In a previous post (Is Austin different?) I noted that the Austin area’s residential real estate market continues to expand even as much of the United States has slowed. The reason is that our expansion is driven by job creation and population growth — real demand. For the same reasons I have long argued against concerns that we were creating a “bubble” in our market that would inevitably reach a breaking point and crash. Our growth is not due to “creative” mortgage financing and minimum credit requirements like those that led to the Great Recession in 2007-2008, nor to the kind of “irrational exuberance” that Fed Chairman Alan Greenspan described in the years leading up the Dot-Com Bust and the previous recession.
Here’s a recent article about the relative health of our local/regional economy now:
If you live in or near Austin, you know that construction is everywhere — residential, commercial, transportation, recreational, etc. The city of Austin and especially the urban core, are increasingly expensive, but with the caveat that sprawl will eventually be self-limiting regional in-migration remains strong. The article linked above notes that signs of an economic slowdown are present elsewhere in Texas, but Austin’s annualized economic growth through November was well above our long-term average and approaching strength last seen almost three years ago. Moreover, Austin’s 2.8% unemployment rate remains well below the national and state-wide numbers.
For readers who want more details straight from the Dallas Fed, here you go:
I commented in my last post that residential building permits were down in recent months and that new home construction still lags the peak pace we saw in 2006. In spite of being under-supplied, however, our metro-area market remains only slightly less affordable than the national average (as measured by the percentage of homes sold that were affordable by a median-income family).
I have written for months that there are signs of market resistance to the fast pace of home price increases, but many indicators should instill confidence that our housing market may be in a time of transition toward “normal,” not toward a downturn. More to come on that …