If there is one rule in predicting what will happen in the housing market, it’s that strong job growth drives strong real estate demand. This is why the Austin market was red hot during the tech boom and why the market was stagnant during the tech bust — even as real estate prices soared in the rest of the country. And it is one of the main reasons that the Austin market has stayed so strong in 2007, even as national prices decline, interest rates continue to spike, and the sub-prime crisis unfolds.
The good news is that job growth in Austin is expected to remain strong. According to Mark Dotzour, chief economist and director of research at the prestigious Texas A&M Real Estate Center, 2008 should be a great year for the Austin housing market.
The Statesman reported that:
Dotzour said national job growth will be only about 1 percent but that Texas’ rate probably will be double that. And he predicted that Central Texas will outperform both the nation and the state with 3.5 percent job growth. “Austin is blowing the doors off the state of Texas,” Dotzour told a crowd of more than 1,000 people. On the housing front, Dotzour said, the Austin metro area should see healthy sales and price appreciation. . . Home sales were at near-record levels at mid-2007 with a low, four-month supply, Dotzour said. . . It’s no surprise, he said, that Central Texas home prices appreciated 11 percent in early 2007 compared with a year earlier, according to federal housing data. That outpaced rates of 6.87 percent in Texas, 4.34 percent in Florida and 1.19 percent in California. “I would expect at the current low levels of inventory, home prices are likely to continue to appreciate substantially in the next 12 months, possibly rising in the 8 to 10 percent range,” Dotzour said in an interview.
For condo shoppers, market appreciation and rapid increases in construction and land prices are clearly putting upward pressure on condo prices. As long as demand remains strong, condo prices will likely continue to slowly rise.