Is all of Austin and area, one big overinflated housing bubble? (rentals, movers)

[Tiger Beer]

I think any market where average salaries/wages aren't in-line with the cost of housing...you have an unsustainable bubble.

Austin isn't California priced...which is probably why there are still Californians, etc. willing to relocate to Austin and keep the bubble sustained.

Granted Texas in general seems to not have been affected like west coast cities...but no doubt Austin does have a bit of a bubble.

Unless of course, I've been misinformed that housing costs aren't actually higher than Dallas/Houston with wages being lower?

[FalconheadWest]

Originally Posted by Tiger Beer

Unless of course, I've been misinformed that housing costs aren't actually higher than Dallas/Houston with wages being lower?

Wages in Austin, on average, are higher than Dallas, and Dallas is higher than Houston. Austin is at approx $69k, Dallas is $65k, and I can't remember what Houston is, but it's not far behind Dallas. Plus, it costs a heck of a lot more to build a house in Austin because of the limestone compared to clay soils in Dallas.

[jobert]

I think this talk of a generalized Austin bubble is ridiculous. I will agree that there are overpriced central neighborhoods in Austin, where 600sf shacks are asking near 400K, but everyone know who they are, and so do they. There is also some housing near lake travis that runs $200/sf+ for an hour commute to go with it, which I think will turn out to be overinflated once the Bush tax cuts expire. In general though, housing in the suburbs here runs $100/sf (or less) in the most desirable city in the most desirable state in the country for the last ten years per the US census. You can live within 20 minutes of downtown for this price, so I'm calling BS on the overall bubble. The only reason we could have a bubble burst is if people start buying the $300/sf housing in coastal states again instead of $100/sf Texas homes. An overall correction of housing prices would be by proxy, not because it's "overpriced". The only real estate problem I really see in Austin are the owners of "tear-down" housing stock in the central core, who won't sell for tear-down prices. Who wants to drop 400K for a house that's a nuisance and land 2 miles from downtown of which you have to end up dropping another 150K just to build a house on it for a total of 600K+, when you can build 8 miles away on open land that runs 50K or less, and end up building a brand spanking new home for 200K? This pricing is not proportional by any means. I think if it was corrected, the city could move forward. In that regard, "yes", I hope there is a bubble, and I hope it corrects for the betterment of the city, or we will perpetually have house-poor hipsters living in double-wides with downtown views. Stay classy Austin!

[centralaustinite]

From what I see, central Austin RE prices are flat or declining. There is very little movement in the market above say, $500K, and you can find houses below $200 per sq foot in solidly central areas. The danger in the central areas are homes that were bought at the peak (say 06-07) and unless folks put quite a bit down, they are probably underwater.

My own neighbors are resisting contesting their property taxes because they want to believe that the tax appraisal reflects the market price, when in fact, the tax appraisal is anywhere between 10-20% too high. But if these folks don't have to sell and can afford their mortgage, then, there is little harm.

Many of those "tear-down" owners are long-time property owners who paid off the mortgage 20 years ago, they want prime prices and don't really have to sell. They are chasing the profits that they could have had if they sold two years ago, they will never get those prices now but they really aren't distressed sellers, they can hold out for a long time and eventually inflation will help them out.

Home prices in Austin have always stayed roughly in-line with income, the median home price is about 3x average income, in parts of California there are places where the median home price rose to 7x average income!! That is a generalized bubble.

All the same, those brand-new 200K homes on the outskirts may not see much appreciation as re-sales as folks can always go another mile down the road and buy new rather than buy a 5 year-old re-sale.

[woodinvilleguy]

I would agree with the flattenning call. From what I have seen, the last 6 months prices in my neighborhood have stayed the same. The houses that were correctly priced sold promptly, the ones with the 2008 prices didn't.

[mark311]

Originally Posted by woodinvilleguy

I would agree with the flattenning call. From what I have seen, the last 6 months prices in my neighborhood have stayed the same. The houses that were correctly priced sold promptly, the ones with the 2008 prices didn't.

