The Austin Housing Bubble – Myth vs. Fact

BUZZ VS. FACT
There’s been some buzz about what some are calling the “Austin housing bubble” lately. But is the Austin real estate market really a housing bubble? And, if so, is this bubble is poised for a crash? The economic experts say, “no,” and here’s why. Real estate bubbles are driven by speculation. Prices rise not because demand for housing is increasing, but because buyers believe prices will continue to rise in the near future, increasing the value of their investment and presenting the potential to “flip” properties quickly. That type of speculation is not Austin’s current housing demand.

POPULATION AND JOB GROWTH: KEYS TO A HEALTHY MARKET
In Austin today, housing demand is being driven by population growth. According to Austin City Demographer Ryan Robinson, there are 110 people moving to the Austin area everyday and our unemployment rate in August 2014 was 4.6 percent, which is 1.5 percent below the national average.

Austin Housing Bubble Myth or Fact?Our population is growing and new residents have jobs, which means demand for homes is increasing. And, as we know, prices rise with demand, especially when supply is low, like it is here. Population growth and job growth have always been the foundations of a healthy market and those two factors – not speculation – are driving price increases in Austin real estate.

LENDING STANDARDS HAVE CHANGED
Due to the housing crash last decade, lending standards for homeowners are some of the most stringent seen in recent years, so only those who can afford a home have access to the financing to buy it.

S Congress St Bridge AustinSO, IS AUSTIN OVERVALUED? NO!
Recent reports paint an incomplete picture of the Austin market. They use only ratios comparing income to rents or home prices, leaving out the two key variables of job growth and population growth. Without understanding how increased population and availability of jobs affects demand for real estate, a market can’t be properly valued.

TALK TO YOUR REALTOR®
In short, the price increases seen for Austin-area real estate in recent years are driven by increased demand among those who want to live in our great city, not unfounded speculation. That makes them part of a healthy real estate market. 

Our team of real estate experts would be happy to talk with you about your options and help you decide what’s best for you in your current housing situation given our current market. Contact us today to schedule an appointment or call 512-829-2062.

Download the full PDF version of this article from the Austin Board of Realtors® here.

ABOUT THE AUSTIN BOARD OF REALTORS®
The Austin Board of REALTORS® builds connections through the use of technology, education and advocacy to strengthen the careers of its 9,000+ members and improve the lives of Central Texas families.The Austin Board of REALTORS® empowers Austin REALTORS® to connect their clients to the region’s most complete, accurate and up-to-date listings data. For more, visit AustinHomeSearch.com.

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