With one of the strongest state economies in the United States, Texas is a popular place for real estate investors and market-watchers. However, since the Great Recession of 2007 - 2008, many people have been anxious about real estate markets in major areas of the United States. Home values are skyrocketing and mortgage rates are low in major cities across the United States. Is this a sign of another recession? How is the health of the Austin real estate market? These are just some of the questions that we aim to answer.
Demand for Single-Family Homes Soars
In the Austin metropolitan area, single-family homes were sold throughout the May and June 2017. This increased demand for homes caused the total value of homes sold to soar beyond $1.2 billion. This sales volume is 18.4 percent larger than the volume in May 2016. With such a high volume of cash flow, investors are flocking to urban areas in Texas to take advantage of earnings from mortgages and real estate investment packages.
While the value of these closed deals is impressive, the quantity of sold homes is also an insightful figure. In May alone, 3,170 single-family homes were sold in the Austin metropolitan area. This demand is likely being spurred by growing consumer confidence and job growth in Texas' urban centers. This spike in demand has also caused the prices of single-family homes to increase. Per data from June 2017, the median price of single-family homes has risen to $321,600. This figure demonstrates that home values have increased by approximately seven percentage points over a one-year period. Market analysts from Zillow predict values to increase by another three percentage points before 2018. Within Austin's city limits, home values are higher due to greater demand from convenience and steeper costs. The median home value in the city is currently $380,000.
Bubble or True Prices?
Due to the higher home values and low mortgage rates, some people believe that the market is eerily similar to the pre-crisis market of 2007. Predicting whether or not the real estate market is in a bubble requires a large amount of speculation, but many experts believe that the current conditions can be attributed to the improving economy of Central Texas. If this is true, then a housing crash is certainly not on the agenda for the near future.