The Austin area has the major drivers in place, including job growth and low unemployment, to fuel a strong housing market for the foreseeable future, an industry expert said Wednesday.
Timothy Sullivan of California-based Meyers Research delivered that message to about 350 homebuilding, real estate and other professionals at an mid-year forecast event sponsored by the Home Builders Association of Greater Austin at the Phillips Event Center in Northeast Austin.
“With job growth of 30,000 to 40,000 new jobs in the Austin area over the last few years and a 3 to 4 percent unemployment rate, new home sales will stay on the rise for at least the next two years,” Sullivan said. “This is a healthy market.”
In an interview before the event, Sulllivan said he expects home price appreciation in the market to slow during the next two years, which could help ease concerns by many residents, city officials and others about affordability —or the lack thereof — in Central Texas.
In his address, Sullivan said prices in the Austin area are still relatively in line with median incomes, and that can’t be said of California, New York, Connecticut and Chicago, among other places.
Sullivan cited Austin’s 8 to 1 ratio of existing home sales to new home sales as a benchmark that illustrates the overall health of the new home market. By comparison, New York’s ratio is 35 to 1.
“Affordability is trending downward but is still better than 75 percent of the country,” said Sullivan, a practice leader with Meyers Research’s San Diego office.
For example, he said, a buyer could purchase a 2,546 square foot home on a 9,000 square foot lot in the Austin area for $475,000. In San Diego, $479,000 would buy a 1,600 square foot home on a 4,000 square foot lot.
With the Austin area’s job growth, downtown transformation, “superior” new-home design and cultural draws, Sullivan said the metro area will experience a robust new home market with price appreciation of 3 percent overall. That’s a more moderate rate than the 8 percent to 10 percent home price growth seen in recent years.
Sullivan said the Austin area is not only adding jobs, but it’s adding good-paying jobs. The increase of professional and business service jobs locally, which tend to have higher salaries, can help fill the gap between income growth and home prices in the region, Sullivan said.
And to those who complain about the region’s traffic congestion, Sullivan offered a dose of perspective: “Every strong market has that. It’s a byproduct of success.”