Though interest rates will continue to rise, 2019 shows no signs of a slowdown in our market. Here’s what else we predict.
I spoke with economist Ted Jones about what we could expect from our Austin real estate market this year. Ted gives us his forecast each year, and what he told us in 2018 was incredibly accurate; 2019’s predictions should be similarly credible. If you’d like to see the PDFs he shared with us, take a look here and here.
When people have jobs, they’re able to buy homes. When more jobs are created, more homes are needed for people to buy. We saw an acceleration of job growth in 2018, and Ted says he sees no recession on the horizon.
He uses leisure and hospitality jobs as predictors—they show where people are spending money (and where jobs are needed to accommodate business growth). That sector has seen a 1.89% job growth year over year, which is a great sign. We’ve also seen a 3.2% wage growth over last year, and unemployment is at 3.9%. Because of tax cuts, 90% of people will pay less in taxes this year—a lot of that extra money goes right back into real estate.
Existing home sales have gone down for two reasons: Interest rates have gone up and prices have risen. Rates are in the mid-4% range, which is higher than last year. As home prices increase, people can’t afford as much when they purchase homes. Currently, the biggest group of homebuyers are millennials—13.6% of homes were bought by them last year. That number will continue increasing in the future.
As long as jobs keep coming to Austin, the market will keep going up.
Job growth in the Austin area increased 3.39% year over year. We see headlines about big companies coming to Austin all the time, and I’m sure you’ve seen that Apple will be building a new campus here soon. The biggest gross sectors in the region are in oil and gas; this is one of the first years that America has become a net exporter of these goods.
Interest rates are expected to rise; Ted predicts rates will be somewhere between 5.1% to 5.7% by June. That’s a big increase from where we are now. Though Ted is a little more aggressive in his prediction, the general consensus is that rates will be at least 5%.
Commercial markets are also an indicator of our market—when businesses are buying space, it’s a good thing. We’re among the top five commercial markets.
After everything Ted shared with me, 2019 shows no signs of a slowdown in our real estate market or economy. As long as jobs keep coming to Austin, the market will keep going up.
If you have any questions or need more information, feel free to reach out to me. I look forward to hearing from you soon.