Austin Ranks Second For Most Overvalued Housing Market
AUSTIN, Texas The Austin housing market is hot and maybe a little too hot.
A new study ranked the Austin housing market as the second most overvalued market in the nation, with homes selling at an average of 50.72% more than they should. Boise, Idaho, is ranked No. 1 on that list.
The study was conducted by Florida Atlantic University and Florida International University. The two universities looked at past pricing data, real estate data and other publicly available information on homes and real estate in Austin.
Austin’s housing market has had a streak of record-breaking months, with prices rising above last year’s median scores. In August, the median listing for an Austin-area home was up 36% when compared to the same time last year. The median listing price is currently sitting at $536,000 for the Austin-Round Rock area, according to the Austin Board of Realtors.
The Austin Board of Realtors has previously said the current prices and growth in the Austin housing market are unsustainable.
Bucking The Pandemic Austin Is The Hottest Market In The Country
The Texas city is a hot spot for commercial real estate investment and a magnet for corporations looking to move to a high-tech hub.
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AUSTIN, Texas In March 2020, the outlook in Austin was bleak after the pandemic forced business closures, lockdown orders and the cancellation of South by Southwest, the annual festival that brings in millions of dollars for the city.
A year later, optimism has replaced despair. Across the nation, the coronavirus remains a threat and empty office buildings and restaurants have hampered growth, but Austin, the Texas capital, has emerged as a hot spot for commercial real estate investment and a magnet for out-of-state corporate relocations that are strengthening its allure as a center of high-tech industry.
Its the hottest market in the country right now, said Mike McDonald, vice chairman at Cushman & Wakefield who represents pension funds, insurance companies and real estate investment trusts. Millennials are moving to the Sun Belt, and companies are following the millennials. Investors are following the companies.
The Sun Belt markets of Austin, Dallas, Phoenix and Atlanta were among the top-performing metros where the least number of jobs were lost in 2020, CBRE said in its survey.
Other County Reports From Abor Aug 2021
These trends have echoed in all the five counties of the Austin-Round Rock Metro. Price increase accompanied by a drop in home sales except for two counties.
Williamson County: Home sales decreased 1.3% to 1,105 sales, while sales dollar volume rose 37.2% to $549,681,505. The median price rose 36.5% to $445,000, and new listings increased 12% to 1,011 listings. During the same period, active listings rose 24.7% to 753 listings, and pending sales also increased 13% to 1,151 pending sales. Housing inventory increased 0.2 months to 0.7 months of inventory.
Hays County: Home sales decreased 16.3% to 329 sales, while sales dollar volume dropped 3.8% to $159,743,802. The median price for homes rose 27.9% to $390,000. During the same period, new listings increased 24.4% to 418 listings, while active listings also rose 7.6% to 466 listings. At the same time, pending sales increased 2.2% to 417 pending sales. Housing inventory stayed level at 1.1 months of inventory.
Bastrop County: Home sales increased 3.4% to 122 sales, and sales dollar volume rose 44.4% to $47,225,012. The median price also increased 32.2% to $345,000. During the same period, new listings increased 6.5% to 115 listings, while active listings decreased 11.7% to 182 listings. Pending sales increased 6.9% to 124 pending sales and housing inventory decreased 0.5 months to 1.4 months of inventory.
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Investing In Austin Real Estate Follow Our Handy Guide To Make The Most Of Your Investment
With its robust diverse economy, soaring population growth and reputation as the Live Music Capital of the World, its no wonder Austins residential and commercial real estate industry is thriving! All of these factors create favorable conditions for real estate investors. Austin TX buyers and investors may enjoy a steady stream of current income and build long-term wealth for the future. If youre a first-time real estate investor and are considering investing in Austin real estate, weve put together 10 important tips to put you on the right path to ensure your best chance for success.
Speaking Of Affordability Mortgage Rates Are On The Rise
Mortgage rates will also be increasing as the year pushes forward. Most real estate investors buying investment property depend on a mortgage loan to get into the Austin real estate market.
Related: Where to Invest in Real Estate for Affordable Investment Properties
Why invest in the Austin real estate market 2018 NOW?
If you have any intention to invest in Austin real estate this year, mortgage rates might make you put your plans off. That is if you wait any longer than right now. Mortgage rates are increasing. If you plan on getting your investment property financing from a traditional bank loan, getting a fixed rate now will better secure your chances of making more net rental income in the future, resulting in a positive cash flow property.
