New home lot supply drops to cycle lows
Home design drives new home sales in Austin, and homebuilders are juggling in-bound hipsters with existing Texans. The state capital was among the top in the nation for net migration from 2016 to 2017, and shoppers are generally coming from expensive West Coast markets. Redfin’s data that tracks online home searches shows that nearly 30% of shoppers are looking from outside the market with the most activity from the Bay Area, Los Angeles, and Seattle. Ali Wolf, our Director of Economic Research, along with our Senior Vice President of Advisory, Scott Davis, spent time in Austin last week touring 15 communities and recap the highlights below.
Austin CBSA stats at a glance, powered by Zonda:
Jobs and lifestyle are some of Austin’s biggest selling points. The area’s average household income of $75,000 is 23% above national figures. Some of the big employers in the market are Apple, Whole Foods, Samsung, and Dell. The metro also hosts university and hospital jobs.
Unlike some markets where one cardinal direction of downtown is good while another is bad, there are pockets of strength throughout the metro with accompanying development. During our tour, the sentiment in the market was that sales have slowed in recent months, matching the normal seasonal pattern.
With prices rising (up 15% in two years), rates hovering around 5%, and affordability tightening (50% of households can afford the median priced new home compared to the historical average of 55%), the question top of mind was – what will motivate somebody to buy today? In Austin, there were two clear answers:
Regardless of the strategy, design execution is king. There were homes so wonderfully designed that our team had to stop and take a picture. Equally, there were homes that our team also photographed, but as an example of what to avoid (this wasn’t just subjective; the proof was in the sales rates). In some cases, even the coolest amenities struggled to save a community with poorly executed product or a lack of flow.
Knowing reason two is harder to execute on, here are the notable mentions from the trip that satisfy both regional newbies and Texans alike:
Prado: Continuity at its Finest.
Goodnight Ranch: The Stapleton of Austin.
Presidio Station: Authenticity to the Suburbs.