Austin housing bubble (rent, home, tech jobs)

[riaelise]

I see a cooling off and it's not just in the suburbs. Houses are sitting longer than before and there have been (albeit small when you consider these homes are routinely over 600k) price drops. Early part of this year and last year was just insane home price wise.

That being said, I don't think my home will return to what we've paid ever again barring a depression or something.

[ScoPro]

Originally Posted by austinnerd

It sold for $125mil and it is a revenue generating business, so of course it would sell for significantly more than the value of the real estate alone.

My bad. The first report I saw used the inflated number.. Still a pretty skewed ratio though.

[ipott]

https://www.wsj.com/articles/even-de...et-11654806570


From the article:


Cities like Austin that experienced Covid booms are primed for a painful return to reality, said Nicholas Gerli, founder of Dallas-based Reventure Consulting, a real-estate data analytics firm. The influx of buyers boosted home prices higher than underlying market fundamentals like job and wage growth. “Austin is the biggest housing bubble in America,” he said. Between January 2020 and April 2022, wages in Austin rose nearly 9%, while home values shot up more than 72%, said Mr. Gerli, using data from the U.S. Bureau of Labor Statistics and Zillow. “If the prices of homes adjusted to match wealthy San Jose or Los Angeles [buyers] moving in, that growth aspect was never going to sustain itself,” he said.


So far, prices that skyrocketed during Covid haven’t dipped, according to Ms. Deane, who said homes in Austin that sold for $4 million a few years ago are now on the market for $9 million. But she said wealthy buyers are more cautious. Recently, she sold a roughly 3,000-square-foot house, listed for $6.5 million, which last year would have been snatched up in minutes. This year, it took about five months to sell but Ms. Deane said she didn’t cut the price. “I had a patient seller waiting for the right buyer,” she said.

[Need4Camaro]

I personally think Austin will hit a ceiling .. and maybe slightly dip to readjust itself.. ..but I doubt we are going to see pre-pandemic home values again unless something catastrophic on an economic level happens to the rest of the country.

[Carpenter858]

Originally Posted by Need4Camaro

I personally think Austin will hit a ceiling .. and maybe slightly dip to readjust itself.. ..but I doubt we are going to see pre-pandemic home values again unless something catastrophic on an economic level happens to the rest of the country.

It might have already in mid-March based on what we sold then. I'll know more once we list another house here soon. Time will tell, we might have missed it. I agree, I don't think we'll see pre-pandemic house prices given there's been an 80%-100% price increase since 2020 in most places in Austin.

[riaelise]

Originally Posted by Need4Camaro

I personally think Austin will hit a ceiling .. and maybe slightly dip to readjust itself.. ..but I doubt we are going to see pre-pandemic home values again unless something catastrophic on an economic level happens to the rest of the country.

I agree with that assessment.

I don't see a drastic cutting of prices but there have been lots of price drops (albeit a bit nominal) throughout the area with probably the exception of the central core. Homes are also sitting on the market longer than before. I do believe the higher dollar buyers are a bit more cautious and the rising interest rates are weeding out those who were affording more expensive homes solely because of the lower rates. I've always believed in market correction.

[ipott]

From the roofstock newsletter:


A new Zillow survey of over 100 housing experts found that 60% of them believe we aren’t in a housing bubble, compared to 32% who said we are. Further, the panel of experts also believes we will see a short recession by 2024 as well as continued home price growth throughout 2022 due to strong demand.


[CENTER][/CENTER]
[CENTER]Source: Zillow (June 2022)[/CENTER]

In discussing home price growth, Zillow found that “Looking forward, the most optimistic quartile of respondents predicted prices would rise 46.1% between now and the end of 2026, while the most conservative quartile predicted a cumulative rise of only 9.3% in that time. On average, respondents are forecasting a 26.4% cumulative rise by the end of 2026.”

Not everyone is as optimistic, including Wolf Richter of WOLF STREET who recently published an article titled, Housing Bubble Getting Ready to Pop. According to Richter, homebuyer confidence is dropping, interest rates are rising, and mortgage applications are tanking, all pointing to a bubble situation.

Nevertheless, the total value of real estate over the past several years has skyrocketed according to new data from Realtor.com. The value of all homes owned by owner-occupiers hit a new high of just under $40 trillion in Q1 2022, a $1.6 trillion increase from Q4 2021. Of note, this number has doubled over the past decade. Further, the total equity value that homeowners had sat at $27.8 trillion in Q1 2022, an improvement of $4.6 trillion year-over-year and the highest level since 1986.

Maurie Backman of The Motley Fool discusses the potential of a housing bubble, noting that we aren’t currently in one, but that “[i]f housing inventory picks up in a meaningful way, home prices could begin to plummet. But there are no indications that that's about to happen.”

[blameyourself]

I like to look at my local Community Impact newsletter to see data on Round Rock. Based on their numbers supplied by the Austin Board of Realtors (most current info being from April), the days on the market is extremely low (on average it's 15 days or less). Every zip code is up with the lowest increase YOY at 16.05% and the highest at 26.56%. It's simply not pointing to some major downturn in the near future. Based on Ipott's numbers above, I certainly fall in the optimistic range thinking more along the lines of a leveling off instead of pricing plummeting.

[Need4Camaro]

Yeah. Prices are not going to drop short of a massive economic disaster. Level off is more realistic.

[10scoachrick]

Originally Posted by ipott

https://www.wsj.com/articles/even-de...et-11654806570


From the article:


Cities like Austin that experienced Covid booms are primed for a painful return to reality, said Nicholas Gerli, founder of Dallas-based Reventure Consulting, a real-estate data analytics firm. The influx of buyers boosted home prices higher than underlying market fundamentals like job and wage growth. “Austin is the biggest housing bubble in America,” he said. Between January 2020 and April 2022, wages in Austin rose nearly 9%, while home values shot up more than 72%, said Mr. Gerli, using data from the U.S. Bureau of Labor Statistics and Zillow. “If the prices of homes adjusted to match wealthy San Jose or Los Angeles [buyers] moving in, that growth aspect was never going to sustain itself,” he said.


So far, prices that skyrocketed during Covid haven’t dipped, according to Ms. Deane, who said homes in Austin that sold for $4 million a few years ago are now on the market for $9 million. But she said wealthy buyers are more cautious. Recently, she sold a roughly 3,000-square-foot house, listed for $6.5 million, which last year would have been snatched up in minutes. This year, it took about five months to sell but Ms. Deane said she didn’t cut the price. “I had a patient seller waiting for the right buyer,” she said.

And we ALL know what an excellent measure of the market $6.5 million houses represent. Not to mention the $9 million ones!!!