Zillow predicts Austin will have nation’s hottest housing market in 2020

By   – Staff Writer, Austin Business Journal

Austin has topped its first list of 2020 for its sizzling real estate market.

Zillow Inc. this week named the Texas capital as the hottest housing market of the year, based on the results of a survey of 110 economists and real estate experts.

The vast majority — some 83% — of panelists expect home values in the Austin metro to grow faster than the expected national rate of 2.8%. Only 10% expect home values to grow at the national rate, and 7% expect home values to grow slower than the national average.

That is sure to heighten worries about affordability, which is consistently one of the top concerns in Austin.

Markets in the southern states are expected to lead the nation in home value growth while California markets will cool in 2020, according to the survey conducted by Pulsenomics and Zillow in the fourth quarter of 2019. Panelists were asked to rate their expectations for home value growth in the 25 largest real estate markets compared with the nation as a whole.

Rounding out the top five, according to Zillow (Nasdaq: ZG), were Charlotte, Atlanta, Nashville, and Dallas/Phoenix, which were tied. Charlotte was the only market among the 25 analyzed in which none of the panelists said it would underperform.

“What these top markets have in common is they still remain relatively affordable in terms of cost of living … and they are attractive metropolitan areas for businesses, especially technology companies looking to grow and expand, which is directly tied into where younger people that work for these companies want to live,” said Eldon Rude, principal of Austin-based 360 Real Estate Analytics.

He added: “That creates the continuation of strong demand for all kinds of housing whether it be apartments, new homes or resale homes.”

Strong demand combined with low inventory is causing prices to keep going up, Rude said. “I don’t expect that to be any different as we move into 2020,” he said.

Though Austin is expected to top the nation this year, Rude said increases in housing prices have actually slowed in the past couple of years. And, while home values are rising faster than income levels, it hasn’t reached a tipping point in Austin, he said.

The Austin area was expected to end 2019 with record-breaking home sales despite rising prices and a critical shortage of housing, according to the Austin Board of Realtors.

Single-family home sales in the Austin metro in November rose 14.3% year-over-year to 2,554 for a total sales dollar volume of $984.2 million, according to ABOR. The median price for single-family homes increased by 1.7% to $305,000.

In the city of Austin, where the housing shortage is the greatest due to the lack of land, the median price for a single-family home jumped 10.6% year-over-year to $405,000 in November — the highest price on record for that particular month.

“It’s no surprise that Austin’s housing market leads the nation in terms of growth and overall performance predictions,” Romeo Manzanilla, 2020 president of ABOR said in an email. “The local economy continues to be fueled by companies relocating, expanding or establishing secondary headquarters in Austin. As a result, Austin enjoys an unemployment rate of 2.6% as compared to 3.6% nationwide and an extremely low mortgage delinquency rate of .4% as compared to the national value of 1.1%. Given the continued demand for housing caused by relocation and the overall affordability as compared to larger markets, Austin will continue to outperform U.S market expectations.”

The markets expected to perform the worst in 2020 are San Francisco, San Jose, Los Angeles, Cincinnati, and Sacramento, according to Zillow.

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