Multiple forecasts for the Austin, Texas housing market suggest that home prices in the area will continue rising throughout 2020. And one survey ranked Austin as one of the hottest real estate markets in the U.S., in terms of long-range outlook.
But why? What makes the Central Texas city such a housing hotspot?
There are multiple factors at work here. But two of them rise to the top. Through 2019 and into 2020, the Austin housing market has gotten a strong boost from:
- A rapidly growing population that has increased demand for homes
- An ongoing supply shortage that increases competition among buyers
In short, there are plenty of buyers in the market searching for properties, but not enough homes to go around. Of course, this is true for many cities across the U.S. as we enter 2020. But the imbalance is particularly strong in the Austin-Round Rock metro area.
Steady Home Price Growth Expected in 2020
Over the past few years, home prices have risen across the entire Austin-Round metro area. But the biggest gains have occurred within the city itself.
According to a December 2019 press release from the Austin Board of REALTORS®, the median price for a single-family home within the city of Austin rose 10.6% in November 2019 compared to a year earlier. The median (or midpoint) is now above $400,000, and climbing.
Forecasters are predicting a continuation of this trend throughout 2020. Zillow, for example, recently predicted that home prices in Austin, Texas would “rise 2.8% within the next year.”
That might even be a conservative forecast. Given the current supply-and-demand situation within this housing market, it wouldn’t be surprising to see prices rise by more than 2.8% during 2020. But we’re wandering into the weeds of speculation here.
The bottom line is that home prices in the Austin real estate market have risen steadily over the past year, outpacing the national average. And there’s a good chance that trend could carry over into 2020.
In fact, a recent survey showed that economists and housing analysts expect Austin to be one of the top-performing local housing markets in 2020 in terms of home-price growth.
Experts Predict Austin Real Estate Market Will ‘Outperform’
On January 1, 2020, Zillow published a report based on its survey of more than 100 economists and real estate analysts nationwide. Among other things, they asked survey participants to “rate their 2020 expectations for home value growth compared to the nation in 25 large markets nationwide.”
In other words: They asked if those 25 biggest housing markets would outperform or underperform in 2020, compared to average home-price growth nationwide.
The majority of those who responded to the survey picked Texas’s capital city as one of the housing markets that will outperform the nation in 2020.
That report stated that “a whopping 83% of respondents said they expected Austin to outperform” average U.S. home-price growth in 2020.
This is not surprising to anyone who follows housing trends in Texas and nationwide. The hot real estate market in Austin has become increasingly competitive over the past few years, as more buyers move into the area. This is largely the result of significant population growth, as explained below.
Population Growth Drives Housing Demand in Austin
According to the U.S. Census Bureau, Austin’s population rose 20.2% from 2010 to 2019. Nearly one million people now call the city home, and that number is rising. The broader metro area, which includes the city of Round Rock to the north, has swelled beyond two million residents.
According to the Austin Chamber: “Because of its draw as a destination for migrating talent, metro Austin’s population surpassed 2.0 million in 2015. The decade ending 2017 saw a 34.1% increase in population, and growth was 2.7% for the year ending July 2017.”
The table below, created by the Chamber, show how Austin has outpaced both the state of Texas and the nation as a whole, in terms of population growth.
This trend has increased demand for housing on both the rental and purchase side. It has also increased competition among home buyers, which puts upward pressure on house values across the metro area. This is arguably the dominant factor driving those strong forecasts for the Austin housing market in 2020.
Bustling Job Market Attracts New Residents
As of November 2019, the unemployment rate for the Austin-Round Rock-San Marcos metro area was 2.5%. That’s based on figures reported by the U.S. Bureau of Labor Statistics.
By comparison, the nation‘s unemployment rate was 3.5% during that same month. Austin, Texas has had a higher level of employment than the nation as a whole for several years running. And that’s partly why so many people are flocking to the area.
A strong local job market boosts the Austin real estate market in several ways. For one thing, it attracts new residents from elsewhere in the country. A recent analysis from the Census Bureau showed that Austin is one of the top destinations for relocating job-seekers.
A few years back, the city ranked #1 for net migration among the nation’s 50 biggest metro areas. And in 2017, Austin had the highest level of residents who had recently moved in from elsewhere (among the 50 largest metros).
In the end, it’s a supply and demand story. Rapid, above-average population growth has increased demand for homes in the area. And that comes at a time when the inventory of for-sale properties falls well below what’s considered to be a “balanced” market. Prices tend to rise steadily under those conditions.
Disclaimer: This report contains forecasts for the Austin, Texas real estate market extending through 2020. Those predictions were provided by third-party sources not associated with the publisher. The Home Buying Institute makes no claims or assertions about future housing conditions.