San Antonio and Austin Tied at No 1 Most Overvalued Housing Markets

[L210]

Originally Posted by TX-born

I think many of the people posting here for realize how supply and demand work. Especially how it relates to pricing.

I fully understand how supply and demand work. I took economics in college. But, if you're going to say that housing is expensive in a certain area of San Antonio because of demand, then one can say that about the whole city of Austin or almost any other city. In that case, there rarely is such a thing as an overvalued housing market. The housing costs in Austin are skyrocketing due to very high demand. People are willing to pay a few hundred thousand dollars for a small house just to live in Austin because they see it as a desirable city. Price can be higher than the demand warrants, which will eventually lead to a correction.

Still, in my opinion, I would not pay almost $300,000 for a small, ugly KB home that is going to start falling apart in less than 10 years just to live in Stone Oak. But, that is my personal choice. There are plenty of other good areas with good schools and less traffic. If you bothered to read the article, it is not about discounting supply and demand. It is about the growth of housing costs outpacing the growth of an area's economy within the same time period. When you have housing costs outpacing the economy, you end up with a situation where it becomes more difficult for people with incomes near the median to afford a house. I don't know what the numbers are in San Antonio, but the median housing costs in Austin are higher than what a person making a median income for that city can afford. When you have this huge housing bubble, it's going to eventually bust because it is not sustainable.

[imaterry78259]

It appears that most of the new construction homes have gone up around 100K in the past two years.