Jobs are everything. Period. And yes, this is the third blog this week I have started out with those exact words. But is it appropriate since this blog is about Austin, Texas.
Yesterday I spoke to a great group of people for Gracy Title in Austin. It is a place that is booming.
Austin added 35,800 net new jobs in the prior 12 months – a gain of 4.22 percent, the 14th best in the entire country out of all metropolitan statistical areas. The type of jobs are more high-end than the rest of Texas. Not only is Austin the Texas state capital and home to the University of Texas (the fifth largest public university in the U.S.), but the technology industry also takes center stage. Firms include Dell, AMD, IBM, Apple, Flextronics, Freescale Semiconductor (formerly Motorola), and National Instruments. Unlike the U.S., which still has almost 700,000 fewer total jobs than as of January 1, 2008, Austin has more jobs than any time in history. And it continues to boom.
The following graph shows the impressive recovery and continued job growth taking place in Austin.
Strong job growth has translated into growing demand for real estate. Housing sales continue to surge. The first of the following two graphs details the raw data (not adjusted for seasonality), while the second shows the 12-month moving average (which removes the monthly seasonality and better illustrates trends). While Austin did not participate in the housing price bubble that most of the U.S. experienced in 2005-2007, they were not immune from the increased sales impact of subprime lending. The second graph shows the increase in sales arising in that period. Today, however, under the most stringent lending standards in my lifetime, Austin has reached an all-time record sales level. It is not a bubble, but is purely driven by effective demand.
Austin home prices likewise are rising, but perhaps not as much as the unexplained statistic indicates. There is a minimal supply with an estimated 2.1 months inventory, with six months considered normal. The following two graphs show the raw median home prices and the 12-month average. The latest year-over-year 12-month moving average shows median prices rose 9.17 percent – less than the 10.7 percent nationwide. The story here is twofold. First, Austin did not have a price bubble, but rather saw systematically sustained growth in home prices. Second, much of the impact in recent price increases has been a result of more higher-end properties selling – a trend ongoing nationwide.
The Real Estate Center at Texas A&M University includes on their Website a detail in the percent of homes sold by price. In Austin, sales of homes in the less-than-$160,000 range were lower as a percentage of total sales in 2013 than in 2012, while homes priced from $160,000 and up all increased in the total percent of sales. To see the graph and table from the Center, click http://recenter.tamu.edu/data/hs/hs140.asp. To read the latest data on housing sales from the Austin Board of Realtors® click https://www.abor.com/news_media/press_releases/2014/p4_14.cfm. Austin had the third highest median residential price in Texas in February at $206,800, exceeded only by Collin County at $222,100 and Midland at $226,000.
Taxable sales of goods and services in the Austin MSA increased 8.9 percent according to the Texas Comptroller’s Office. Office vacancy has declined from 25 percent in 2009 to 12 percent today according to CBRE. Building permits tallied 9,443 single family permits in the latest 12 months and 9,461 permits for multifamily units. Given the 38,500 net new jobs, Austin is not in aggregate overbuilding. That equates to 2.03 net new jobs per new dwelling unit, with 1.25 to 1.5 jobs per unit considered normal.
Haute Austin has a hot economy and corresponding real estate markets. It is the most environmentally-focused city in Texas with many using the phrase “Keep Austin Weird.” Given job growth, there is no housing bubble, just a genuine interaction of supply and demand. And it’s a beautiful place to live.