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2020: Where does anybody make profit buying what seems to me to be, at best, a $450K house for $550K?
2015: Where does anybody make profit buying what seems to me to be, at best, a $350K house for $450K?
2010: Where does anybody make profit buying what seems to me to be, at best, a $220K house for $300K?
2005: Where does anybody make profit buying what seems to me to be, at best, a $150K house for $200K?
2000: Where does anybody make profit buying what seems to me to be, at best, a $100K house for $140K?
1995: Where does anybody make profit buying what seems to me to be, at best, a $75K house for $100K?
I get what you're saying but a) we're not talking about a 25-ish % increase over 5-ish years and b) we're talking specifically about investment property, not families buying houses they intend to keep for a while.
In two years, maybe less, I've seen basic houses in my neighborhood go from $500K-ish (which I thought was high) to $800K-1M-ish with at least some being sold to investors. Are they going to be $2M in 2024? I can't fathom that. I don't see where this kind of growth is coming from.
Actually, that's not really true anymore from what I'm seeing.
Anectodally, my sister-in-law recently purchased a stunningly updated 3000-ish square foot house 5 blocks from a beach in New Jersey for just over $1M. There are 40 year old OG houses 2/3 that size near nothing of any significance in my neighborhood selling for nearly that. I see listings like that pop-up on my Facebook feed all the time. We used to snicker at the prices up there and brag how good we had it in Texas and now we've pretty much caught up and surpassed them in many cases.
Eh. I disagree. Austin isn’t cheap but there’s still far more expensive places and you get WAY more house for your dollar than you do in a place like NJ and NY. You may find similar prices but you’re going to end up with a 2.5 - 3k sqft for a $600k - $800k home in suburban Austin area vs a $600k - $800k home at about 1.3k - 1.5k sqft in Jersey, Long Island NY, SF bay area or Seattle at very similar distances from the core of the metro. Add onto the fact that many of those places are overpopulated and you’re basically living ontop of each other in boxes breathing in everything your neighbor exhales in the fashionable term CD loves as gritty neighborhoods paying $3k monthly rents or extraordinary mortgages. You also have to add to the fact there’s no income tax here where some of these places are paying property taxes just as high or higher than ours ONTOP of an income tax, so they still come out ahead. There’s still a bargain in moving here, although it’s not as pronounced as it may have been maybe 5 to 10 years ago. I don’t think we will ever catch up to those places however.
As for sustainability. up up and away is the only direction if the area continues to attract high paying jobs and building of inventory is so heavily restricted as it is in Austin proper. The suburbs are doing the best they can but not enough of them have access to good schools, infrastructure to reach job centers, or desirability factors to attract high income groups which Austin is doing excessively well at attracting pushing some communities through the roof while others while eating increase of demand are not developing as quickly.
Last edited by Need4Camaro; 11-21-2021 at 10:52 AM..
It actually makes perfect sense (whether or not people want to accept it or not). As for when it ends, that will be when companies stop relocating business here and the growth stops. Until then, the sky's the limit. I know most people don't want to hear this, but the Austin metroplex is very affordable in comparison to many other high COL metroplexes in the nation.
It’s not just that. The Austin real estate market is like crypto currencies right now. Beyond the normal supply/demand forces which have always been favorable for us, there is a higher level force at work imparting value on Austin real estate. This makes predicting the market in the future, at least for now, very simple. It’s going to keep going up. Don’t know for how long, or how hard it may eventually fall — but right now it’s seatbelts on.
eh. I disagree. Austin isn’t cheap but there’s still far more expensive places and you get way more house for your dollar than you do in a place like nj and ny. You may find similar prices but you’re going to end up with a 2.5 - 3k sqft for a $600k - $800k home in suburban austin area vs a $600k - $800k home at about 1.3k - 1.5k sqft in jersey, long island ny, sf bay area or seattle at very similar distances from the core of the metro. Add onto the fact that many of those places are overpopulated and you’re basically living on top of each other in boxes breathing in everything your neighbor exhales in the fashionable term cd loves as gritty neighborhoods paying $3k monthly rents or extraordinary mortgages. You also have to add to the fact there’s no income tax here where some of these places are paying property taxes just as high or higher than ours ontop of an income tax, so they still come out ahead. There’s still a bargain in moving here, although it’s not as pronounced as it may have been maybe 5 to 10 years ago. I don’t think we will ever catch up to those places however.
