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1/17/2019
1
The Home Builders Association of Greater Austin2019 Housing Forecast
(11.26.18)
1/17/2019
2
November 6, 2018
Austin, TXCollege Station, TXSan Antonio, TXNaples, FLCharlottesville, VASalinas, CALafayette, LA
1/17/2019
3
Austin Denver Seattle
AUSTIN, DENVER & SEATTLEActive Residential Listings
ActiveListings
7,001
5,131
11,193
7,750 7,530
15,830
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Austin Denver Seattle
Nov. '17 Listings Nov. '18 Listings
Source: MLS
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4
AUSTIN, DENVER & SEATTLETotal Residential Sales
Sales
2,448
4,703
8,068
2,442
3,732
6,837
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Austin Denver Seattle
Nov. '17 Sales Nov. '18 Sales
Source: MLS
AUSTIN, DENVER & SEATTLEMonths of Supply Based on Previous Year Sales
MonthsOf Supply
2.5
1.01.4
2.7
1.6
2.3
0
1
2
3
4
5
6
Austin Denver Seattle
Nov. '17 months of supply Nov. '18 months of supply
Source: MLS
Equilibrium
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AUSTIN , DENVER & SEATTLEAnnual Home Price Change Trend
Source: FHFA
Ann. Price
Change
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Austin Denver SeattleAnn. Price
Change
-7%-6%-5%-4%-3%-2%-1%0%1%2%3%4%5%6%
Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 Nov-18
Austin Denver Seattle
AUSTIN, DENVER & SEATTLETrend in Percent Annual Job Growth/Loss
Source: BLS
Ann. Job Growth
Rate
Annual Job Growth Nov. ‘17 to Nov. ‘18Austin: 35,200 (3.3%)Denver: 30,800 (2.1%)Seattle: 72,100 (3.5%)
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3.5 3.3 3.2 3.4 3.5 3.2
4.8 4.65.0
8.2
9.9
0
2
4
6
8
10
12
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
Austin DFW Houston S. Antonio Nashville Raleigh Denver Portland Seattle San Fran San Jose
2017 Median Family Income 3Q18 Med Home Price
Source: NAR & U.S. Census
Multiplier of Median Home Price to Median Family IncomeMajor Texas Markets & Selected Tech Centers
MultiplierMedianHome Price
Multiplier
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
Median Home Price Median Family Income
Source: NAR & U.S. Census
Income/Home Price
1.9X
2.5X
2.5X
3.5X
2.4X
$73,0001990
$39,400
$100,5001995
$318,2002018
$189,4002010$161,300
2005$144,50020002.3X
$91,862$73,800$67,300
$58,900$43,200
The Austin Metropolitan AreaTrend in Median Home Price & Median Family Income
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THE AUSTIN ECONOMY
THE AUSTIN ECONOMY
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THE AUSTIN ECONOMYTrend in Annual Job Growth/Loss
Ann. Job Growth/Loss
Ann. % Change
Job Growth Nov.‘17 to Nov. ’18 = 35,200 Jobs (3.3%)Nov. ‘18 Unemployment Rate = 2.7%
-30,000
-20,000
-10,000
0
10,000
20,000
30,000
40,000
50,000
0%
1%
2%
3%
4%
5%
6%
7%
8%
Unemployment Rate Annual Job Growth/Loss
Source: TWC
THE AUSTIN ECONOMYAnnual Job Growth/Loss by Category
Annual Job Growth
6,100
200
11,600
500 600
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
Mining, Logging, Const Manuf. Trade, Trans., Util. Info. Fin. Activities
Nov-16 Nov-17 Nov-18
Source: Texas Workforce Commission
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THE AUSTIN ECONOMYAnnual Job Growth/Loss by Category
Annual Job Growth
4,5003,400
4,200
2,100 2,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
Prof. & Bus. Serv. Edu. & Health Serv. Leis. & Hosp. Oth. Serv. Gov.
