Today I want to mix things up with some data I’ve gathered from local economists over the last month. It’ll help us get a better idea of where we stand as a real estate market.
I’ve spent a lot of time this month listening to local economists speak about how 2016 went and how they think 2017 will shape up.
We all know Austin is growing, but just how quickly? According to Angelou Economics, more than 100,000 new residents will come to the Austin metro area over the next two years, raising the total population from 2 million to close to 2.2 million by year’s end in 2018. Our job market is also on the rise. According to 360 Real Estate Analytics, we gained about 20,000 jobs in 2016 and our local unemployment rate dropped from 3.3% to 3%. That’s compared to a national average of almost 5%.
One of our biggest industries is tech—our tech employment has increased 28% since 2011 and has represented over 22% of total employment growth since that time, according to Angelou Economics. Apple is one of the biggest employers with more than 6,000 employees here in central Texas. Austin houses their biggest research and development group outside of Cupertino.
The festival economy is also a big economic driver for us. How much does that impact us, though? According to Angelou, the annual impact of Circuit of the Americas is $1 billion, $320 million for SXSW, and $220 million for the two weekends of ACL Fest.
As for real estate, we’ve had 33,000 closings in the last 12 months, which is up 4% from the previous year. Our median sales price is also up 6.3% to $287,000. Depending on the source, we see inventory levels quoted between two and four months. This means that if no new listings came onto the market today, it would take just two to four months for all the available houses to sell. A balanced market typically has about six months of inventory, so we’re obviously in a low-inventory seller’s market right now.
So what about this coming year?
We’ll have more jobs than ever before and we’ll see more and more first-time homebuyers entering the market. Sales for homes on the high end are actually retreating, though. Last year, we had fewer of these sales than the year before. As for financing, adjustable-rate mortgages and second loans will become more common, and interest rates will rise. The Fed has already stated that they will likely raise rates multiple times in 2017.
Oil prices will stay low; likely below $60 a barrel. We can anticipate pretty cheap gas for a while. Inflation, on the other hand, has been low over the last couple of years, but will likely rise this year.
I want to thank the economists for doing the work that I’ve summarized here. They include Ted Jones at Stewart Title, Angelou Economics, 360 Real Estate Analytics, and Dr. Greg Hallman at UT Austin.
If you have any questions at all for me, give me a call or send me an email. I’d be glad to help.