability): Even with the increase in home values that we have seen, Austin’s Housing Affordability Index remains about the same as the national average.
So, yes, home values are up, but are homes here overvalued? Ask yourself: Compared to what?