The residential real estate economy was the focus of a presentation Eldon Rude, founder of local market research and consulting firm 360 Real Estate Analytics, gave to members of the Oak Hill Business and Professional Association on Oct. 2.
He explained that although national consumer confidence levels are at their strongest since the recession, Austin is not selling as many homes to first-time homebuyers as it has in past real estate cycles.
"I look out and see the biggest opportunity in terms of housing being in those [below-$200,000] price points. Some of the large-level builders are beginning to aggressively move into that space around the country, and I think we will see that more and more in Austin," he said.
Most of that growth will likely take place away from the city center, he said.
During the past year, the U.S. economy has added about 3 million jobs, with 1 in 8 of those jobs being created in Texas, Rude said.
"We are in an amazing period in Texas in terms of our economy," he said.
He noted Austin has seen strong population growth.
"When those people move here, they've got to live somewhere. So that has created in our market a fairly significant imbalance in supply and demand for housing," he said, noting growth has caused significant price escalation in all types of housing.
The average rent for a 1,000-square-foot apartment in Austin has gone from about $1,000 to $1,250, he said.
Land purchasing and real estate entitlement can be more difficult in Southwest Austin than in other areas of the city, Rude said.
"Whether it be environmental, whether it be pricing, whether it be water, whether it be regulatory, you see a lot more barriers to entry [into the market]," he said.
Rude said ultimately that means more stable pricing and that there could be more price increases if strong demand in the area continues.