If you’re like us, you like to end each year with a quick look at the 2018 Austin area real estate trends. Every year, PricewaterhouseCoopers (PwC) and the Urban Land Institute (ULI) releases a report on the investment outlook for the real estate and land use industry. Now in its 39th year, the Emerging Trends in Real Estate report is considered one of the most highly regarded annual outlooks for the real estate industry. According to their forecast for 2018, Austin ranks second on the list of cities in the U.S. and Canada with the most positive real estate market outlook.
Methodology and Participant
To create the list, researchers for PwC and ULI surveyed and interviewed professionals who represent a wide range of industry experts. Those included in the data collection process range from investors, fund managers, developers and property companies to lenders, brokers, advisers, and consultants. More than 800 individuals and survey responses were received from more than 1,600 individuals.
Company and industry affiliations are broken down below:
- Private property owner or developer 34.0%
- Real estate advisory or service firm 26.8%
- Investment manager/adviser 6.8%
- Homebuilder or residential land developer 8.2%
- Bank lender 5.4%
- Equity REIT or publicly listed real estate property company 4.3%
- Institutional equity investor 4.1%
- Private REIT or nontraded real estate property company 2.3%
- Institutional lender 1.1%
- Real estate debt investor 0.6%
- Securitized lender 0.4%
- Mortgage REIT 0.2%
- Other entity 5.8%
Industry Pros Explain Austin’s Strong Real Estate Trends
Industry professionals came to the general consensus that Austin real estate has a positive outlook for all property sectors, especially in both multifamily and single-family housing. As far as available investor capital, the local economy is said to have no shortage of investor interest or available capital.
One major factor affecting the positive Austin real estate trends is the difficulty in continuing to invest in primary markets such as Los Angeles, New York, and San Francisco. A national office investor was quoted in the report as saying, “Traditional gateway markets have gotten so competitive that we are looking at adjacent submarkets and the top secondary markets.” Austin is a secondary market and based on its top rankings in the Emerging Trends reports over the past few years, it’s easily one of the strongest secondary real estate markets in the U.S. and Canada.
Demographic and Lifestyle Statistics
Austin has seen a population boom over the last several years. The Austin population is expected to continue its expansion throughout 2018 and into the next few years, with a projected growth rate of 2.8% in 2018. Austin expects to add 42,000 residents per year over the next 5 years.
Broken down, people aged 15 to 34 make up one-third of the Austin population. Through 2022, the age group is expected to grow 20.3%. That’s an impressive expansion, considering the age range includes Millennials, which is the largest living generation on the planet. They command a whopping $200 Billion in annual buying power, according to Forbes. As this age group enters the housing market, they are expected to continue to help fuel housing growth in the Austin region.
In terms of lifestyle, Austin is also ranked one of the top Green cities and has a solid ranking for outdoor activities. There’s a vibrant culinary scene in Austin and there’s an impressive one micro-brewery per 38,00 residents. In fact, the Austin area has out-produced every other Texas region in craft-beer production with its strong microbrew industry.
Other Real Estate Trends for 2018
Commercial Real Estate: Brick and mortar stores should consider transforming their current structures to meet the needs of gen Z shoppers. This generation of shoppers is looking for omnichannel, social media worthy shopping experiences. As far as the workplace, there may be a return to more traditional offices with doors and more personal space, rather than the open, collaborative spaces preferred by Millennials.
Housing Inventory: It’s been talked about in Austin for years now: homebuyers are experiencing a housing shortage. This trend is not likely to change, with millennials and Gen Z numbering 150+ million and the baby boomers remaining in their homes longer. There’s a big opportunity for homebuilders willing to scale production to their preferences, which are smaller and more energy-efficient homes, townhouses, condos, and “affordable” starter homes.
Multi-Family and Senior Housing: Because of continued housing inventory shortages, multi-family housing will likely be a strong investment product. There’s a particular need for more affordable rental units for the millennials and Gen Z, especially in secondary markets. Housing inventory for seniors also tops the list for all residential segments. Current inventory levels do not meet the needs of this group that is projected to grow by 25 million in the next 15 years.
To learn more about how David Brodsky Properties can help you with your real estate goals in 2018, reach out to us for a complimentary real estate strategy session. We’re happy to discuss your goals and how we can help you leverage our expertise to accomplish your intentions. Our consultation is free and can go a long way in helping you to have success in Austin real estate in 2018.
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