AUSTIN, Texas — As Austin’s population continues to grow, housing prices keep rising.

  • Home sales less than expected last fall
  • High demand for $200,000 – $300,000 range
  • Labor adds to rising home costs

Both private homeowners and developers in the area are eager to know the future of the market. Industry experts, analysts, and developers met on Thursday morning for the 2019 Housing Forecast Conference hosted by the Homebuilders’ Association of Greater Austin.

Presentations covered the current state of the housing industry, forces that impact market prices, and predictions for the coming year. The main takeaway — expect the number of housing developments to plateau in 2019, rather than grow like in previous years. Although that number will still be high (just under 16,500 new starts), economists predict the flattening of the housing economy for a number of reasons.

According to Holly Davis of the Homebuilders’ Association of Greater Austin, the first reason is fragile buyer confidence.

“Tariffs, trade wars, the stock market, the government shutdown, all of those things make buyers hesitant to want to make a large purchase,” said Davis.

New home sales in October and November of 2018 fell short of expectations due to many factors, including a spike in mortgage interest rates, uncertainty due to the midterm elections, and volatility in the stock market. Although sales rebounded in December, the government shutdown is reintroducing a high level of fragility to buyer confidence.

And it’s not just national and political trends that are making developers hesitant to increase the number of housing project this year. Analysts say local wages and median family income isn’t keeping up with rising house prices. Industry experts keep an eye on the “priced out” factor — in other words, for each $1,000 a home increases in price, how many people can no longer afford the home.

In Austin, Davis says 1,222 people get priced out of the market for every $1,000 increase in price.

“Even though we’ve had this great job growth, and especially here in Austin with the tech jobs and things like that, those are still well-paying jobs, but they’re not quite keeping pace with the home prices,” says Davis.

According to the Homebuilders’ Association of Greater Austin, the vast majority of demand in 2018 was for houses in the $200,000 – $300,000 range, and developers are struggling to keep their projects affordable.

Developers are having to go further outside of downtown to find affordable land to build on. A serious shortage of construction labor also adds to rising costs.

Although representatives with the Homebuilders’ Association of Greater Austin works closely with city government to help keep home prices affordable, they’re also looking to recruit young people to construction-adjacent jobs to help decrease the labor shortage.

“We do a lot of work with workforce development, and trying to encourage high schoolers or those newly graduated from high school, to consider these trades as an option,” said Davis.

Considering the forecast of the housing market, there’s one thing for certain— it shouldn’t be hard for those recruits to find work.