With rising home prices and the migration of millennial tech workers in Austin, the outlook for single family homes in 2016 may only be a ‘moderate’ increase, according to Eldon Rude, principal of 360 Real Estate Analytics and a speaker during the 2016 Greater Austin Housing Forecast on Jan. 13.
“It’s a matter of us as an industry trying to find ways to preserve and provide the kind of housing that [buyers] are looking for,” Rude said.
According to data presented by Rude, the median price of single-family homes and the rental rate for apartments have continued to increase annually since 2010. The median price of single-family homes, townhomes and condominiums went from more than $175,000 in 2010 to nearly $275,000 in 2015; rental rates for apartments went from about $0.95 per square foot in 2010 to $1.35 per square foot in 2015.
Supply overall has also increased, as 21,000 new housing units were added in 2015.
“As we move into 2016, how many are we going to build?” Rude said. “I will argue that it’s not about demand.”
Brian Kelsey, principal and founder of Civic Analytics, forecasted a 3.1 percent employment growth, or 31,590 new jobs, in Austin in 2016, though most jobs may come from the tech industry, requiring high skills and education.
Kelsey said challenges for the community in 2016 will include closing the earnings gap and the loss of competitive advantage Austin has compared with other job markets.
“When will the housing costs in the urban core start to erode our competitive advantage?” Kelsey said. “For years, we’ve been able to point to the coasts and say ‘Come to Austin, we have a base of technology workers here, we haven’t reached out critical mass, it’s a wonderful community and it’s much cheaper.’ That is still true compared to markets like San Francisco, but it’s becoming less true compared to places like Raleigh-Durham.”
The third speaker, Malee Tobias, vice president of research for Newland Communities, said the demographic shifts and changes in consumer attitudes are affecting the types of homes being built. The main obstacle for the millennial homebuyer, Tobias said, is finding a home that fits their needs, as well as price.
Tobias challenged the housing industry to make creative, non-traditional homes that attract millennials, designing homes that offer amenities flexible room, or a large garage while still being affordable.
“Today, homes serve more as a lighthouse,” Tobias said. “It gives people a clear view and helps them navigate through a complex information- and technology-overloaded world.”