Growing Like a Weed

Boomtown Austin — still booming!

For those of us who live here, we already know this: the Austin metropolitan area has been growing like gangbusters for a while now.  And according to Ryan Robinson, the City of Austin’s demographer, the Austin area population will increase 2.75 percent in 2019; if this prediction holds up we will see 61,000 new residents in 2019, the equivalent of about 167 people per day!

So, whats driving this frenetic population growth?  Says Robinson: “With the pace of overall job creation remaining near 3.5 percent in Austin, anyone would be hard-pressed to predict much of a slowdown.”  Austin’s unemployment rate of 2.6% is well under the already impressively low national figure of 3.6%

JOBS, JOBS, JOBS!

Our once-crunchy, weird, small-ish city has grown into a massive tech hotspot, with some of the biggest names in the industry moving or expanding their operations here: Apple, Amazon, Facebook and Google (just to name a few) have begun or announced their company expansion plans for our fair city.

Increasing what is already a substantial presence here, Amazon recently announced their plans to add 800 new jobs at their tech hub near the Domain, which will bring their overall number of Austin-based employees to around 7,400.

Apple’s new Austin campus, which will be located just down the road from its existing facilities in northwest Austin, will initially accommodate 5,000 employees, with plans to eventually grow that number to 15,000.

Google has announced their plan to add an additional 5,000 employees who will be housed in a 35-story building downtown, with an expected 2022 opening — and this is in addition to the 800 or so Google employees already located here.

And Facebook, currently with about 700 employees in their downtown Austin offices, has now leased all 17 floors of the Domain 12 tower, which should be completed by the end of 2019.  In addition, the company has plans to lease 32,000 square feet at the upcoming Parmer Innovation Center in northeast Austin.

And again, the above is just a taste of what’s happening with Austin’s rapidly expanding job scene.  As of the end of March 2019, Austin added 22,700 net new jobs during the preceding 12 month period, pushing our ranking to 16 on the nationwide list of fastest growing major metropolitan areas.

GETTING HERE

With all those new bodies, we obviously need to update our capacity for folks to fly in and out.  In February, the first phase of the $350 million terminal expansion project opened in the Barbara Jordan Terminal at the Austin-Bergstrom International Airport — and this is just the beginning of ABIA’s expansion plans, which will see it gearing up for an expected 30 million air travelers passing through annually by 2030. Considering there were approximately 16 million travelers who passed through the Austin airport in 2018, that means in just over 10 years’ time we will see almost double that number — wow!

GETTING AROUND

Of course one of the more pressing issues that comes with all these new people showing up on our doorstep is the worsening congestion on our roads.  Ask anyone who commutes on our already clogged highways — even after the addition of toll roads and express lanes over the last decade — we are still struggling mightily.  To be honest, we are way behind the curve when it comes to reasonable mass transit options in Austin, which is something our city planners, along with Capital Metro are trying to address.  We are currently in the community engagement phase of Project Connect, which is a bold  and multi-pronged plan to tackle some of our our transit problems and will include fully electric high capacity rapid transit vehicles, light rail, express bus and commuter rail expansion.  Ongoing right now is engineering and environmental review, along with vehicle review/selection.  There is a proposed referendum date for the project of sometime in 2020.

HOUSING

So what effect has this growth had on local real estate? As you might have easily guessed, our housing market remains incredibly strong, with the median single family home price in the greater Austin metropolitan area reaching $320,000 in April.

We are currently ranked 5th nationally in new home starts, up 7% over last year, and indications are that this should remain strong throughout the year.  Leasing demand in Austin is up 7% over last year, with the average apartment occupancy rate hovering around 93%.

THE GOOD NEWS

The good news is Austin is a vibrant, flourishing city with a strong economy and loads of opportunity. Homeowners and investors have seen their real estate values skyrocket in a relatively short period of time (and unlike the housing bubbles in other cities of years past, this increase is based on actual growth rather than speculation).  And our home prices, while increasing steadily, are still among some of the most affordable compared to other major tech hubs around the country (I’m looking at you, San Francisco).  Yes, we are experiencing some growing pains, but there is a reason why Austin keeps being voted the Best City in America — and it ain’t just for the barbecue!

 

Setting Records

Is this another housing bubble?

In case you don’t happen to be regularly clicking on my About Real Estate page for market updates (or my Facebook page, or otherwise following along), I’m re-posting this EYE-POPPING headline I put up earlier from the most recent Central Texas Housing Market Report put out by the Austin Board of Realtors: in May we reached an ALL-TIME HIGH of $1.2 BILLION (yep, you read that correctly — that’s Billion with a big, fat B) in home sales!

From the report:

“Coupled with rising home prices, this recent surge in home sales activity made May 2017 the highest-grossing month for Central Texas real estate in the region’s history. For the first time this year, single-family home sales dollar volume topped $1 billion ($1,234,217,617) in a single month within the five-county area, which is an increase of 18.4 percent from May 2016.”

(And this figure excludes most new home construction, which is similarly experiencing phenomenal growth.   New home construction in Austin is at its highest level since 2007.)

This is obviously very exciting news for sellers.  But on the flip side, this trend may be prompting you to ask a very reasonable question:  Is this another real estate bubble which might burst in spectacularly messy fashion?  We all remember what the country went through less than a decade ago when that housing bubble burst.

So is this another bubble?

The short answer, in my humble opinion, is no.  Or at least not in the way it was in 2008-2010; it’s not a bubble created by a whole host of factors which created an artificial inflation of the market, as was the case back then.

The longer answer should include what is a driving force for this increase: job growth.  (Or as my broker like to say: Jobs! Jobs! Jobs!)  Austin’s current job growth rate of 2.9% puts us in place as the 10th fastest growing major metro area in the country.

As reported in the Austin Jobs Postings Report for May, unemployment is at 3.2% (nationwide we are at 4.3%) and more jobs are coming; several companies have announced expansion plans in the area.  To quote from the report:

“The U.S. News & World Report named Austin as the “Best Place to Live in the U.S.” in 2017.  Savills calls Austin “one of the 22 Cities at the Forefront of Global Tech” while SmartAsset named Austin as one of the “10 Best Cities to Raise a Family”.  Austin also comes in 3rd on Gallups’ “Good Jobs Rate” ranking based on the percentage of adults who work for an employer full-time.  Indeed ranked Austin No. 4 on its “25 Best Cities for Job Seekers” list.”

Dang — if I didn’t already live here I’d definitely want to move to Austin after reading all that!

So to sum it all up: with great livability, high consumer confidence, low unemployment, solid job growth and considerable planned expansion coming to the area, I’d say it’s likely that our housing market will remain strong for the foreseeable future. (Barring any big national economic crash, anyway — OH NO, I hope I didn’t just jinx us!) 😉

And finally, to any buyers sitting on the fence I’d say, “Come on in — the  water’s fine!”