Nov-16 Nov-17 Nov-18
Source: Texas Workforce Commission
THE AUSTIN ECONOMY-THE OFFICE MARKETAnnual Net Absorption of Office Space
Absorption
-1,500,000
-1,000,000
-500,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
Source: Cushman & Wakefield
Last Four Quarters Net Overall Absorption = 524,195 SFApproximately 4 mil. SF under construction
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THE AUSTIN ECONOMY-THE OFFICE MARKETTrend in Total Vacant Space & Average Rental Rates
AvailableSpace
AverageAsking Rents
Source-Cushman & Wakefield
$20
$22
$24
$26
$28
$30
$32
$34
$36
$38
$40
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Total Vacant Space Average Rents
4Q18 Market Vacancy Rate = 10.6%
4Q18 CBD Vacancy Rate = 7.7%
FAANG Stocks Combined
Net. Cap.: $2.8 Trillion
12 Mo. Rev: $644 Billion
Cash: : $246 Billion
Ford & GM Combined
Net. Cap.: $190 Billion
12 Mo. Rev: $306 Billion
Cash: : $43.5 Billion
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Major Lease Transactions in 2018
Facebook: 320,000 SF Lease (Domain 12)Indeed: 307,000 SF Lease (Block 71)Amazon: 140,000 SF Lease (Domain 10)Visa: 135,813 SF Lease (Research Plaza Park II)
Major Announcements in 2018
July: Selected Austin as home ofFutures Command (up to 500 employees)
Oct: Moving corporate headquarters to East Austin (120 executives)
Nov: Started construction of 420,000 SF Phase II of Riverside Campus
Sept: Announced creation of world class tech facility and innovation lab in East Austin
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Major Announcements in 2018• $1 Billion Investment• 5,000 Employees Initially• Phase One completion in 36 mos• As many as 15,000 employees• 3 million SF of space
Our Housing Markets
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• Entered 2018 With Questions About Supply, Not Demand.
• A Great Start to the Year…Strong Spring Market.
• Things Began To Change Late Summer/Early Fall• Rising Prices & Int. Rate Hikes…Some Buyers Hit a Wall• Continued Delays in Lot Deliveries Pushed Starts• The Mid-Term Elections• Consumer Confidence Shaken by Economic Volatility
• These Factors Combined to Slow Market Momentum Oct. & Nov.
• And Then…A Strong December!
MAJOR THEMES IN NEW HOME MARKET IN 2018
The Resale Market
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THE AUSTIN RESALE MARKETAnnual Closings Trend (SF, TH and Condo)
Source: Texas A&M Real Estate Center
AnnualClosings
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,00034,791 Closings Last 12 Mos. (+3.5%)
THE AUSTIN RESALE MARKETAverage and Median Price Trend (SF, TH and Condo)
Source: Texas A&M Real Estate Center
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
Avg. Annual Sales PriceMedian Price
November 2018 Average Price: $381,919 (+4.4%)November 2018 Median Price: $300,000 (+3.4%)
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THE AUSTIN RESALE MARKETMonths of Supply of Listings & Average Sales Price
(SF, TH and Condo)Sales Price MOS of
InventoryMOS of Listings Has Been <4 MOS for 75 Months
0
1
2
3
4
5
6
7
8
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
Average Sales Price
Months of Inventory
Source: Texas A&M Real Estate Center
THE AUSTIN APARTMENT MARKET
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THE AUSTIN APARTMENT MARKETOccupancy & Rental Rate Trends
