The Austin Real Estate Market: Is There a Bubble?
I frequently hear the following question from my clients about the Real Estate market in Austin: “Are we in a Bubble market, and when is it going to burst?”
The clients that ask this question are typically Buyers wanting to time the market to try to buy during a “dip.” They also remember the recession of 2008/2009, when the bubble burst in sub-markets across the United States. So, are we in a bubble market? Five years after I initially began hearing that question, the market in Austin still hasn’t slowed significantly. I assert there is NOT a bubble, and here is why:
1. The Mortgage Crisis was Unique
Prior to 2008, the mortgage industry had become the "Wild West" with ludicrous loan types like Stated Income loans. Today, lending standards are much stricter, requiring documentation to substantiate income, which prevents the mass defaults we saw previously.
2. Geographical Supply Constraints
Many California markets are landlocked, with no room to build affordable housing. Without new supply, prices escalated as Buyers competed for limited options. Austin is different.
3. Plentiful Land Supply in Central Texas
Growth in Central Texas is occurring in all directions:
- North: Beyond Georgetown.
- South: Beyond Buda and Kyle.
- East: Along 290 beyond Manor.
- West/NW: Growth has swallowed Lakeway and moved into Jonestown, Lago Vista, and Dripping Springs.
4. Historical Resilience
In 2008-2009, Austin experienced only a minor flatline. Forbes even rated Austin the #1 market in America to ride out that recession. Since then, we have seen over 60% appreciation in values over the last 10 years.
5. Corporate Expansion and Job Growth
Recruitment of new business is the primary driver of our economy. Companies like Google, Apple, Dell, GMC, and Hewlett Packard are continuing to expand here. Even as more supply comes online, Austin remains the most desirable (and expensive) market in Texas.
Bottom Line
If you’re sitting on the sidelines watching to see if the market hits a major slowdown, you will likely look back 3-5 years from now and be disappointed that you didn’t join the fray sooner. Don't wait to hear yourself say, “I wish I had invested in Austin 5 years ago.”
Matt Prewett
A native of Austin, Texas, Matt has witnessed the city blossom from a hidden gem to one of the fastest-growing cities in America. He is dedicated to helping clients navigate this evolving market with expert local knowledge.
