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Page 25 FEBRUARY 2015 • VOLUME 19 • ISSUE 10
Housing experts cautiously optimistic for 2015 By Naomi Bludworth
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ach year the Home Builders Association (HBA) of Greater Austin hosts its annual housing and economic forecast. This year was no different and over 550 industry professionals attended the breakfast event at the Renaissance Hotel to hear what they should expect to see happen in the local real estate and building industry in 2015. Coming off the heels of another banner year in real estate, you could almost smell the optimism in the room. The sea of smiles reaffirmed the sense that most anticipate an-
other great year for business and their pocket books. But experts warn, while there is reason to feel optimistic, cautious optimism is the name of the game in 2015. Kicking off the event was Jo Karr Tedder, president and founder of the Central Texas Water Coalition. The organization is an advocate for the preservation of the Highland Lakes’ role as an irreplaceable, natural resource that drives an important regional economic engine for the State of Texas, according to its mission. Her message served as a reality check that more work is needed in the areas of conservation, legislation and research and development to ensure Central Texas’ growing water needs are met for years to come. According to Tedder, we might still be in a drought for the next 10-15 years. “This is the new normal,” she says, “it’s not ever going to go back to the way it was.” Tedder warns we must do more to conserve locally, find new ways to create more useable water through desalination and other techniques and protect our reservoirs through legislation. Real estate analyst Ken Pearlman of Johns
Burn Real Estate Consulting gave an insightful presentation focusing on the fundamentals that lead to some easing in the builder market in 2014 and is expected to continue to do so into 2015. Because many affluent buyers purchased homes over the last several years, he expects the first-time move-up buyer market to contract, leading to slower sales in the $250,000-$450,000 price range. However, he anticipates more movement in the entry-level home buyer price points with the influx of “80s babies” ready to start purchasing their first homes. Pearlman further warned that Austin might be on the tail end of the positive housing trend. He noted that most housing market expansions last between two and five years. According to Pearlman, Austin is on year five of that housing cycle, leaving one to believe contraction in the market is not just expected; it’s inevitable. Celebrated housing expert Eldon Rude of 360º Real Estate Analytics echoed many of the sentiments of his colleagues, but focused on the fundamentals contributing to sharp price
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Wednesday, February 18 Austin CRS Bi-Monthly Meeting Westwood Country Club - 11:30 a.m.
Wednesday, February 25 WCR Denim & Diamonds Mixer 1012 Sugartree Ave. - 5:30 to 8 p.m.
AYREP February Networking Party Lil Woodrow's Southpark - 5:30 p.m.
SAVE THE NEW DATE May 2nd: HBA MAX Awards Hilton Austin Downtown
Tuesday, February 24 ABoR TREPAC Chili Cook Off ABoR New Office - 6 to 8 p.m.
It’s Really a No Brainer!
increases in the region—under supply. “While it is no secret that home prices in Austin have risen sharply over the last several years, the fundamental principle of demand exceeding supply has been the primary reason for our price increases, says Rude, not the speculative home buying that markets such as California and Florida saw during the last decade.” The months of supply of active listings for resale homes in Austin has remained below three months for nearly two years. In the past 12 months ending in Nov. 2014, the average sales price for a previously owned home increased nearly 7 percent. "If recent economic reports suggesting continue strong job growth in Austin prove accurate, says Rude, "I expect builders will increase their starts pace in 2015 over 2014, which was up 25 percent over 2013 at 11,243." Rude expects housing starts will top 12,000 by the end of 2015, with the large majority coming from the first-time buyer market with home prices $250,000 and under. RL
Wednesday, February 25 ABoR Member Forum: Town Hall ABoR New Office - 10 a.m. to 12 p.m.