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Where people want to live

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Written by Christi Covington Friday, 11 April 2008

Major growth trends expected to keep local real estate strong

Lots of people want to move to Southwest Austin and that is a good thing for the local housing market, according to Ryan Robinson, the demographer for the City of Austin.

In 2004, he completed his last major forecast that predicted some of the city’s greatest numbers would move to Southwest Austin by 2010. From 2000-2010, he estimated the most people, 10,254 new residents, would come to the 78748 Zip code, near IH 35 and Slaughter Lane, alone. With only two years left until those estimates expire, he thinks the projections are on target, and as a result, homes will continue to sell, despite the national trend.

“Austin is today one of the healthiest housing markets in the country,” he said. “We’ve always been the envy of many other cities, but we find ourselves in a really good position right now.”

That is true, he added, especially for Oak Hill and the Circle C area.

“Oak Hill, I would say, as a sub-region is healthier than Austin and if Austin can maintain its relative economic health over the rest of the country then I don’t see anything that tells me that Oak Hill is not going to maintain its position as being one of Austin’s better, stronger neighborhoods,” he said.

Keller Williams Realtor Shelli Williams does most of her business in the southern and western sides of Austin and said although some people point to declining sales in the last year, she is not worried.

In March, she closed on five homes—one had multiple offers and two sold in less than 30 days after entering the market. She admits that some young realtors have struggled to enter the profession lately, but most of her colleagues are doing well. She has her own gauge for how she is doing.

“I am not starving to death,” she said.

Best because of a bust

Robinson said the main reason Austin will not experience the same upset as other cities is because it never developed the same housing market growth.

“Yes, housing prices have gone up in almost every part of the region, probably more than most people would like, but it has not been the kind of thing that when you buy a house for $175,000 that the next year you can sell it for $350,000,” he said. “We have had a much more gradual, reasonable, steady increase in our values, so that today is one of the big sources in our stability. Plus, something very important and basic is we are creating new jobs and you don’t see that in every part of the country.”

The unemployment rate for the Austin/Round Rock metropolitan in November was at 3.5 percent compared with 4.1 percent for Texas and 4.7 percent for the United States. Ironically, Robinson said the tech crash in 2001 may be Austin’s saving grace because it forced the city to slow its growth and diversify the job sectors for local employment.

Why Southwest?

So as people continue to work and move to Austin, south of Town Lake is a popular place to live—and it is an eclectic group of residents moving there, according to Williams. A few are still relocations from California, most are first-time buyers taking advantage of low interest rates and those moving around the city. Others are older residents ready to downsize their home.

She said the community’s culture, easy access to the airport, proximity to the lakes, shopping and major transportation infrastructure all make the area attractive at any price, but the main reason for growth is basic affordability and convenience.

Prices can range at the very low end at around $100,000 and escalate to the millions farther west.

“You can get a lot for your money,” she said.

Robinson has also paid attention to who is moving into the neighborhoods, focusing on the type of growth in concentrated areas. Middle class, first- and second-generation Hispanic families are moving into the neighborhoods closer to IH 35. One southeast neighborhood in particular is an extreme and exclusive example. Dove Springs on Stassney Lane had a 95 percent Latino population when last recorded in the 2000 census.

The opposite is true for the neighborhoods to the west. They are becoming increasingly Caucasian and attracting more and more Asian residents. Again, these neighborhoods are dominated by families, with eighty-five percent of Circle C’s residents falling into this category.

In the future

During the next several years, Robinson expects property values to increase steadily with all the trends he has already seen accelerating. Oak Hill particularly will become “more of a Westlake for middle class families,” he said.

According to the Austin Board of Realtors, homes in the 78735 Zip code sold for $375,000 at the median price in 2007. In the first few months of 2008, that price has jumped to around $600,000. Values are going to escalate because limited land is available for developers to build, Robinson said.

It will overall be less commercial, he thinks, because residential builders will fight for the land. What he does anticipate is redevelopment, such as at the retail center at the Y in Oak Hill.

“This is a perfect candidate. I would not be surprised if you see this as a mixed-use, residential, loft-like development,” he said. “The future of Oak Hill is going to be less and less traditional high-end single family subdivisions and more what we are seeing in the urban core—and that is relatively upscale, mixed use condos.”

House trends
According to the Austin Board of Realtors, the City of Austin’s housing market is doing well compared to the national market. Although overall home sales are expected to drop in 2008 by 7 percent compared to 2007, home prices will steadily increase.
Austin area	Number of sales	Median sold price	CDOM*
Jan. 1- Feb. 28, 2003	2,143	$148,250	70
Jan. 1- Feb. 29, 2004	2,212	$148,000	77
Jan. 1- Feb. 28, 2005	2,827	$153,500	81
Jan. 1- Feb. 28, 2006	3,261	$168,025	74
Jan. 1- Feb. 28, 2007	3,198	$175,500	72
Jan. 1- Feb. 29, 2008	2,832	$183,500	80
78735
Jan. 1- Feb. 28, 2003	32	$334,750	125
Jan. 1- Feb. 29, 2004	25	$300,000	158
Jan. 1- Feb. 28, 2005	22	$326,500	99
Jan. 1- Feb. 28, 2006	40	$374,393	114
Jan. 1- Feb. 28, 2007	45	$295,990	88
Jan. 1- Feb. 29, 2008	24	$661,000	162
78739
Jan. 1- Feb. 28, 2003	19	$246,000	80
Jan. 1- Feb. 29, 2004	26	$254,000	90
Jan. 1- Feb. 28, 2005	44	$251,920	116
Jan. 1- Feb. 28, 2006	41	$325,000	65
Jan. 1- Feb. 28, 2007	39	$335,000	72
Jan. 1- Feb. 29, 2008	49	$312,500	105
78745
Jan. 1- Feb. 28, 2003	87	$120,000	74
Jan. 1- Feb. 29, 2004	76	$121,750	61
Jan. 1- Feb. 28, 2005	62	$112,000	94
Jan. 1- Feb. 28, 2006	92	$135,000	48
Jan. 1- Feb. 28, 2007	83	$148,000	34
Jan. 1- Feb. 29, 2008	71	$169,900	79
78748
Jan. 1- Feb. 28, 2003	72	$135,000	52
Jan. 1- Feb. 29, 2004	63	$139,000	99
Jan. 1- Feb. 28, 2005	105	$139,999	94
Jan. 1- Feb. 28, 2006	96	$155,438	47
Jan. 1- Feb. 28, 2007	113	$173,500	81
Jan. 1- Feb. 29, 2008	111	$175,000	72
78749
Jan. 1- Feb. 28, 2003	68	$180,500	68
Jan. 1- Feb. 29, 2004	67	$177,000	96
Jan. 1- Feb. 28, 2005	92	$175,000	100
Jan. 1- Feb. 28, 2006	118	$197,500	50
Jan. 1- Feb. 28, 2007	74	$226,250	44
Jan. 1- Feb. 29, 2008	64	$224,492	177
* Comparitive to average days on market

Southern migration

In the United States, the fastest-growing metro areas are in the South. In the South, the most people are moving to Texas cities, and in Texas, the fastest-growing metro area is Austin-Round Rock. It increased by 4.3 percent between July 1, 2006 to July 1,2007 with 65,880 residents moving into the area.

Source: U.S. Census Bureau