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Bubble: Buzz vs. Fact

Source: Austin Board of Realtors

There’s been some buzz about Austin being in a “housing bubble” and poised for a crash, but we want to give you the
facts. Is the Austin real estate market in a bubble? The economic experts say, “no,” and here’s why.
Real estate bubbles are driven by speculation. Prices rise not because demand for housing is increasing, but because
buyers believe prices will continue to rise in the near future, increasing the value of their investment and presenting
the potential to “flip” properties quickly. That type of speculation is not what is Austin’s current housing demand.

POPULATION AND JOB GROWTH: KEYS TO A HEALTHY MARKET
In Austin today, housing demand is being driven by population growth. According to Austin City
Demographer Ryan Robinson, there are 110 people moving to the Austin area everyday and our
unemployment rate in August 2014 was 4.6 percent, which is 1.5 percent below the national average.
Our population is growing and new residents have jobs, which means demand for homes is increasing. And,
as we know, prices rise with demand, especially when supply is low, like it is here. Population growth and
job growth have always been the foundations of a healthy market and those two factors – not speculation –
are driving price increases in Austin real estate.

LENDING STANDARDS HAVE CHANGED
Due to the housing crash last decade, lending standards for homeowners are some of the most stringent
seen in recent years, so only those who can afford a home have access to the financing to buy it.

SO, IS AUSTIN OVERVALUED? NO!
Recent reports paint an incomplete picture of the Austin market. They use only ratios comparing income
to rents or home prices, leaving out the two key variables of job growth and population growth. Without
understanding how increased population and availability of jobs affects demand for real estate, a market
can’t be properly valued.

TALK TO YOUR REALTOR®
In short, the price increases seen for Austin-area real estate in recent years are driven by increased
demand among those who want to live in our great city, not unfounded speculation. That makes them part
of a healthy real estate market. Your REALTOR® has expert insights and information on why Austin isn’t
ready to “pop.” To learn more, visit AustinHomeSearch.com.

ABOUT THE AUSTIN BOARD OF REALTORS®
The Austin Board of REALTORS® builds connections through the use of technology, education and advocacy to
strengthen the careers of its 9,000+ members and improve the lives of Central Texas families. We empower Austin
REALTORS® to connect their clients to the region’s most complete, accurate and up-to-date listings data. For more,
visit AustinHomeSearch.com.

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