Housing Crisis or Housing Insanity or Market Opportunity?

Austin like so many of the better places to live in the USA is attracting a number of new residents. There are a lot of well known Tech Companies setting up shop in Austin.And the flow of money is just one more factor pushing prices. The Austin Housing Market is crazy!

Hurry and get your hands on a beauty like the above pictured home before it hits $1.5 million next year. Or wait and pick it up for a song when the City water supply drys up? Do you get in before its too late or do you just keep renting? Will inflation and property tax drive the middle class out of Austin? Who knows?

Seriously, like you might be, I am in the housing market. And yikes! i just aw a 2,400 sq ft family home in an “Okay” area on a nice size lot (Austin has some really big home lots) for the low low price of $1.6 million. This home was built in 1980 and has had a modest remodel. That’s just plain crazy. Homes wear out over time and they go up up up. It is what it is… Austin is still a City where Buyer DEMAND is outpacing available supply.

A whole lot of businesses are still setting up shop here and people are moving here. How long can this insanity go on? Will the Austin housing Market ever make sense to the average earner? Your guess is probably better than mine. I should also mention before your read too much more the Property Taxes are some of the highest in the Country.

The Supply vs Demand Curve is still skewed towards the Seller thus prices are high. Add to this the interest in Short Term Visitors for Business or Personal reasons and you end up with in my opinion and OVER PRICED market.

Austin City Counsel is rezoning properties so that mult-family housing can be built. The Rezoning is going to result in Gentrification and long term residents will lose (Be forced to sell their homes due to rising Property Taxes). It’s a very short sighted policy being made on behalf of Corporate Private Equity Groups. Money Talks. It’s quite sad.

There are better ways to address the housing issues. Sad times for long term residents. Perhaps the SOLUTION is to offer long term home owners in neighborhoods which are being Targeted AGGRESSIVE AND SUBSTANTIAL TAX CREDITS.

One would expect a market adjustment due to really high Mortgage Interest rates and it appears to be happening on a small scale, but only time will tell.

If you are new to the Austin Area you should really consider the WATER plan for the future. As Lake Travis is already blow 50% and falling another few years of drought could make Austin much less desirable. But this will likely be the case for other areas as well especially Phoenix and parts of Southern California

Do you have an opinion? This is my view as a Transplant who is simply not hip enough to fully understand the appeal of living in a city that has been baking at over 100 degrees w/humidity for 3 months now and the Farmers Almanac is predicting a very cold winter. Proceed with caution.

Here are 5 reasons why the Austin housing market has become so expensive:

  • Low inventory: The number of homes for sale in Austin is very low, which is driving up prices. This is due to a number of factors, including:
    • The city’s strong economy and job growth, which is attracting new residents.
    • The limited amount of land available for development.
    • The rising cost of construction materials.
  • High demand: There is a lot of demand for housing in Austin, which is also driving up prices. This is due to the city’s many attractions, including its mild climate, vibrant culture, and growing tech industry. I think I said tis already but it is worth saying again.
  • Investor demand: Real estate investors are also driving up prices in Austin. They are buying homes to rent out or flip, which is putting upward pressure on prices. They are turning some neighborhoods into AirBnb Zones.
  • The influx of new residents: Increasing the demand for housing, which is driving up prices. The city’s limited supply of land is also contributing to the problem. Austin is surrounded by hills and rivers, which limits the amount of land that is available for development.
  • The pandemic: The COVID-19 pandemic has also contributed to the rising cost of housing in Austin. Many people who were able to work from home during the pandemic moved to the city, which increased demand for housing.

Additional details about the rising housing cost reasons:

  • Low inventory: The Austin housing market has been in a state of low inventory for several years. In 2022, the number of homes for sale in the city was down 20% from the previous year. This is the lowest level of inventory in Austin since 2011.
  • High demand: The demand for housing in Austin is also very high. In 2022, the median home price in Austin was $585,000, up 30% from the previous year. This is the highest median home price in Austin history.
  • Investor demand: Investor demand is also contributing to the rising cost of housing in Austin. In 2022, investors purchased a record number of homes in the city. This is due to the fact that Austin is a desirable place to invest in real estate.

The combination of these factors has created a perfect storm for rising housing prices in Austin. It is unclear when the market will cool off, but it is likely to remain competitive for the foreseeable future. So if you plan on moving to Austin you may need to rent a Brinks Truck to haul your cash with you.

Buy while you can, or wait or move. Life decisions are difficult, but nothing is more scary than signing you name on a legal document that will eat up 50% of your income fore the next 30 years! Welcome to Austin…enjoy the ride.