On the plus side, this will likely increase the ratio of renters to buyers in the Austin real estate market 2018. Act now, invest in Austin real estate, and you wont be sorry.
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Austin Real Estate: Why Theres Still Room To Grow
Thousands of people are moving to Austin, Texas, every year with the population expected to grow to over four million in the next 20 years. As a city booming with new jobs and a local scene with some of the best food, art, and music in the country, Austin has much to offer investors and new residents alike.
Its no surprise that new residents are pouring into Austin and surrounding areas, but along with the tremendous economic growth comes concern that Austin may be expanding too quickly to remain a viable real estate investment option.
With the projected growth reminding some investors of San Franciscos oversaturation problem, some are worried the real estate market in Austin may already be close to tapping out. The good news is, Austin is still a great option for investorsand an enticing option for new residents.
Room for DevelopmentDespite Austins rapid population growth in recent years, there is still room for development in the city and surrounding areas. New residents are spreading out, making homes for themselves in Austins metropolitan areas of Williamson, Hays, Bastrop, and Caldwell counties, and much of the land in these areas is still undeveloped.
Some investors have questioned whether Austin is oversaturated, but as communities expand out to the metropolitan areas, the need for housing and commercial developments, as well as the availability of land in those areas, increases.
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The third time Drew Menas manager asked him about relocating to Austin, Texas, he and his wife, Amena Sengal, began to seriously consider it. They had deliberated each time before, in 2017 and 2018, but landed on a hard no: Drew and Amena had lived in New York for more than 10 years, and they loved it. They owned a two-unit townhouse in the Bedford-Stuyvesant neighborhood of Brooklyn, and they felt lucky to have it, with its yard and the kind of close-knit neighbors who compete to shovel one anothers sidewalks after a snowfall.
But now it was August 2020, and the pandemic had changed their calculus. When the city shut down, their daughter, Edie, was 7 months old Drew and Amena co-parented while working full time, one at the kitchen island, the other at the breakfast table. In May, they escaped to Drews familys cottage in New Hampshire, and gradually their tether to the city began to fray. When the relocation offer came in from Drews employer, an asset-management company, they started browsing listings online, and it looked as if they could get a lot more space in Austin. They would certainly save money on everything else, like gas and groceries. The world is ending, they said to themselves. Why the hell not?
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Buying An Investment Property In The Austin Real Estate Market Reason #: Supply And Demand
The increasing population along with the steady property inventory has fueled and created more demand for Austin real estate. The increasing demand and low supply results in rising home values. In addition, homes are sold twice as fast in the Austin real estate market than the national average. According to Redfin, investment properties for sale in the Austin real estate market spent a median of 18 days on the market during June 2017, while the national median was 36 days. This is obviously good news for real estate investors buying an investment property in the Austin housing market for the purpose of selling it, as buyers are quick to purchase investment properties once they find them.
Related: What Are the Expected Residential Real Estate Trends in the US Housing Market for 2018?
The high demand and low supply dont only create great opportunities for those thinking of buying an investment property in th Austin real estate market, but also for homebuilders. In fact, thanks to the recent success of the Austin housing market, new construction is on the rise with a focus on single-family homes.
The Bread And Butter Model
Before we go into the sub-markets, lets define the bread and butter model:
Were looking for homes that:
- a. have 3 bedrooms, 2 baths, and a 2-car garage
- b. are worth $80k-$120k
- c. rent for under $1000/mo.
Without going into the subject of an entire other article, the reason we choose the bread and butter model is twofold:
- 1. it fits Dels Rules for Investing, and
- 2. supply and demand maximizes our profits
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How To Choose Best Places To Invest In Real Estate In The World
You may be located anywhere in the world, the basic principles of real estate business remain unchanged you want to choose those places for your investment properties where the return-on-investment is high. To maximize the returns from your real estate investment you want to buy property in places with the following features:
- High rental occupancy: Check how much of the available housing stock in an area is vacant
- High rentals relative to your mortgage repayments: The more of your mortgage you can cover from rentals, the better and
- A low tenant default rate: The last thing you want is to buy property in an area when tenants frequently miss rent payments.
Real estate investing requires in-depth research. Market timing also matters as some cities have exceptional rental income prospects, but a very tight inventory. In that scenario, it becomes very difficult to find and close a deal that fits your investment criteria. Therefore, you need to act fast and wisely.
