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Market News and Trends

More on Austin-area prices and affordability


Following up on recent posts about rising home prices in Austin and Central Texas (Home prices are up …, most recently), more direct discussion of affordability is in order.  As a starting point, this chart from the National Association of REALTORS® (NAR), with one added data point, provides some national perspective:

Most and Least Expensive Metros 2013 (NAR) plus Austin

Clearly, the Austin metropolitan area isn’t the highest priced market in the United States, nor is it the lowest.  But prices have been rising over the past couple of years, and concerns about ongoing affordability are well-founded.  Still is this the most over-priced real estate market in the country as one industry media source stated recently?

How much do homes really cost here?  Here’s a comparison of the city of Austin and major nearby suburbs:

Average and Median Prices - Austin and Suburbs, 2014

Even in the metro area, the city itself doesn’t have the highest average and median prices.  That position is occupied by neighborhoods around the close-by south shore of Lake Travis.  At the other end of the market, there are six suburban cities with average and median home prices at or below $200,000 — far from exorbitant.

And how about the city of Austin?

Average and Median Prices - Austin, 2014

The labels along the X-axis of that chart are “MLS Areas” as defined by the Austin Board of REALTORS®.  As you might expect, the highest priced homes are closest to the central city and near Lake Austin and Lake Travis.  (See map.)  Even in the city, though, there are market areas with average and median prices around $200,000 and less.

So, what about affordability?  Of course, living affordably is about more than home prices, but NAR provides a useful tool for comparing cities, taking into account home prices and household income, the Housing Affordability Index.  The HAI is the ratio of median income to the income required to qualify for a 20%-down fixed rate mortgage for a median-priced home.  A higher HAI indicates a more affordable market than a lower HAI.  With that in mind, here is a sampling of major cities from around the country:

HAI and Population by Metro, 2012-2013

I added population and population growth to help in making comparisons.  Among these cities, the Austin metro is near the middle of the pack in terms of affordability, and just a bit more affordable than the national average.  Both Austin and the U.S. average HAI have lost ground in the past two years, and at nearly the same pace.  An important difference is the very strong demand for Austin-area housing — population growth in Austin about 30% higher than the second fastest-growing metro in this sample, and nearly 14-times the national change in population.  I commented on this in Case-Shiller and Market Bubbles a few days ago, and it is important to consider supply-and-demand market dynamics in judging price appreciation.

Workforce housing in and near central Austin is a real, and growing, issue, and local governments are working to mitigate the problem.  With rapid job creation and population growth, turning the tide will be difficult or impossible, but affordable housing is available nearby.  In any discussion of “over-priced” housing, an important threshold question is, “Compared to what?”

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About Bill Morris, Realtor

More than thirty years of business experience (high tech, client service, business organization and start-up, including many years in real estate) tell me that service is the key to success and I look forward to serving you. I represent both buyers and sellers throughout the Austin metropolitan area, which means first-hand market knowledge is brought to bear on serving your needs: -- Seller Representation is a comprehensive process that begins with thorough market analysis and consultation, continues with properly staging the home to achieve the highest price possible in a reasonable time on market, a complete program of marketing and promotion, ongoing updates and communication, closing coordination, and follow-up throughout (and after) the sale. -- Buyer Representation is also full service: shopping, previewing, price and market consultation, contracting, negotiating, coordination of inspections, appraisals, repairs, and closing details, and follow-up beyond the closing of your purchase to ensure your lasting satisfaction. Because the real estate industry is becoming more sophisticated and challenging every day, you need a professional that understands the industry and is positioned to stay ahead of the game. I go the extra mile to help you achieve your goals. That's why I constantly research the market and property values so your home is priced effectively from day one. I also make sure the public knows your home is for sale by using innovative advertising and marketing techniques to attract potential buyers.

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  1. Pingback: Another “over-valued” report | Bill Morris on Austin Real Estate - December 21, 2014

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