The Austin Board of Realtors reported that the March 2015 median price for single family homes was $255,000, a 10% year-over-year increase. This is a record high for Austin homes, so it isn’t surprising that some are saying our market is overvalued or in a bubble.
Appreciation isn’t the only factor in determining if a market is overvalued. Here are some other metrics to watch:
- Job creation vs. home starts (a ratio of three jobs to one home start is balanced)
- Resale housing inventory: less than six months is considered a sellers’ market
- Less than 24 months supply of new home starts
- Less than 24 months supply of lot inventory
- Rental occupancy residentially above 90% with no concessions
- Double digit appreciation for more than three years
When there has been job creation but an absence of developing and building there will be a need for more inventory as the market plays catch up. That is where our Texas metros are; playing catch up, not overvalued or undervalued. With true demand from population and employment growth the metro markets have a ways to go to catch up.
Read more at the source: Texas housing markets (still) aren’t overvalued | Independence Title