As for sustainability. Up up and away is the only direction if the area continues to attract high paying jobs and building of inventory is so heavily restricted as it is in austin proper. The suburbs are doing the best they can but not enough of them have access to good schools, infrastructure to reach job centers, or desirability factors to attract high income groups which austin is doing excessively well at attracting pushing some communities through the roof while others while eating increase of demand are not developing as quickly.
^ ^ ^ ^ ^ ^
this
P.S. That $1.4 million I mentioned in the Bay Area is 1070 sf.
I'm old enough to remember the S&L crash in the 80's. It felt like things were on edge before that happened and I wasn't surprised we crashed. I wish I would have been in a position financially at the time to buy something, but I wasn't.
Same with the dot-com crash in the early 2000's. It felt like things weren't quite right, and they weren't, but Austin we didn't get hit too bad with that one. Some, but not like 86. I was in better financial position then but the bargains didn't materialize to the degree I expected so I stayed content in my little starter home I'd bought a few years earlier.
I didn't really see 2008 coming and I don't recall Austin being hit nearly at all. I recall prices had been increasing, but not fantastically so like they are now. If anything we kind of plateaued for a few months then started up again.
This one I can't quite get a handle on. The speculation feels to me like 1986 but at the same time there is some real growth behind it, unlike the 80's or even 2008. So I don't know.
It’s impossible to rely on past statistics to depict the future of where we are going. You have to look at it in terms of causes and effects rather than the previous statistical market crashes. The causes of our inflated housing market are much different than they have been in the events that lead to prior market crashes. The 08 market crash was largely induced by lenders providing finances to people who otherwise should not have qualified for those resources. When everyone defaulted foreclosures sailed and it also happened during a period of time where much of America’s economy was at slug pace.
Austin’s market isn’t invulnerable by any stretch but by what is being observed (massive corporate relocations, many new residents bringing their own work via WFH thus keeping their relative salary or something close to it, influx of cash buyers) while the market seems crazy, people are buying homes through legitimate methods and have the capital to maintain them despite what ‘we’ feel is ridiculous, is VERY sustainable for the people coming here (I.E. buying a $500k house for $750k, especially when comparing to the places they are coming from.) As long as the capital remains in place to pay for homes and desirability remains higher than the places they are coming from, two major factors I do not forsee changing short of a major disaster, they will still be able to justify coming here and prices will continue to rise.
If jobs or demand does not decrease, then prices will only level off if..
A.) More inventory comes online, and enough of it to offset demand.
B.) Prices climb to a point where they can no longer justify making a major life adjustment to relocate here, IE we approach a point where moving to Austin is a lateral move and although it seems in dollar figures we are close to that point, we are a long ways off because what people are forgetting is we offer a MUCH better quality of life.
These are all the same thing. Housing prices are a reflection of that.
There’s also truth in this is as well. Although it’s not the only factor. Money supply isn’t being talked about but it is a big problem in America. Much of our money is focused into very minute nodes and/or focused offshore into other countries where citizens of this country are only getting the breadcrumbs left thus further inducing the American rat race. Add on to the fact that we are a majority import minority export nation and we can’t manufacture anything on mainland to save our souls further increasing our global dependency, we can’t easily justify increasing money flow without causing inflation / printing more money thereby increasing our debt.
It seems today in America you pretty much have to be a high earner or have a considerable savings / investment / strong financial planning skills / or bought when things were still affordable to own the things we portrayed as the American dream decades ago otherwise you are shafted into a lower social status and incapable of seceding it without a major breakthrough. No longer is working a 9x5 enough to buy your dream home, or in many cases, a home at all.
