State of the Market Report: Austin
Job growth in this burgeoning millennial tech hub has been nothing but robust in 2014, and the trend is expected to continue in 2015. The unemployment rate was down in the fourth-quarter to 3.9% from 4.7% a year ago. Affordability in Austin continues to squeeze young and entry-level buyers out of the new home marketplace. The share of new homes under 200k in the market dropped by 16% in 2014, and the decline is only expected to continue. Although 2015 calls for continued market growth, it will not be as much of as an easy target as in previous years.
The new home market toward the end of 2014
matched the strong economic growth. Austin saw a 4.0% year-over-year growth in
closings between 4Q13 and 4Q14 and a 13.7% rise in single-family housing
starts. Annual closings were up as well with a 5.2% increase compared to 2013. Starts
in the fourth-quarter hit an annual rate of 10,686, up 500 units from the
previous quarter. Total housing inventory went up in 2014, but stuck at
historically low levels.
“The evaluation of new home activity by price range shows that affordability in Austin continues to erode with the market share of new home starts priced below $200,000 dropping 16% in the past year. New construction activity priced between $200,000 and $300,000, the largest segment of new homes being built, has seen its market share climb from 34% to 39% over the past year”
“The count of the quarterly numbers from Metrostudy’s survey shows the Austin market finished the year on a high note, exceeding expectations in the process. The annual rate of new single-family housing starts generated by builders is 13.7% above last year’s 4Q13 level, an increase of 1,284 units.”
“The months of supply of vacant development lots has decreased from a high point of 41.3 months reached in 2Q09 to the current supply of 16.6 months. Developers [also] can no longer provide lots for the [under $200,000 market] to meet the demand that requires more affordable housing in Austin”
DR Horton, KB Home, and Pulte Group closings accounted for nearly half of the market share in the fourth-quarter, collectively closing more than 700 homes.
