2017 Housing Forecast: Pent-up demand and consumer confidence expected to drive regional housing market in 2017
Experts cautiously optimistic ahead of proposals made by Trump administration that could impact market
Austin, Texas (January 19, 2017) Almost 700 industry professionals attended the Home Builders Association (HBA) of Greater Austin and the Austin Board of Realtors’ 2017 Greater Austin Housing Forecast on Thursday, January 19, 2017, at the JW Marriott. The annual event is the only comprehensive housing forecast of its kind in the region where industry professionals get insights into what to expect from the market in the year ahead.
Housing and economic experts came together to present their analysis of the factors that are impacting the housing market, including the state of the regional labor market, buyer trends and expectations, population growth, and housing supply growth trends.
Dr. Greg Hallman, senior lecturer of real estate finance at the University of Texas at Austin, pointed out that employment growth in Texas is much higher than in the rest of the U.S. Texas has seen a 25 percent increase in employment since 2006 compared to our nearest competitor, New York, which has seen just over a 10 percent growth over the same period. Austin alone has seen an average increase of approximately 40,000 jobs annually since 2006; contributing to an unemployment rate of just 3.5 percent.
“Judging by the usual numbers we use to judge economic performance – e.g., GDP growth, employment, wage growth, and consumer confidence – the US economy today is in very good shape,” says Dr. Hallman. “Europe appears to be growing slowly, and while China’s growth has slowed over the past few years, it is still strongly positive. We look to be in good shape now, and I expect continued growth in the near-term for the US and Texas,” he says.
Dr. Hallman warned that the Trump administration’s policy proposals could have a dramatic effect on the positive outlook now forecasted. “There’s plenty of uncertainty from the new administration’s plans regarding tax policy, international trade, and government spending,” says Hallman, suggesting that if these proposals were to come to fruition that, “all bets are off.”
Colleen Sharp, vice president and associate head of Insights Integration at Kantar Futures points out three major trends among consumers, including unprecedented use of technology in everything they do, the blurring of boundaries in identity and mindset that demands flexibility and the overwhelming desire for belonging within their communities.
“In a slow-growth economy, the home-building sector must understand and apply key consumer trends to drive growth and market activity,” says Sharp. She went on to say, “the No. 1 key trend is the impact that digital technology is having on how consumers connect and communicate, driving new needs for convenience and lifestyle utility in homes and communities.” Sharp suggests re-evaluating the need for traditional home features such as three-car garages and trading those spaces for flex areas that would allow a homeowner to take advantage of services like AirBnB, for example.
Sharp goes on to say, “the second key trend is the blurring of defined assumptions – from personal identity to ethnicity, to life stage. Homebuilders can leverage growth by targeting these emerging consumer groups and offering more flexible configurations, such as speaking to “usable footage” rather than “square footage” as a metric for communicating value.”
“The third trend is about an increased consumer desire for belonging, and how homebuilders can utilize a “big tent” branding strategy to build community, and create spaces or experiences that balance the desire for hyper-individuality and the longing for belonging,” says Sharp. Sharp suggests that consumers are willing to trade off smaller yards, for example, if they have access to green space and dog parks/runs within the community.
To conclude the event, once again Eldon Rude, a mainstay of Central Texas’ real estate community and principal of 360° Real Estate Analytics, gave us his projections for the local new home market in 2017. “While the most recent job numbers suggest Austin’s economy is beginning to show signs of weakening, the combination of strong consumer confidence and lingering, pent-up demand for housing will result in another positive year for Austin area home builders,” says Rude.
Rude expects starts to increase in 2017 to between 14,000 – 14,500 for the whole greater Austin metro area, an increase of 5 to 8 percent over 2016. With recent reports indicating a minimum of 15,000 starts are needed within Austin’s city limits alone, coupled with just four months-of-supply of active listings for previously-owned homes – sustained home price increases are expected to continue in the area.
“We look forward to working with organizations in our community to advance the professionalism of the home building industry and to ensure that all people in the region have the opportunity to live in strong communities and homes that enable them to thrive,” says Steve Krasoff, HBA of Greater Austin president.
About the Home Builders Association (HBA) of Greater Austin
Since 1953, the Home Builders Association (HBA) of Greater Austin has served as the leading not-for-profit trade organization dedicated to residential construction and remodeling in Central Texas. The HBA works with government, public, business, and community organizations in six counties – Bastrop, Caldwell, Hays, Lee, Travis and Williamson — to advance the practice and professionalism of the home building industry in our community and to ensure that all people in the Greater Austin area live in strong communities and homes that enable them to thrive. For more information, visit www.hbaaustin.com.