Over valued Real Estate Markets: Austin No 1 and Houston No 2?

Or how about the fact that most of the growth in Austin has been through tech?

I anticipate that prices will stabilize in ATX in a couple of years just because so much construction of "luxury" apartments and condos are going up. Only so many people that can afford them.

 

I can tell you, at least in The Woodlands, prices have been falling. They peaked about a year ago with houses not staying on the market for more than a week. Now, as my wife and I have been looking, houses are staying on much much longer and the prices continue to drop. Seems like it's a combination of the current state of the oil industry here and a bit of a correction. In either case, it's making things look better for me to get more of what we want in a house over the next few months. Houses I'm seeing now that are clearly overvalued will likely still be there in a couple of months at a lower price...and desperation will kick in if they want to be out before the holidays.

 

no San Fran (or any California or west coast cities), yet two in Tennessee and four in Texas?

I'd say there's an issue with how they're measuring this.

 

Feels like Houston's is overvalued to me. And they're still building new neighborhoods like crazy in the burbs.

 

If you could choose a free $5m house in Houston, Knoxville or San Francisco right now but have no access to it at any point, you would just be allowed to sell it in 5 years and keep the % increase in value X $100,000 - what city are you taking?

 

No deal.

 

houses that cost 120k in 2000 are worth 700k now in Austin. Add 20k in property taxes and you have an unsustainable market. The property tax bill cost more than the mortgage of the same house 15 years ago.

 

That doesn't really address the fundamentals here... it's supply / demand. Austin population has also grown stupendously, and in pockets gotten much wealthier. So the increases you mention above have been in areas that to date have been able to withstand the increases because of supply / demand economics.

Will tech slow down?
Will overall economy slow down?
Will population growth slow down?
Will supply come on too fast?

All are valid concerns. As they are everywhere, really. If I'm a homeowner in a place like Travis Heights or near Zilker in Austin I'm more concerned, especially because the over-supply issue could really impact me, as more houses in those types of areas lease currently.

 

The fundamentals is when the interest rates go up, no one will be able afford to buy these houses.

 

They're just reporting CoreLogic's data/analytics. CoreLogic did have this to say about prices in Texas :

“Between 2006 and 2014, an oil and gas boom had fueled job and population growth in some markets, pushing home prices well above their sustainable levels in these markets. Since last year, geopolitical events have shifted in favor of excess oil supply, possibly exerting further downward pressure on oil prices in the next few years and impacting some of these Texas markets,” CoreLogic said.

 

There is a very limited supply of land in SF (it is surrounded by water on 3 sides) and strict zoning laws about building high rise condos. SF is already has 2nd highest density population for a major city in the US behind NYC.

Houston on the other hand, has tons of land ripe for development.

 

Interest rates will increase nationally. So all markets will deal with it. Relative to valuation it will hurt overvalued markets more, theoretically, but that doesn't tell us if Austin is more overvalued than somewhere else right now.

 

I was going to say there's no way it is more overrated than the San Francisco area.

 

It's probably a good time to buy

 

except for the people from california migrating here.

 

End of story. This is why real estate is so, and will remain, expensive in San Francisco and NYC.

For a much better band for your buck everyone knows it's better to buy a home in a major Texas city... Or Midwest or anywhere other than the coasts and Hawaii. Austin and Houston are good because they are fairly cosmopolitan and diverse too.

 

We all know houston market is overvalued compared to 2-3 years ago...but the question is what's it going to take to bring it back down...if it ever does?

If it doesn't...at what point does people accept it as the norm?

 

I think prices inside the loop might stay high, but there is so much land with nothing on it even in the loop. The cities with super high real estate have no land.