The new year is underway and buyers, sellers and real estate professionals are keeping a close watch on the real estate market trends for 2020. Whether this is the year you’re thinking of entering the Austin real estate market for the first time, are ready to downsize or are looking for an investment property, here’s the path the real estate market is expected to take.
Demand for Properties Remains High
According to the annual Urban Land Institute’s Emerging Trends in Real Estate Report, Austin ranks first out of 80 U.S. cities for overall real estate prospects for 2020, based on the results of a survey of 110 economists and real estate experts. The bustling economy in this area continues to be fueled by companies relocating, expanding or establishing secondary headquarters in Austin. As a result, the city is attracting a growing number of professional talents with jobs in various sectors, including technology, manufacturing and education.
According to the U.S. Census Bureau, Austin’s population rose 20.2% from 2010 to 2019. The current rate of population growth in Austin is around 45,000 people per year, around 123 people per day. This creates the continuation of strong demand for all kinds of housing including apartments, new homes or resale homes. In short, there are plenty of buyers in the market searching for properties, but not enough homes to go around. The good news is that Austin remains ambitiously committed to not only business expansion, but real estate expansion as well.
Home Values on the Rise
Economists and real estate experts predict that Austin home values will outperform the nation’s average, 2.8%, in 2020. While this forecast is encouraging for sellers who’ll likely have plenty of potential offers, it’s sure to heighten worries of buyers who are concerned about Austin’s affordability. An important point to consider, however, is that compared to similar cities such as Seattle or San Francisco, Austin is significantly more affordable and has a broad range of what you can get for your money.
In Austin, for example, newer, larger family-sized homes have a median price point of $388,065. Whereas in San Francisco, the median sale price of a single-family home in the city soared to $1.6 million in the first quarter of 2019. According to the cost-of-living calculator on the BankRate.com site, the average monthly rent in San Francisco is $3,230 compared to $1,442 in Austin, per RENTCafe’.
Austin Will Continue to Attract Investors
The upward trend in Austin real estate prices means that appreciation will be strong in the Austin housing market. This means that Austin will be one of the top locations for real estate investing in 2020 and beyond. To illustrate just how quickly properties have appreciated in Austin, consider that a median-priced home in the East Austin zip code 78721 cost $137,400 in 2009. The median home value in the same zip code jumped 130% over the past decade to $315,400.
Neighboring communities, including Round Rock, Buda and Kyle are experiencing the same effects and are also presenting excellent investment opportunities.
Mortgage Rates Will Stay Low — for Now
There’s emerging consensus that rates will remain low this year. Forecasts from Freddie Mac and the Mortgage Bankers Association back this up, both predicting 2020 rates within the 3.7% and 3.9% range. Fannie Mae actually predicts rates will clock in even lower, vacillating between 3.5% and 3.6% throughout the year.
Thanks to these continued low rates, refinancing should remain a popular choice in the new year. And for homebuyers, they’ll be able to afford more house than they would have otherwise. Low interest rates also spell good news for sellers, as more people will be able to afford to buy a home if mortgage payments remain affordable.
The Movement Known as “Hipsturbia” Will Grow in Popularity
The Urban Land Institute recently named “hipsturbia” as one of its top real estate trends to watch in 2020. What is it? It’s a trend where a growing number of millennials are moving out of cities for “cool” suburbs where live-work-play environments thrive. The New York Times first reported on the “hipsturbia” trend back in 2013, but now the trend has expanded to other major metro areas, including Austin.
Millennials are discovering that smaller communities surrounding the capital city can all offer the same charms — art galleries, trendy restaurants and a vibrant nightlife — while being more affordable than living in the heart of the city. Older millennials who want to buy their first homes and start families are expected to form the foundation of “hipsturbia” enclaves around the country in the new year and for years to come.
While national real estate numbers can provide a general “big picture” outlook, real estate market trends vary depending on specific areas of the country. As local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood.
Whether you’re selling or buying, you can take advantage of the current trends by partnering with one of Habitat Hunter’s professional real estate agents. Our experienced team always keeps pace with the changing trends and is ready to help you make a well-informed, researched decision.
