There have been many major announcements of companies moving to Austin, TX. Nearly every week there seems to be a new announcement of corporate relocations and ancillary business ventures and start ups. From the new Apple Campus in North Austin to the Tesla Gigafactory in SE Austin to the Amazon distribution hubs in Pflugerville and Round Rock, the entire metro area is booming.
A recent LinkedIn report dubbed the “Silicon Hills” of Austin, Texas the top market of its size for emerging jobs, and tech has played a big role in that expansion. According to LinkedIn’s 2020 U.S. Location Trends report, “a lower cost of living and an expanded availability of remote work have created opportunities in a number of smaller U.S. economies,” with Austin ranking as the top city of its size for tech jobs.
These announcements from last year and the more recent ones this year have started a firestorm of home buying. There are many buyers who are anticipating a move with their company in the coming months or years, who are already trying to buy something now to secure their spot in Austin. Earlier last year Apple was even buying properties in anticipation of their employee relocations. Investors have been purchasing in the hopes of some fast appreciation in the coming years.
The problem with this explosive growth is that there is not enough housing to meet the high demand. New home builders have long waiting lists for home buyers – in some communities 200 people deep. Builders are completely excluding investment buyers at this time – owner occupied only are allowed to contract on new homes. Inventory is almost at zero right now for most all new home communities because the builders can’t keep up with the demand and building costs are going up due to lack of materials and labor. Starts for contracts now can be 6 months to a year out, if they are even selling now. There are waitlists for releases and builders only release what they can build in the next 6 months.
Resale homes are fetching ridiculous prices from buyers who view our market as relatively cheap compared to where they are now. It’s hard to say if this is a short term anomaly of low supply, high demand causing panic buying, or if this is here to stay. Most people believe this market is here to stay as Austin has enjoyed relatively affordable housing for a long time compared to other major metro areas. The suburbs have remained affordable, but that is changing fast. Are we seeing a bunch of lemmings running towards the cliff speculating on Austin’s future housing prices? Are they taking a big gamble paying $50-100k over asking. Is there really that much demand? Only time will tell.
At some point the $50-100k over asking is unsustainable. The people winning bids right now are able to make their offer with an appraisal waiver, meaning they are willing to pay the difference between the lenders appraisal and their offering price. Many buyers are also coming here with cash and waiving all contingencies that a normal buyer would want. It’s a great time to be a seller. It’s a very tough time for buyers without deep pockets. When appraised values catch up to “market value” then buyers may have an easier time with financing. Right now, without sufficient comps at the high prices, appraisers can’t appraise properties for what buyers are willing to pay for them.
I wish I had better news for traditional buyers right now. Hopefully spring and summer will bring more inventory to help quell the demand. There is also lots of land to be developed and a lot of new communities in the works, so that might help increase inventory. But it will take time. The high prices might be the norm going forward, but hopefully appraisal won’t be an obstacle.
If you have ever considered selling and leaving the area or moving farther out to the countryside, you may be shocked at how much you may be able to get for your home right now. How high can it go? Time will tell. Contact us for a no obligation market analysis of your home.
Many big names—eBay, Apple, Facebook and Dell, Google to name a few have expanded their operations in and around Austin in recent years. With that, there’s no doubt many people from Silicon Valley, New York and other commercial hotspots will be making a move. Here are the most recent announcement of Companies Moving to Austin.
None of this should come as a surprise to those who already call the area home. We know Austin is a wonderful place to live. We love it here and enjoy the tranquility and serenity of the TX Hill Country. But that is changing fast. Hopefully new comers will slow down and enjoy what we have here and help to preserve it. Hopefully our state elected officials will roll back the red carpet a little and start thinking about the sustainability of this massive push to bring more companies here. Who will pay for the infrastructure, schools, services and community needs that come with all this growth? At the moment it’s the burden of cities, school districts and homeowners to bear. Pay attention and speak up.
Here is one guy who didn’t like Austin and now people don’t like him. The internet is harsh. Transplant Who Hated Austin
If you are thinking of relocating, weigh all the pros and cons. And please visit in July. Unless you have deep pockets, you may be relegated to live in one of the many sprawling apartment communities that have been built here in recent years in anticipation of this growth. So many people move here and think they will just rent an apartment until they find something, only to be extremely disappointed that the Austin housing market is just as out of reach here as it is in CA for first time buyers and average wage earners.
Seems like not everyone is fleeing Silicone Valley to move to Austin though. Seattle still has a strong tech sector and people aren’t leaving. In fact, there are jobs to be had there too. Miami is also vying for tech jobs. Before you pack up and flock to Austin, weigh your options. Companies moving to Austin doesn’t always mean opportunity for everyone.
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