4Q18 City-Wide Avg. Rent = $1.45/SF4Q18 City-Wide Avg. Occ. = 93.%
$0.75
$0.85
$0.95
$1.05
$1.15
$1.25
$1.35
$1.45
$1.55
80%
82%
84%
86%
88%
90%
92%
94%
96%
98%
100%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
Occupancy Rate Avg. City-Wide Rent
Source: Austin Investor Interests
AverageOccupancy Average
Rent
• Avg. Rent +50% in 10 Years• Added +64,000 Apts. Last 10 Years
78702
78704NEW CONSTRUCTION
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78702/East Austin (excluding large condo projects)
Last 12 Months Median Sales Price =$489,000 (<3%)Last 12 Months Average Sales Price =$515,740 (+2)Active Listings (new const.) = 16 (16 in 1/18)Sales Last 12 MOS = 139 (132 in 2017)MOS Active Listings = 1.4 mos (1.5 mos 1/18)
24% of sales in the last 12 months <1,000 square feetSource: MLS (Jan. 2019)
78704/Central South (excluding large condo projects)
Last 12 Months Median Sales Price =$653,000 (<11%)Last 12 Months Average Sales Price =$839,729 (+5%)Active Listings (new const.) = 49 (65 in 1/18)Sales Last 12 MOS = 130 (138 in 2017)MOS Active Listings = 4.5 mos (5.7 mos 1.18)
Source: MLS (Jan. 2019)
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5th & West• 154 Units• Complete• +90% Sold
Independent• 363 Units• 1Q19• 86% Sold
Austin Proper• 98 Units• April 2019• +71% Sold
70 Rainey• 164 Units• 1Q19• 75% Sold
THE HIGH-END MARKET
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THE AUSTIN LUXURY MARKET-NEW & RESALEActive Listings, MOS & Sales Last 12 MOS +$750,000
Source: MLS
Jan ‘19 Overall MOS of Active Listings +$750,000 = 5.1 MOS(Down from 5.9 MOS in January 2018)
4.3 3.7
7.46.2
18.6 17.7
0
5
10
15
20
25
0
200
400
600
800
1,000
1,200
$750K-$1Mil. $1Mil.-$1.5Mil $1.5Mil.-$2Mil $2Mil.-$2.5Mil $2.5Mil.-$3Mil +$3Mil.
Active Listings Sales Last 12 Months MOS Active Listings
Jan. ‘184.0
Jan. ‘185.3
Jan. ‘189.2
Jan. ‘1811.2
Jan. ‘1818.4
Jan. ‘1820.5
Sales/Listings
MOS ActiveListings
THE AUSTIN LUXURY MARKET-NEW CONSTRUCTIONActive Listings, MOS & Sales Last 12 MOS +$750,000
Sales/Listings
MOS ActiveListings
Source: MLS
Jan. ‘19 Overall MOS of Active Listings +$750,000 = 6.4 MOS(Up from 5.7 MOS in January 2018)
7.3
5.2
6.7
2.2
4.0
10.7
0
2
4
6
8
10
12
0
25
50
75
100
125
150
$750K-$1Mil. $1Mil.-$1.5Mil $1.5Mil.-$2Mil $2Mil.-$2.5Mil $2.5Mil.-$3Mil +$3Mil.
Active Listings Sales Last 12 Months MOS Active Listings
Jan. ‘184.8
Jan. ‘185.8
Jan. ‘185.3
Jan. ‘186.0
Jan. ‘188.0
Jan. ‘1826
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20
A Forecast for 2019
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21
• Economic Data Suggests Continued Strong Demand for Housing in Austin.
• Good Sales in December & Early January Bode Well for Spring Market.
• Buyer Confidence More Fragile Than Any Time This Cycle.
• Higher Interest Rate & Price Increases Combine to Increase Costs.
• Builder’s Challenges to Deliver the Right Product Persist:• Land/Lot Issues (location, price, entitlement, utilities)• Labor Shortage Persists (who controls labor?)• Material Prices…Lumber a Bright Spot!
• Biggest Pubic Builders vs. The Rest of the Pack• Resources, Margin Pressure…
2019 FORECAST: PRIMARY FACTORS TO CONSIDER
The Home Builders Association of Greater Austin2019 Housing Forecast
1/17/2019
22
For further information, contact:Eldon Rude, Principal360° Real Estate Analytics512‐796‐[email protected]