I agree with this as well. I bought my home in West Round Rock over 3 years ago and its price has stayed flat since then which I'm fine with. I think if there was a bubble to burst, it would have happened during that time already. I still don't know where else I could buy a 10 year old 2400 square foot house for $190K that feeds into an exemplary Elementary school down the street, so I don't plan on moving.

[riaelise]

Originally Posted by Tiger Beer

I think any market where average salaries/wages aren't in-line with the cost of housing...you have an unsustainable bubble.

Austin isn't California priced...which is probably why there are still Californians, etc. willing to relocate to Austin and keep the bubble sustained.

Granted Texas in general seems to not have been affected like west coast cities...but no doubt Austin does have a bit of a bubble.

Unless of course, I've been misinformed that housing costs aren't actually higher than Dallas/Houston with wages being lower?

The wages here *are* less than Houston and Dallas. I would be making 10K more, at least, in either of those cities. Housing is more expensive as well, in comparison to those cities. Native Austinites will tell you that Austin has always been one of the most expensive cities in Texas. However Austin has a great desirability factor and that attracts people. I'm up in the air as to whehter I would prefer to live in Sugar Land, or where I live now.

I don't think the prices have grown that exponential as to have the bubble of some of the other states, IMO.

[inthecut]

Originally Posted by lpc123

Tenth place for a major metro area is not exactly frightening, but it is a bit troubling.

Frightening would be Phoenix, las Vegas, Ft. Myers, southern cal......Austin is STILL in the sunbelt though, and had a "somewhat" overhyped real estate market, with more than a fair share of out-of-area and local "investors/flippers"....I recall a few of those flip-it shows did "on-location" in Austin....so, sure, Austin was overhyped, and does not have a high average income level to support a hyped market, even a slightly hyped one.....much of the money for the upscale housing came from outside the area, and, once a metro puts its eggs in one basket like that, it can have quite a come-down when that out of state money trail starts ebbing......

So, our market is not frightening, but, certainly, will not see the growth spurt of recent vintage for many years to come.Our local growth is very much played out till at least 3-4 years down the line. a good time to play catch up with local infrastructure...

[AK123]

Originally Posted by riaelise

The wages here *are* less than Houston and Dallas. I would be making 10K more, at least, in either of those cities.

I think wages really depend on the industry.

For example, the medical industry in Houston is huge (the Texas Medical Center is Houston's largest employer and is said to grow larger than downtown Dallas in the coming years) and pays very well in comparison to other Texas cities (especially for nurses and similar staff.)

Other industries... not sure. I wouldn't be surprised if there were some that payed the same or better in Austin though.

Originally Posted by riaelise

Housing is more expensive as well, in comparison to those cities. Native Austinites will tell you that Austin has always been one of the most expensive cities in Texas. However Austin has a great desirability factor and that attracts people.

Maybe a little. But Houston's "cheapness" is something of a myth. In many of the good areas, that feed into the good schools, it's really not cheaper. Sometimes it's much more than you'd think. This is especially true in the city limits.

Originally Posted by riaelise

I'm up in the air as to whehter I would prefer to live in Sugar Land, or where I live now.

Round Rock, Sugar Land, The Woodlands, Plano... all very similar in the sense that they are basically small cities with their own industries, not completely dependent on the larger city they are suburbs of (i.e. not just bedroom communities). The nice thing about Sugar Land I can speak of from experience is that it is 20-30 minutes away from both the largest medical complex in the world, and one of the best museum districts in the country.

[mwv]

Originally Posted by makeyes

Within 1-2 years local economists have predicted Austin will experience a housing shortge and that will drive up demand and prices.

This is wishful thinking based on the presumption that the economy will recover to some kind of norm like we've seen the last 20 years. That's not likely to happen. Housing demand will be suppressed for years to come, and there will be more renters and more people doubling up as well.