Austin housing market expected to continue growthAustin housing market expected to continue growthhttps://www.recenter.tamu.edu/news/newstalk-texas/?Item=118152016-01-23T06:00:00Z2016-01-23T16:00:00Z

​​AUSTIN - ​Another strong year is in store for the Austin housing market, as the region enters its seventh year of positive trends in its real estate market and overall economy.

That is the forecast by Eldon Rude, principal of 360 Real Estate Analytics, an Austin-based consulting firm.

"It's virtually impossible to be negative when talking about the Austin market," Rude told more than 600 industry professionals at a Home Builders Association of Greater Austin and Austin Board of Realtors event.

Despite uncertainties like the price of oil, Rude predicted 2016 will be another robust year for the region's housing market, buoyed by the expected continuation of strong job and population growth.

Austin economist Brian Kelsey, who also spoke at the event, said the Austin economy is projected to add 31,590 jobs this year, a 3.1 percent growth rate.

With the region having surpassed 2 million in population last year, Rude said demand for new homes is not going to be a problem.

Rather, the key issues for builders will be whether they can add enough of the right kind of supply in the locations people want to be in, and that appeal to a new wave of consumers, including millennials with changing preferences, Rude said.

Builders also will face challenges constructing homes in more moderate price ranges, even as costs for land, labor and materials continue to escalate.

While those costs are contributing to the region's higher home prices, the main factor behind the sharp increases is the fact that the supply of available housing has lagged demand for more than three years now, Rude said.

In November, the median home-sales price for a previously owned home was $270,000, a 10.2 percent increase year-over-year, according to the Austin Board of Realtors.

"Because prices have gone up so much, we have effectively removed a group of prospective buyers from being able to buy a home," Rude said, noting how the share of buyers in the $100,000 to $160,000 price range has dwindled from more than 25 percent of the market in 2010 to just under 10 percent currently.

Because of those challenges, Rude thinks the Austin metro will see only about a 5 percent increase in homebuilding this year, or just over 12,000 starts when compared to the estimated 11,500 homes builders started construction on last year.

While the sharp home price increases have been alarming to longtime Austinites, Rude said, the increases are consistent with rent spikes in home prices in metros that are considered peer cities to Austin, such as Denver, Nashville, Raleigh and Atlanta, as well as other major Texas markets.

Austin American-Statesman
Austin-Round Rock
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