Austin one of the 15 worst housing markets in the next five years? (Mission: real estate, apartments)

[CptnRn]

Originally Posted by kbchitown

Uh oh...
The 15 Worst Housing Markets For The Next Five Years - Yahoo! Finance

I thought this should have a thread of its own.

The article seems pretty bizarre to me, given that it contradicts so many other projections.

I don't know whether the "Fiserv Case Shiller Indexes" have any credibility or not, never heard of them before.

And it seems completely contradictory to this article:

Demand for new homes may be picking up in Central Texas, survey shows

Demand for new homes is beginning to pick up in Central Texas, a signal the market could be turning around, new figures show.

"That's really a positive sign of the market and an indicator that the builders are seeing increased demand," said Eldon Rude, director of the Austin market for Metrostudy, which tracks the housing market locally and in a number of major markets nationwide. "We're at or close to the turning point."

But overall, demand for new homes is starting to strengthen, he said, fueled by job growth, population growth, a tight rental market and the lowest supply of new homes since 2002, with just 1,186 finished vacant homes on the ground.

Mark Sprague, another local housing expert, said that "barring a catastrophic event, it is going to be a very tight market within a year."

"The basketball of demand is coming down that hose, and there's far too little supply" of homes, lots and apartments, said Sprague, director of business development for Mission Mortgage in Austin.

According to the U.S. Census Bureau, 560,800 people are projected to move to Austin over the next 10 years, and Sprague said Austin is expected to have more people move here than any other metropolitan area in the U.S. over the next 10 to 20 years.

"We have more demand moving here than supply," Sprague said. "There is no way that the house or apartment you look at today (won't) be more expensive this time next year, I guarantee it, because of demand."

Rude said the supply of new homes is so low that for the first time in several years, "builders are now having to start a new home to accommodate a buyer," which wasn't the case when inventory was plentiful.

[jobert]

It contradicts other economic indicators as well: Austin apartment rents continue to rise | Austin Business Journal

Considering that apartment rents have risen 8.7% in the first 5 months of this year, it makes no sense that home prices wouldn't rise as a result. It's starting to become really expensive not to be a homeowner in Austin. Look on Zillow, and you'll find that the average monthly price for rent, and the average monthly PITI in Austin is approaching a 1:1 ratio.

[infoseeker2010]

Originally Posted by jobert

Austin apartment rents continue to rise | Austin Business Journal

Considering that apartment rents have risen 8.7% in the first 5 months of this year, it makes no sense that home prices wouldn't rise as a result. It's starting to become really expensive not to be a homeowner in Austin. Look on Zillow, and you'll find that the average monthly price for rent, and the average monthly mortgage in Austin is approaching a 1:1 ratio.

In Bay Area, if the rents go high, means real estate is dipping. Not sure about Central Texas though.

[CptnRn]

#9 (tie) Austin, Texas
Cumulative growth from 2005 to 2011: 2.63%
Annualized growth from 2011 to 2016: 1.2%

I'm not sure how they define "Cumulative growth" but the total population of Austin grew by 20.4% from 2000 to 2010.

[jobert]

Originally Posted by infoseeker2010

In Bay Area, if the rents go high, means real estate is dipping. Not sure about Central Texas though.

If rents go higher, I'm sure. But rents and monthly PITI in places like San Jose probably never get close to reaching an equilibrium though. If it becomes more expensive to rent than own in any given market, it seems unsustainable.

[CptnRn]

The City of Austin Demographer's projections

http://www.ci.austin.tx.us/demograph...date_2020c.pdf

Annualized population growth rates for the City of Austin since 2005 have
fluctuated around the 2.5% mark, a stronger pace of growth than that of the
first half of the decade. The decade’s final overall annualized growth rate
should still fall below the historical rate of 3.5% as it would be an almost
mathematic impossibility for the population growth rate to accelerate enough
to pull the decade’s overall rate up to our historical norm. The region’s
overall final annualized growth rate for the decade should finish right around
the 2.9%

Again from the City of Austin demographics page http://www.ci.austin.tx.us/demograph...istory_pub.xls

The document "Detailed population history of the City of Austin, 1840 to 2011", gives the population growth of Austin since 1990 as:

1990 465,622 -0.2%
1991 476,447 2.3%
1992 482,296 1.2%
1993 492,862 2.2%
1994 508,336 3.1%
1995 526,128 3.5%
1996 548,043 4.2%
1997 567,566 3.6%
1998 613,458 8.1% 70% from annexation
1999 629,769 2.7%
2000 656,562 4.3%
2001 669,693 2.0%
2002 680,899 1.7%
2003 687,708 1.0%
2004 692,102 0.6%
2005 700,407 1.2%
2006 718,912 2.6%
2007 735,088 2.3%
2008 750,525 2.1%
2009 774,037 3.1%
2010 790,390 2.1%
2011 812,025 2.7%

So the population growth rate in Austin has actually increased the last 6 years (2.6-3.1%), during the nations economic downturn, over what it was during 2001 - 2005 (0.6-2.0%).

That is an eye opener, I had assumed it probably slowed.

[texastrigirl]

I don't buy it...

Here's some info from one person's perspective on Case Shiller Index

Mark Sprague Explains Case-Shiller | Mission Mortgage of Texas, Inc.

And another's

http://billmorrisrealtor.wordpress.c...hiller-cities/

[sxrckr]

Originally Posted by CptnRn

I'm not sure how they define "Cumulative growth" but the total population of Austin grew by 20.4% from 2000 to 2010.

The 1.2% the article has for Austin is the home appreciation prediction, from what I can gather. So it has Austin as the 9th worse housing market for growth from now to 2016.
Not sure why that would be, the only thing I can think of is that the prices had gone too high up until a few years ago, and are going to "correct" over the next several years? That could be it. Because we know it's not from lack of growth.

"Fiserv identified 15 housing markets that will appreciate at an annualized rate of less than 1.5% -- a pretty lousy investment. If you stay out of these markets, the national average is slightly better at 3.7%."

[gpurcell]

We didn't collapse, we're not going to rebound as much as the bubble markets might.

Pretty simple, seems to me.

[JohnHenrySDM]

Originally Posted by CptnRn

The article seems pretty bizarre to me, given that it contradicts so many other projections.

I agree. Too little information about methodology and how they arrived at the list. And think of all the cities not on the list... Detroit, Phoenix, Miami, Las Vegas...

Seems more like a hit list than an actual forecast.