For nine years running, Central Texas has seen positive trends in its economy and real estate market.
That momentum, fueled in part by the strong global and U.S. economies, is expected to continue next year, a Texas economist said — barring any major headwinds, none of which he said currently are visible on the horizon.
But by 2020, the picture “gets fuzzy,” and the momentum for the Austin-area — the state’s priciest housing market — could begin to slow, said Jim Gaines, chief economist at the Real Estate Center at Texas A&M University.
That’s Gaines’ outlook, delivered at a mid-year forecast event sponsored by the Austin Board of Realtors. About 275 real estate and other industry professionals signed up for Gaines’ presentation at the board’s headquarters in North Austin.
“This area has just been booming,” Gaines said. “That momentum is still going, and it’s still going strong. But it will slow down eventually.”
When that is, Gaines isn’t certain — he joked that as an economist, he can tell audiences what will happen, though not when.
However, in an interview before his talk, Gaines said 2020 could see some potential slowing in part due to it being a U.S. presidential election year. Other factors that could come into play include trade/tariff issues, labor shortages and water-supply issues — the latter a topic a member of the audience raised.
But for the near-term, Gaines said, the Austin area housing market, spanning a metro area from Georgetown to San Marcos, is “blowing and going.” Housing demand continues to outpace builders’ ability to find lots and labor to construct houses in the areas and price ranges — namely below $300,000 — that are most in demand, Gaines noted.
In the market overall, robust 3.7 percent job growth, along with swelling population, is driving housing demand, while limited inventory continues to push home prices up, he said. The median home price in the Austin area is expected to climb about 5.5 percent this year, he said.
“You’re all sitting here waiting for me to shut up so you can go sell more houses,” Gaines joked.
Gaines predicts 2018 will be another “banner year” for the Central Texas housing market, with sales and the median home-sales price eclipsing the record pace seen in recent consecutive years.
The median home price in the Austin area has risen to $319,000 so far this year, up 66 percent from $192,000 in 2008 — a “tremendous” jump, Gaines said.
In a relatively short period, there’s been a dramatic shift in home sales by price range, Gaines said. In 2011, 67 percent of houses that were sold were priced below $250,000, while 32 percent were priced from $250,000 to just under $1 million.
By 2017, those percentages flipped: 63 percent of sales were above $250,000, and 35 percent were below.
In 2019, Gaines thinks home sales and prices “probably” will hit another record in Central Texas, although the rate of growth could slow some. That’s because the “extraordinary” run the local real estate market and economy have experienced — which Gaines characterized as “considerably above the long-term norm” — eventually is expected to return to more historical norms, he said.
“We’re not seeing major headwinds that will cause the economy to decline that much,” Gaines said in an interview. “That doesn’t mean you won’t have a storm, but I don’t see one on the horizon.”