There’s been some buzz about Austin being in a “housing bubble” and poised for a crash, but we want to give you the facts. Is the Austin real estate market in a bubble? 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 what is 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.
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.
SO, 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.
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