After reviewing the Texas commercial real estate market last week, we would like to review residential sale prices in the Austin and San Antonio metropolitan areas over the last twelve years. Texas housing markets has shown steady strength in 2012, and this will give you a comparison of how we stack up to previous years. In Austin the biggest appreciation year was 2000, due to the tech boom. San Antonio’s biggest year was 2003 from booming medical and biomedical industries.
[dottoro_gallery image_id=”13351″ align=”” add_to_gallery=”false” show_hoverelem=”true”][/dottoro_gallery]
Texas was not immune to the bursting of the housing bubble, as evidenced by both cities showing a decline in values in 2009. Even with the down years, Austin and San Antonio home prices have increase 41% since 2000, outperforming the national average of 32% (measured by the Case-Shiller 20 City Composite Index) in the same period. Further, values in Central Texas did not decline as much as those nationally, and have recovered far in advance of the rest of the country.
[dottoro_gallery image_id=”13348″ align=”” add_to_gallery=”false” show_hoverelem=”true”][/dottoro_gallery]
As you can see both markets have performed well over the past decade – Austin averaged 4.4% annual appreciation and San Antonio averaged 4.8%. This is nice, steady growth – far different than the extreme speculative driven appreciation seen in California, Nevada, and Florida.
The distribution of sales based on price range can also tell us important things about a residential market. In the following charts we have highlighted those years and price categories that had greater than 10% market share.
[dottoro_gallery image_id=”13349″ align=”” add_to_gallery=”false” show_hoverelem=”true”][/dottoro_gallery]
In Austin sales below $120,000 fell below the 10% threshold in 2006 and have continued to decline since then. Likewise, sales between $120,000 and $160,000 represented less than 10% of market activity in 2011 and 2012. In all likelihood, this will continue due to the restraints on developments in these price ranges. This doesn’t mean there is not a market for homes at this price. Quite the opposite – however the cost of land and development has made it harder for home builders to bring homes to market at these values. Any resales in these price points are absorbed quickly by the consumer, whether an end user or investor.
At the same time, sales between $200,000 and $400,000 have become well-established contributors to our market over the past few years, representing 34% of sales in 2011 and 36% of sales so far in 2012.
Buyers wanting to see 50% of “sold inventory” would have to extend the target price above $200,000 for the first time this year.
Let’s review at San Antonio.
[dottoro_gallery image_id=”13350″ align=”” add_to_gallery=”false” show_hoverelem=”true”][/dottoro_gallery]
Sales from $100K to $150K remain strong due to the strength of federal and military jobs from the three bases in the area.
The good news for San Antonio’s growth is that of the four major metropolitan cities in Texas, San Antonio has had the strongest growth in both exports and GDP since 2005. In fact, exports as a percent of GDP have more than doubled between 2005 and 2010. Although San Antonio’s overall GDP is the smallest of the four Texas metro areas, in terms of exports as a percentage of GDP, San Antonio ranks third and surpassed Dallas in 2009. This should help continue strength in the housing market.
Are all home prices increasing? Not necessarily. All four metros in Texas have submarkets that have large inventories of developed lots and no absorption. And all four metros have submarkets where average sales prices have actually declined over the past twelve months. Low inventory and strong demand continue to exert upward pressure on prices, however, and I believe that effect will be felt pretty much across the board over the next year or so.
So why go through this exercise?
For me, even though I have been a Texan for over 45 years, what is the attraction?
Well, besides it home of everything deep fried (visions of Texas state fair stick with me), there’s strong job creations and low cost of living. Any of the four metros have plenty to do and you can wear boots 365 days of the year at any age. But it is more than that. If you talk to young and old moving here it is the cost of housing and the abundance of opportunities drawing them to our state.
If you take a cost of living calculator and compare Los Angeles with Austin the cost savings are over 30%; Los Angeles to San Antonio over 32%; Los Angeles to Houston closer to 34+%.
You can afford to actually live in Texas. Not merely exist. Our cost of living really makes it for us here, where homes tend to cost less per square foot, gas is about $0.70 cheaper a gallon, etc. Even our higher property tax rate doesn’t make up for the difference you’ll feel in your pocket books coming from a more expensive area, and you’ll enjoy knowing those taxes go directly to the school district your home is in – meaning it goes right to the school your child actually attends, verses to the state where it gets dished out or wasted as they see fit.
We have no personal income tax (one of only seven states) and if you don’t like the high sales tax (minimum of 6.25% and maximum 8.25%), learn how to spend less. Our total tax burden is among the nation’s lowest at 7.9% of income (45th nationally), well below the national average of 9.8%.
Besides, where else but Texas do you see people hang maps of their state in their homes as a point of pride?
Where else can you get good Tex-Mex? I don’t know if people move here because of Tex-Mex, but I have two kids who lived in other states and came back asking for it. Food in Texas makes your taste buds sing.
Not only does Texas have some of the best food offered in America, it’s served in portions that would surprise even Paula Deen. When you’re in Texas you’re welcomed with open arms and a full plate of food, what other reasons do you need?
So yes, there is a reason for so many moving to Texas, about 1,300+ people per day according to the IRS. I am sure that most get sick of Texas pride and bragging. But as evidenced above there are good reasons for the attraction.
The pride Texans have for our state predates the Civil War and is an intricate part of our every day life…but don’t take my word for it. Come to any city in Texas, find a busy area of town and shout something like “Texas sucks and I wish we could give it back!!”…Best you make funeral arraignments ahead of time. Sure, every state has a little pride, but nothing beats Texan pride (this is where all non-Texans roll their eyes).
Equity and consumers will continue to be attracted to moving to our state, based on great fundamentals and a lot of pride. Great football, great friendship, great BBQ and great quality and cost of life and much more should insure the growth of this state.