The Central Texas housing market appears to be on track to set records this year for home sales and prices, an economist said Wednesday.
If the prediction by Jim Gaines, chief economist at the Texas A&M Real Estate Center, is correct, 2019 would mark the ninth year in a row that home sales — and the median sales price of those homes — hit all-time highs in the Austin-Round Rock metro area. The five-county area, which extends from Georgetown to San Marcos, remains one of the nation's fastest-growing regions.
"The (Austin-area) market is still very strong," Gaines said in an interview before giving his mid-year economic and housing forecast. "The biggest problem is still low inventory, particularly in the $200,000 to $400,000 price range, which is 61% of the market."
Gaines addressed about 100 real estate professionals at the event, which was sponsored by the Austin Board of Realtors at their headquarters on Spicewood Springs Road in Northwest Austin.
Gaines said sales across the Austin-Round Rock region continue to be buoyed by strong job and population growth. Sales are expected to be up from 2% to 5% over last year's volume, while the median sales price is projected to increase by about 2%, he said.
Last year, just over 30,700 houses were sold throughout the Central Texas region, according to the Austin Board of Realtors. Half the homes sold for less than $310,400 and half sold for more, for a 3.6% increase in the median price over 2017.
The board's most recent home-sales report said that sales of single-family homes and the median price in June reached an all-time high for any June on record. June's median home-sales price was $334,702, down slightly from May's $335,095 median price.
Within Austin's city limits, the median home-sales price in June was the highest it has ever been for any month on record, climbing to $420,000, the board said.
Affordability is one of Central Texas' most pressing issues, Gaines said. He said it will continue to be one of the region's biggest challenges over the next 25 years, and one that will take "flexibility and political will" to address.
He said it's tough for buyers looking for a home priced in the sweet spot of the market — $200,000 to $400,000 — to find a house in neighborhoods where they want to live.
In the Austin area, the median home price has increased by 62% over the past eight years and by 40 percent in the past five years, according to Austin Board of Realtors data. Local housing market experts say the growing gap between the median household income in the Austin area and the median home price is a mounting concern.
But while home prices might seem high to locals, relative to the rest of the country, including people moving from California, they are "very, very much competitive, very attractive in terms of price," Gaines said.
Gaines said that the Austin area's appeal and momentum continues, as it regularly ranks among the top cities where people want to move.
"Austin has just exploded," Gaines said. "It has been clearly one of the most economically rapidly growing cities, not just in the state, but in the nation."
Although the Austin region's job growth is anticipated to slow from 3.3% last year to 2.3% this year, "Austin has blown the socks off both Texas and the U.S," he said.
For the Texas housing market outlook, Gaines said, several factors potentially could create a drag on home-buying demand. Those include limited housing inventories, higher prices, stock market volatility and concerns about the economy.
The nation has been in economic expansion mode for 121 months — a record — following the end of the last recession, which officially occurred in June 2009, Gaines said. The average duration of the 11 expansions since 1950 has been 61 months, he said. The previous record was 120 months, in the period from April 1991 to March 2001.
"We're going to have a recession," Gaines said, though he stopped short of predicting when that might occur. The Federal Reserve Bank of New York has put the probability of a recession in the next 12 months at 30 percent.
Statewide, Texas' 2019 economic outlook is strong, although growth will be somewhat slower than in 2018., Gaines said. He said job growth is expected to land somewhere in the 2% to 2.5% range, and "Austin is going to get its fair share of jobs."
