Austin Economic Commentary 10.30.09
I listened to Austin economist Jon Hockenyos (President, TXP) speak this week and he says we’re past the bottom but it will be slow going for a while. He said the bottom most likely hit summer 2009.
Mr. Hockenyos reiterated that Austin is a blue dot in a red sea and is where smart creative people want to be. We know that and it’s why Austin will continue on the path of doubling in population the next 20 years … that’s another article per what that will look like but it makes for a sound real estate outlook.
A few notable points from the economist:
• 80% of stimulus spending yet to come into the economy. 50% to hit in 2010.
• Austin technology has shifted from hard tech to soft tech … “It’s not about making things, it’s about adding value.”
• Confidence and capacity to spend are slowly recovering – expect about another year before balance has been restored. Recovery is U-shaped at best.
• TX economic stats are some of the healthiest in the country.
• Californian’s move to TX, New Yorkers move to NCA.
One observation this week is that the W hotel has re-secured financing to restart their build downtown. I find this particularly good news because available commercial financing is a strong economic indicator. In other words, if the construction downtown stops mid-build, that is bad; if it continues as planned, that is good (remember the “Intel Not Inside” banner downtown).
I am asked almost every day how Austin is doing and my typical response is that it’s better than you may think. Average home prices in Austin are only down about 4 ½% in Austin from last year (compared with the hard hit cities – Phoenix, Vegas, the west coast – down 20 and 30 and 40% in some cases … Vegas the 4-yr loser at 39%). The Austin market has pockets that are still adjusting (over $500k, 2-year supply of homes over $1M, trendy east Austin) and pockets that are rockin’ hot (south Austin, homes around $200k).
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