According to the Fourth Annual Housing Forecast held by the Austin Board of Realtors and Home Builders Association, the housing market in Austin will continue to see improvement in 2012. Austin’s housing market saw growth in 2011 and that trend is expected to continue in 2012.
Austin’s job growth, increasing population and tightening rental market should result in higher demand for housing in Austin and surrounding areas, according to Eldon Rude with Metrostudy.
Texas experienced a 2.2% increase in job growth when comparing November 2010 to November 2011. One out of seven jobs created in the US have been in Texas. As a result, Texas consumer confidence is much higher than the overall south central region of the nation. The Austin/Round Rock/San Marcos MSA saw a 1.2% increase in job growth year over year which meant 9,600 new jobs.
Texas had over 63,000 housing permits pulled for new construction in 2011. This is double the amount of the next highest state, California with over 33,000 new housing permits. For 2012, Eldon Rude expects new home production in the Austin region to increase for the second straight year. There were 6,115 new home “starts” in the Austin region in 2011 which represents a nearly five percent increase in starts from 2010. The starts barely exceeded closings so inventory is declining....which is a good sign. Demand must be met by supply so builders must start building to meet that demand.
Home starts in 2011 were up over 2010 levels in every price range except under $150,000, with the strongest increases in the move-up price points between $200,000 and $300,000.
A factor that might limit new home starts in 2012, especially in more high demand areas, is a lack of developed lots to accommodate new home construction. Weather and water resources are also major concerns for homebuilders.
According to 2010 and 2011 migration patterns, Texas nets more people moving into the state versus moving out. The IRS information census shows a strong population growth trend in the Austin MSA over the past 10 years.
In 2011 the Austin MSA population was approximately 1.763 million. By 2020, Eldon Rude with Metrostudy predicts a population of approximately 2.304 million. This growth of 540,000 in population is equivalent to 31% total growth which is 3.4% per year. At 60% home ownership the result is 13,333 new homes per year in Austin.
The upcoming Presidential election should generate confidence that the economy will improve, reflecting in many home buyer's decision to purchase. Due to continued job growth, a strong rental market and strong inward migration, we should experience a housing market that continues to improve in 2012.