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People in Austin are saying it's a bubble. But it isn't - a significant number of homes are being paid for in cash. Often $10-20k over the asking price. Those
by chiph 11y ago
People in Austin are saying it's a bubble. But it isn't - a significant number of homes are being paid for in cash. Often $10-20k over the asking price. Those that are being financed have fairly solid support behind them (20% or more being put down). It's not a bubble - it's supply + demand in action.
Which means that housing will be tight until the builders can catch up. Unfortunately, Austin's roads and other infrastructure weren't designed for this influx and are overwhelmed. The city leadership recognizes it's a problem, but haven't been able to produce a coherent plan for solving it. Don't move here.
- dragonwriter 11y agoBubbles are supply + demand in action, but where the demand is driven in large part by perceived future value where the underlying fundamentals to support that future value do not exist. That homes are being paid for in cash doesn't indicate that there isn't a housing bubble -- it does mean that if there is, its not likely significantly an effect of a mortgaged-backed-securities bubble the way the pre-2009 national housing bubble was.
- jsuar 11y agoThe question becomes, if there is a bubble, what could make it pop? Tech jobs leaving the area and not creating salaries that support existing house prices?
- dragonwriter 11y ago> Tech jobs leaving the area and not creating salaries that support existing house prices? Sure. But other things could, too -- bubble-driven overbuilding of new housing and then having the influx of jobs stop could do it, especially if updates to shared infrastructure were deferred and the tax revenue to support them didn't materialize because the growth stopped -- the new houses would sell at lower prices because the new higher-paid workers they were made to appeal to wouldn't be there, but the total infrastructure demand would be similar, adversely affecting property desirability. There's probably other scenarios -- and I'm not saying it is a bubble or that any particular popping scenario is likely (I don't know Austin that well), just that the fact that purchases don't seem to be mortgage-fueled doesn't mean that there isn't a bubble.
- SlipperySlope 11y agoA tech job brought me to Austin in 1999. No state income tax and plenty of ranch land for development nearby. The University of Texas at Austin has a very powerful supercomputer and lots of sponsored research. Apple has a huge campus in North Austin and is a model for tech companies expanding out of Silicon Valley. My friends here want me to tell you that 'Austin is Full', but everywhere you look there are help-wanted signs.