According to a recent analysis by the finance website SmartAsset, Austin, Texas is the second most stable housing market in the United States. Boulder, Colorado was ranked first. Home prices in Austin have risen more or less steadily for many years, while avoiding the extremes of other real estate markets across the country.
Austin Housing Market #2 in the Nation for Stability
This isn’t particularly surprising, when you look at the history of this housing market. Like most metro areas in Texas, the real estate scene in Austin was relatively stable during the housing crisis that began around 2008. Home values in the area dipped slightly during those years, but it was nothing like the price plummet seen elsewhere across the country.
But what is a “stable” real estate market exactly? According to SmartAsset, these are cities and metro areas with a steady upward trend in home prices and (perhaps more importantly) a low probability of depreciation in the near future.
As the company explained on its website:
“In order to complete our analysis, we relied on two factors: the overall home price growth rate since 1991 (our growth factor) and the average odds that a homeowner in a particular market would have experienced significant price declines within the decade after buying a home (our stability factor). In order for a price decline to be significant, home prices in any quarter within 10 years had to fall by at least 5% relative to the original home price.”
Since 1991, home prices in Austin’s housing market have risen by a whopping 271%, according to the study. More to the point, homeowners haven’t suffered any major price declines in that time.
Boulder, Colorado topped the list with the most stable growth over the past 25 years. House values in that city have risen more than 300% since 1991, again without any major declines.
Here’s a complete list of the top-ten most stable housing markets:
- Boulder, Colorado
- Austin-Round, Rock Texas
- Casper, Wyoming
- Bismarck, North Dakota
- Midland, Texas
- Fort Collins, Colorado
- Billings, Montana
- Missoula, Montana
- Denver-Aurora-Lakewood, Colorado
- Grand Forks, North Dakota
Supply and Demand Driving Home-Price Growth
You might have noticed a common trend in this list, in terms of geography. These cities are mostly located in the Midwest, while the east and west coasts are not represented at all. That’s no coincidence, but rather a direct result of supply and demand.
According to Daren Blomquist, the vice president of RealtyTrac: “In the middle-America markets there is more room to create more supply than in the coastal markets, which are often constrained geographically as well as by more regulation.”
As the report’s authors pointed out, strong demand continues to drive price growth in the Austin real estate market. The city has much to offer young people in particular, which helps fuel the local housing market. Austin has been ranked as one of the best cities for college graduates, partly due to the strong job market and vibrant nightlife. This brings more upwardly mobile residents into the market, boosting demand for homes.
But housing supply is not as constrained in Austin, as it is in places like San Francisco and New York City. There’s plenty of room to build around the city, and land is relatively cheap (especially when you get further out from downtown). So while housing demand continues to lift home prices in Austin, it does so at a more sustainable pace than many metro areas.
Disclaimer: This story includes third-party data and assessments that are deemed reliable but not guarantee. As a general rule, the Home Buying Institute does not make predictions or forecasts relating to the real estate market.