Total new-home closings: 9,724
Total population: 1,943,299
The good: A growing population and workforce keep vacancies low and development surging.
The bad: As developers struggle to keep pace with demand, lot prices increase, conflicting with the sweet spot in the market that’s around $200,000.
The bottom line: Even with signs of slowing in late 2014 and builders facing labor and lot shortages, a briskly growing population and less than two-month inventory among vacant units command attention.
Even though the Austin market displayed signs of possible slowing toward the end of 2014, a 16% year-over-year increase in permits in March 2015 proves that Austin remains a hot spot for more than just great music. Positive signs include a population that’s grown by more than 200,000 since 2010, an unemployment rate that dropped by a full% year over year in March 2015, and a 1.8% increase among total civilian employees. Difficulties include a sweet spot in demand among entry-level homes (around $200,000) challenged by increasing lot prices, as developers struggle to keep pace with demand. That said, even as the number of vacant lots rose in the final months of 2014, those numbers equated to just a 1.7-month level of inventory, making this a sellers’ market for spec homes.