According to Bloomberg, a 6% increase in foreclosure notices in 2Q 2012 signals a housing rebound. They quote Anthony B. Sanders, economics professor at George Mason University in Fairfax, Virginia, as saying “you have to get to the point where the market can heal itself and foreclosures and price adjustments are the only way that can happen.” They also note that delinquencies are falling and there are fewer home seizures, and that new inventory from the foreclosures that do occur may drive a drop in prices. Read more.
According to Forbes Magazine, Austin is the best city to find a job “based on employment growth trends, percentage of growth compared to last year, mid-term growth over 5 years, long-term growth over 10 years, and current year growth rates.” Realty Austin explains why this is important:
The housing market depends on jobs. People move to where the jobs are. When people move, they need housing and housing becomes higher in demand. As rent occupancy rates rise, homeownership becomes more appealing and the demand for housing improves home prices. Austin’s job growth is the best indicator of an improving real estate market which continues to improve as long as we have jobs and people move here for those jobs.
Paul Krugman writes about the connection between more housing nationwide, and more jobs:
it’s not hard to see how this recovery could become self-sustaining. In particular, at this point America is seriously under-housed by historical standards, because we’ve built very few houses in the six years since the housing bubble popped. The main thing standing in the way of a housing bounce-back is a sharp fall in household formation — econospeak for lots of young adults living with their parents because they can’t afford to move out. Let enough Americans find jobs and get homes of their own, and housing, which got us into this slump, could start to power us out.
Austin has had comparatively low rates of unemployment, in fact our economy has been rocking along pretty well while other parts of the U.S. have seen declines. The 2011/2012 economic forecast from Angelou Economics (pdf) said that “Austin’s economy will experience solid job growth in 2011 and 2012, with employment increasing by 18,800 and 25,100 jobs, respectively.”
New jobs will be created across the Austin economy, with leisure and hospitality and information showing the biggest gains. Job growth will remain strong in government, education and health care services, and retail. Growth in manufacturing as well as the transportation, warehousing, and utilities sector will remain slow. Professional services will have slow growth in 2011, but will approach pre-recession growth trends in 2012.
That as a year ago. On January 26 of this year, MetroStudyReport said that job growth had been positive, and housing inventories stable, for Austin through 2011.
In the 12 months ending in December 2011, 16,100 net jobs were gained in the Austin MSA. “In our view the most promising information from the most recent job figures is the minimal number of jobs lost in the last year in the Government sector. As recently as Spring 2011 reports indicated that job losses in these sectors could be significant in 2011 and 2012,” said Eldon Rude, director of Metrostudy’s Austin Region.
During 4Q11, 1,269 homes were started, up 17% from 4Q10. During that same time, 1,552 homes were closed, up 8% from 4Q10. The annual rate of starts in 4Q11 was 6,105 units, up 5% (261 units) from 4Q10. The annual rate of closings in 4Q11 was 5,941 units, down 7.8% (506 units) from 4Q10. “The annual rate of starts has been generally flat for nearly 3 years. The fact that annual starts exceeded annual closings in 2011 suggests that with inventory levels so low, new demand is resulting in the need to start more homes,” said Rude.
Just read an exuberant post about how “Austin Real Estate Is Kicking Major Butt”: with relatively low 6.7% unemployment rate, Austin’s job market is a magnet, home sales are up, values are stable, mortgage rates are low. According to this post, it’s a healthy market.
Though the Austin American-Statesman doesn’t say Austin’s “kicking butt,” it suggests that the “housing market might be recovering”, noting that home starts were up 27% in 3Q 20ll and there was a 2% growth rate in jobs over the 12 months ending in August – that’s 15,500 new jobs. The Statesman’s piece is not altogether rosy. It quotes Eldon Rude of Metrostudy: “Although Austin continues to exhibit the key drivers for housing demand — job creation and population growth — the one ingredient we are missing is strong consumer confidence. Considering the dark economic news that has circulated in the last 60 days, it is hard to expect that the demand for new homes will pick up strongly in the short term.” However the Statesman says that “a number of builders are putting new homes on the ground and say they are seeing encouraging signs.” Scott Eckley, vice president of sales for Pulte Homes in Austin, is quoted as saying “for the month of September we are going to sell more than 75-plus homes net, which is obviously a robust number.” He says that the key to the healthy market is continued job growth.
Another good sign from the Statesman: 221 homes will be added to the local inventory via new development in the Mueller subdivision, the former site of the Austin airport which was repurposed as a sustainable development project by the City of Austin and Catellus Development.
My view is that the market has picked up steadily for the last year, and we are approaching a balanced market where there’s around a six month supply of homes on the market. I think this will hold into the spring, meaning a robust 2012 and contninued strong sales through the fall and winter, if the economy remains fairly stable. This is probably due to pent-up demand and the incredibly low interest rates.
Contact me (mlebkowsky at cbunited.com) for more specific and concrete information about the neighborhood you’re interested in.
Now called Circuit of the Americas, the new Forumula One track in southeast Austin will have a big impact on the area. Big news today is that the track will also host MotoGP, a premiere motorcycle racing event. (More on Circuit of the Americas at Wikipedia.) Follow this link for images of the site southeast of Austin.
These events could trigger a surge for Austin real estate through the creation of new jobs, and through potentially attracting new real estate investment.
Here’s the recent press conference video:
As a University of Texas football fan, I was happy to see an end to the team’s four game losing streak yesterday. In yesterday morning’s paper, I read a fascinating article about Eddie O’Connor, Ph.D, whose business is to overcome losing streaks and who talked about the psychology behind ’em. In a recent paper, according to the article, O’Connor lists “nine common reactions to losing streaks: focusing on losses, focusing on mistakes, blaming teammates, blaming one’s self, utterly giving up and so on. He suggests that none of those helps.” He says that losing kills motivation.
The Statesman reporter also talked to Art Markman, a UT psychology professor, who suggests that winners are focused on positive outcomes, and you have a problem when your focus changes to avoiding negative outcomes. When you’re trying not to fail, you tend to think “about skills that are better left un-thought about,” for instance, “A quarterback who’s worried about the position of his arm isn’t thinking about the pass rush or where the linebacker went.” You get into an “avoid” state rather than an “approach” state. “Approach states result in high-energy emotions such as elation and joy. Avoid states foster sadness and despondence.” One way around this is to focus on “process goals” associated with specific tasks. “Process goals ask a question: ‘What’s your job? Don’t worry about the score.'”
In reading all this, I was thinking about the state of the economy – as a Realtor, I have to be an economy-watcher, so I think about this every day. The U.S. economy has felt like a losing streak lately – some people are using terms like “collapsonomics.” However because of the increase in jobs and the continuing popularity of Austin and the Hill Country in general, our area leads a national trend toward recovery.
How do you move from a near-depression to a winning economy again? I still hear some people say that it’s impossible, that there are too many downward-spiraling variables. But isn’t that just a symptom of losing-streak thinking? We have to turn our heads around.
So I come back to the last paragraph, and apply it to the economy, starting with myself…
“Approach states result in high-energy emotions such as elation and joy. Avoid states foster sadness and despondence.” One way around this is to focus on “process goals” associated with specific tasks. “Process goals ask a question: ‘What’s your job? Don’t worry about the score.'”