Signs point to 2017 being another strong year for the Central Texas housing market.
That was the forecast local market expert Eldon Rude delivered to more than 700 industry professionals at an annual housing outlook event at the JW Marriott in downtown Austin Thursday.
“What an amazing run we’ve had the last four or five or six years,” Rude said. “We’ve had a strong start to the year and I don’t think that will change. The bottom line is we’re going to have a good year, both in the new-home and resale markets.”
Rude is principal of 360 Real Estate Analytics, an Austin-based consulting firm. For almost 17 years prior, he was director of the Central Texas region for Metrostudy, which tracks the housing market nationally and locally.
Rude said all but one of the builders he has surveyed had higher sales last year than the previous year, and the one who didn’t had run out of lots.
Although the region’s job growth slowed to an annual rate of about 2 percent in late 2016 from a rate of over 4 percent for several years prior, “I don’t think that will dent demand for housing,” Rude said. He said lingering demand coupled with strong consumer confidence will keep the market healthy.
“We’re at confidence levels we haven’t seen since 2003, 2004, 2005,” Rude said. “Job growth is the engine that drives housing demand and consumer confidence is the gasoline.”
Any impact on the market from rising mortgage interest rates will be tied to both how much they go up and how quickly, Rude said.
“Although interest rates are always an important factor for homebuyers, history has shown that if the job market is good, wages are increasing and home prices are going up, people will continue to purchase homes. It’s all about confidence,” he said.
This week, the Austin Board of Realtors said the median home sale price in the Austin area hit a calendar-year record of $284,000, up 7.2 percent over 2016’s median. For December alone, the median home-sale price was $290,000, up nearly 7 percent over December 2016.
Rude predicts builders will start construction on 14,000 to 14,500 homes — or 5 percent to 8 percent more than last year’s level. He said most of the growth will be in the lower price ranges, below $300,000, but projects another strong year for the higher-price points as well — over $750,000 — due to consumer confidence in the national economy.
With a continued low supply of available houses compared to demand, home prices are expected to keep rising this year, Rude said. He said the region has had a housing supply of less than four months for more than four years. 52 months running. Experts consider a supply of 6.5 months to indicate a balanced market, tipped in neither buyers’ or sellers’ favor.