Austin Housing Forecast- Slow Growth in 2010, Improvements Later this Year an in 2011

I attended the 2010 Austin Housing Forecast yesterday morning. It was a very interesting event and several notable individuals spoke. The economic forecast was given by John Hockenyos and Eldon Rude.

The general consensus is the stock market and equity markets have come back to some degree but that could be largely due to the absence of alternative investments. (commercial property continues to languish, etc.) Mr. Hockenyos does not anticipate an increase in interest rates in the near future, but he did say when they rise we could very well see dip in the stock market as investors move money from stocks into other investments. He addressed inflationary concerns and said inflation has not affected the market yet, but it could happen as early as this year.

Both Mr. Hockenyos seemed to agree with my prediction that the reduction in new building permits and subsequently new home construction starts will cause a shortage of lots and new homes in the following years. (TPI January 6th post "Q4 Home Construction Down Slightly...") He pointed to the fact that building permits have been decreasing since 2006. More than 16,000 building permits were filed in 2006 compared with roughly 6,500 in 2009. Demand for new construction is down as well (less than levels seen in 2005 and 2006) but the current levels of demand have been decreasing inventory levels more every year.

The forecast touched on the job market in Austin and things are steady. Last year Austin did not see a loss in total jobs. This year Austin job growth is expected to be weak but in the black. Mr. Hockenyos anticipates an increase in job in 2011.

Mr. Rude cited a study that ranked the top 20 real estate markets in the United States. Of the 20 cities mentioned, 9 are in Texas.

On the whole the news was good. Austin and Texas continue to rank among the best in the nation. However, the majority of the findings stated that 2010 would be a slow growth/transition year with 2011 holding the majority of the opportunity.

Austin Business Journal's Comments are below:

Austin housing market OK,

will improve later this year

The spiraling home market has neared stabilization and could see a slight rebound in Austin this year, according to local real estate experts during a 2010 housing forecast Wednesday.

Speakers during the Austin Board of Realtors and theHome Builders Association of Greater Austin event pointed to the relatively better job market as one sign improvement is on the way.

The Texas Workforce Commission reported the area lost about 4,300 jobs in the 12 months ending November 2009, which is better when compared with cities like Houston and Dallas, which lost 88,900 and 50,700 jobs respectively.

The program was presented and moderated by Eldon Rude, who directed a residential real estate market study comparing Austin with 30 other U.S. metros. He said Austin builders cut new home production by about 19 percent last year, breaking ground on 6,490 new homes.

“Starts have stabilized in recent quarters, builders have closed more homes than they have started for the last three years. This strategy has resulted in far fewer inventory issues in the Austin new home market compared to the more challenged markets across the U.S.,” said Rude.

The study anticipates new home starts maintaining 2009 levels, primarily due to slow job growth through at least the first half of 2010.

Though home pricing and buying has improved, experts said the true test will come when interests rates begin to climb and the stimulus-fueled tax credits run out.