Residential Real Estate Inventory is On the Rise - And That May Be a Good Thing!
All throughout the United States there appears to be a nationwide trend of lean housing inventories. But not in Austin. This is one of very few cities that is bucking the trend with new residents finding a minor surplus of homes. The housing surplus might not actually be a bad thing – and there are some mitigating factors that could help balance the market.
Austin is Growing Rapidly
Looking at Austin’s real estate market proportionally, it’s easy to see why a surplus of housing could actually be a positive thing. This is a city that tops nationwide charts for activity. New residents are flooding Austin, to the point that more people moved to this city than anyone expected in 2016.
For instance, as of 2014, new residents that moved to Austin between 2010 and 2014 made up 7.8% of the population. Austin sees upwards of 158 new residents each and every day with an average 108 of those residents being migrants from elsewhere in the U.S. or abroad. People are streaming into this city to take advantage of a strong job market, a healthy economy and a relatively low cost of living – trends that are all expected to continue for years to come.
The flood of people coming to Austin helps put the housing surplus into perspective. Certainly there is a surplus currently but that doesn’t mean homes are languishing on the market. Demand is very high, particularly in sought-after areas like Lakeway and Round Rock. That demand is keeping the housing market competitive. In fact, Realty Austin reports that housing prices have risen 6.6% between March 2016 and March 2017. As of March 2017, homes were being snapped up quickly, only on the market for an average of 50 days.
Anti-Gentrification Measures May Increase Competition Further
Moreover, Austin city officials recently announced an ambitious new plan to fight gentrification within certain areas of the city. This plan includes a $600 million budget that is earmarked for buying properties and building, preserving or refurbishing homes.
Normally, anti-gentrification measures tend to negatively impact the real estate market because tightly regulated housing keeps costs low and markets less competitive. However, in Austin’s case, this might actually make the market more competitive – and provide some opportunities for developers.
To start, a large portion of this new budget looks like it will be devoted to the purchase of existing homes. By removing these homes from the market, there is a good chance that the housing surplus will vanish which means prices stand to go up elsewhere in Austin. Secondly, some of this money will go towards buying land so that the city can build sustainable housing for lower income residents. Now is a great time for developers to submit their proposals, particularly those developers looking to show off eco-friendly and energy efficient housing designs.
Surplus housing isn’t always a sign of an unhealthy housing market. Look to the future because with so many businesses and individuals flocking to this city, the Austin housing market looks like it will continue the upswing it has enjoyed over the past few years.