More Austin jobs were created last year than any year in the citys history, and that momentum is expected to continue through 2015, economist Angelos Angelou revealed Jan.8 during his 30th annual and final economic forecast.
Job growth is projected to increase 7.7 percent in 2015, with nearly 70,000 new jobs expected to beadded to the Austin-area market.
"Our economy is red hot," Angelou said, projecting job growth in every major employment sector, particularly in the business, hospitality and retail fields.
But Austin has become the most expensive housing market in Texas, Angelou said, with average home costs approaching $300,000. The rising costs threaten to price many existing Austin residents out of the market should the city's housing supply not significantly increase,despite a 17.9 jump in new housing starts in 2014, he said.
"We cannot afford to have several years in a row of double-digit growth in housing prices," Angelou said. "We're not in a bubble, and we're not overpriced. We're selling at the right price for supply and demand factors, and I hope we can get the supplies fixed so the prices can go down."
Housing prices did not deter 66,000 people last year from relocating to Austin,mostly from other parts of Texas, California and Florida, Angelou said. That growth helped Austin become the country's 11th-largest city with a population nearing 1 million people, or only 40,000 below San Jose, Calif..
"It'll be very interesting for Austin—not that size matters—to become actually larger than the king of Silicon Valley," Angelou said.
However, Austin should not become reliant on growth to help bolster the economy, he said.
Great cities don't grow forever, Angelou said. At some point in time, we may double our population again in the next 20 years, but growth is going to stop.
Austin and the state of Texas are also at the mercy of the national housing market, which saw a 7 percent drop in housing starts in 2014 than the previous year, he said.
"Despite what we hear here in Texas and in Austin about the housing boom, the rest of the country still has a lot of catching up to do," Angelou said.
Housing aside, Austin continues to benefit from its growing technology industry. In 1990 the city had 53,300 tech workers making about $36,600 per year, compared with more than 121,000 tech workers today who earn on average $91,100 annually.
"I believe technology represents the heart of our economic strength," Angelou said.
However, several challenges remain, he said. Many entry-level employees, creative types and hospitality and retail workers who make up Austin's employee base increasingly cannot afford rent, especially in East Austin, Angelou said.
"I hope that this trend does not continue because that is very, very worrisome to me," he said. "These are people who don't want to own. They want to be flexible, and we need to make sure our city remains affordable to them."
He also cited Austin's increasing educational divide and ongoing traffic congestion as possible barriers to long-term growth and prosperity.
On a bright note, Angelou did project decreasing consumer gas prices will benefit consumers in Texas and the rest of the country.
"While oil prices may hurt Houston and West Texas, they're actually a benefit to the Texas economy overall," he said.