Last edited by Need4Camaro; 11-21-2021 at 11:55 AM..
It’s impossible to rely on past statistics to depict the future of where we are going. You have to look at it in terms of causes and effects rather than the previous statistical market crashes. The causes of our inflated housing market are much different than they have been in the events that lead to prior market crashes. The 08 market crash was largely induced by lenders providing finances to people who otherwise should not have qualified for those resources. When everyone defaulted foreclosures sailed and it also happened during a period of time where much of America’s economy was at slug pace.
Austin’s market isn’t invulnerable by any stretch but by what is being observed (massive corporate relocations, many new residents bringing their own work via WFH thus keeping their relative salary or something close to it, influx of cash buyers) while the market seems crazy, people are buying homes through legitimate methods and have the capital to maintain them despite what ‘we’ feel is ridiculous, is VERY sustainable for the people coming here (I.E. buying a $500k house for $750k, especially when comparing to the places they are coming from.) As long as the capital remains in place to pay for homes and desirability remains higher than the places they are coming from, two major factors I do not forsee changing short of a major disaster, they will still be able to justify coming here and prices will continue to rise.
If jobs or demand does not decrease, then prices will only level off if..
A.) More inventory comes online, and enough of it to offset demand.
B.) Prices climb to a point where they can no longer justify making a major life adjustment to relocate here, IE we approach a point where moving to Austin is a lateral move and although it seems in dollar figures we are close to that point, we are a long ways off because what people are forgetting is we offer a MUCH better quality of life.
Out of curiosity, what's your guest on the point were it would become a lateral move? Austin appears to be the most expensive metro between the Appalachian and Rocky Mountains now. Compared to the coastal cities it's a bargain but even this gap is shrinking.
I get what you're saying but a) we're not talking about a 25-ish % increase over 5-ish years and b) we're talking specifically about investment property, not families buying houses they intend to keep for a while.
In two years, maybe less, I've seen basic houses in my neighborhood go from $500K-ish (which I thought was high) to $800K-1M-ish with at least some being sold to investors. Are they going to be $2M in 2024? I can't fathom that. I don't see where this kind of growth is coming from.
Six years ago we paid in the 400s for our home in Round Rock. Granted, it is a custom home neighborhood that can be considered bucolic, with larger lots. We have a clubhouse and are near a golf course. The homes are mostly early 80s-mid 90s builds. We fell in love with the home within exactly ten minutes, but it was dated (so there'd be expense in updating it), and we thought we overpaid at the time (it was one of the higher priced homes). Our realtor told us that we didn't and we'd see the value down the road. Boy, was he right. At that time, we thought we "paid high"...well now our home is in the $800-900k range. And this is within the past year. The value has risen steadily over the years, but this year was truly stratospheric. There have been two million dollar sales in our neighborhood. Nothing lists for below 750k here. Maybe one or two homes hit the market. People are remodeling their homes, not selling. The people who are buying (and continue to pay) at these prices are those who come from the high COL places that N4C...
Moreover these people have flocked to CP, RR, Pf, Gtown, Liberty Hill, Kyle, etc. because they want a big house, etc. for their dollar vs. smaller and older in Austin...so that has helped too. At least helped my neighborhood. We've also had many local imports, people from Austin living in small homes moving our here to get a bigger home.
And yet one more thing to consider, the governments of these suburbs are being smart. They are investing in attracting businesses, improving parks, adding more trails, bringing more desirability. There's going to be a domain style mixed use development going in not too far from where I live. Many others hate this prospect because they see a ruination of suburban life. Having come from NYC and comparing the NYC suburbs, I think it's a good thing for the overall value of the area.
Oh yeah the realtors are also touting being close to the Tesla factory and if the Samsung factory makes it to Taylor, RRE is also going to hit paydirt from a property tax perspective. the downside is though that the roads are going to have to be improved at an even faster pace. We still have two lane roads.
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