Don’t take any uninformed decision without evaluating the fundamentals of the real estate market you intend to purchase in is it growing, stable, or declining? Are you planning for the short-term capital gains or the long-term buy and hold? To make it easy for you, we recommend contacting an investment counselor who can help you to invest in some of the best real estate markets in the United States.
Take Advantage Of A Booming Austin Real Estate Market
Austin ranked number one on the 2017-Emerging-Trends-Real-Estate by Pricewaterhouse Coopers and the Urban Land Institute. According to the report, Austin has consistently ticked the majority of the top boxes related to recent real estate market attractiveness. The market has benefited from a diverse economy that was affected in a minimal way by the global financial crisis, a growing population base made up of an educated labor force, and the undeniable hip factor that makes Austin attractive to the millennial dominated workforce. As a result, the Austin real estate market has continued to bloom.
In the 2018 edition of the report, Austin was ranked the top place for real estate investing in Texas and as the number two city in U.S. Markets to Watch: Overall Real Estate Prospects.
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Next Best Places In Austin To Buy An Investment Property
Posted by Ryan Rodenbeck on Thursday, May 28th, 2020 at 2:59pm
Austin, Texas has one of the best real estate markets in the nation. The strong job market, natural outdoor beauty, and laid-back lifestyle entice renters and homeowners to flock to the Lone Star State. What makes Austin the best place to buy investment properties? Why should investors buy rental properties in Austin? Is Austin a good place to invest in real estate? We’ll be answering your questions on why you should invest in the Austin housing market and the top 5 next best places to invest in Austin.
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Areas Around University Of Texas
The area surrounding the University of Texas can be a notable area for investors simply because of the continued demand for student housing. There are several distinct neighborhoods that provide student housing, both in the form of single-family homes, duplexes, condos, or apartments, but two of the most popular and affordable are North University and Hyde Park. Properties can range anywhere from the upper $100,000s to low $300,000s, depending on the size, condition, location, and features of the property, which leaves room for rental returns for investors.
Central East Austin and East Austin are also desirable areas for UT students, but prices for single-family residences are much more expensive than other areas. This can be a good market to purchase and rent an apartment in a larger development, a popular method for owning student housing.
Why Invest In Austin Real Estate
A robust economy, favorable business conditions, and a large pool of working millennials are among the factors which distinguish the city of Austin and Silicon Valley has taken notice. In fact, several major Silicon Valley firms continue to maintain a significant presence in this Texas market. This, combined with the fact that local apartment development is set to explode, makes Austin a logical choice for investors.
Employment rate in Austin went up 2.2% in the last year, which means that it outpaced other top metro areas in the US. Furthermore, many of Austins jobs are well-paying tech positions, attracting millennials and making it a city of the future. As a large segment of the millennial population prefers to rent and delay homeownership for an extended period of time this represents another favorable condition for investors.
The capital of Texas is home to some of the largest tech companies in America. With low taxes and no state income tax, young graduated professionals continue to create new start-up companies in the area. Austin, or the Live Music Capital of the World, hosts some of the largest music festivals of the year including South by Southwest and Austin City Limits.
Northwest Austin
Known for its lake access, the northwest is home to the top school district in Texas and 2nd best school district in Austin. The area gets significantly more expensive as you move closer to the city center.
Northeast Austin
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Meet With A Financial Planner In Preparation For Investing In Austin Real Estate
When weighing the pros and cons of investing in Austin real estate, meeting with a qualified financial planner may be helpful. A financial planner is a professional wholl help you invest your money to reach your financial goals. These goals can range from generating income to saving for college to saving for retirement.
Find Agents In Austin
Connect with a local agent who knows the market inside and out and can evaluate properties from an investors perspective. With BiggerPockets Agent Finder you just:
One of the best investments in the Austin market is a multifamily property. Chances are, each unit will be continually rented due to the high occupancy rates of this city, and you can charge higher rents due to the market competition.
The Bottom Line
So, should you, as a real estate investor, consider the Austin real estate market right now? In short, absolutely. Why? Because as the data has shown, the Austin real estate market is one of the best real estate markets in the country. The market trend for Austin real estate projects a continued increase of buyers and renters in the coming months and years, which means the time to invest is NOW!
If youre a real estate investor who currently invests in Austin, TX, or youre interested in the possibility of investing in this city, let us know what you think about this data and the market in the comments below. We are happy to answer any questions and wed especially love to hear from investors on the ground in Austin about their experiences below in the comments!
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