Is Austin in a real estate bubble? House prices are up over 30% and many are wondering, “Is this a bubble?”
According to Core Logic, at the end of 2021 home prices in the U.S. were up 18.5% over last year. As of today, Austin home prices are up 30.97% over February of last year. Wow!
Whereas the median price nationally is $350,000, the Austin median home price is $480,000. Many are wondering, “Is Austin in a real estate bubble?”
What is a real estate bubble? A recent article on KXAN.com said, “A housing bubble is characterized by a significant spike in house prices that isn’t related to other economic fundamentals, like labor markets, income or wealth, explained Stuart Gabriel, professor and director of UCLA’s Ziman Center for Real Estate.”
The primary cause of Austin’s high prices is high demand and low inventory. The drivers of this situation include:
- Remote workers. The Pandemic created the opportunity to work from home and many people realized, “I can live anywhere and work remotely.” Many decided I want to live in Austin because it has so much to offer.
- Household wealth in more expensive markets. Many of Austin’s buyers are coming from California where home prices are high. Austin’s prices look like a bargain.
- Austin’s job market. The job market in Austin is strong and it’s relatively easy to find a job. The Tech industry is a huge employer here.
- Low interest rates. I had several buyers get mortgages below 3% in 2021 and early in 2022. This is a big driver of buyer demand.
Are we in a bubble? Probably not, but that doesn’t mean home prices can’t go down. With mortgage rates going up into the 4-5% range many buyers will be unable to buy. This should create more supply and less demand. This could moderate prices and perhaps even lower prices.
As a local Austin real estate broker I work with Buyers and Sellers all the time. Feel welcome to give me a call at 512-516-4666.
