“Housing is a giant job creator,” said Scott Norman, an Austin mortgage broker and past president of Texas Mortgage Bankers Association. “There are a lot of people whose livelihoods depend on a house being bought and sold.”
Contributing factors
Several factors contributed to the relative stability of the Central Texas housing market during the downturn. They include stricter home-equity lending laws in Texas than some other states, the diverse local economy, and continued job and population growth, housing experts and economists say.
The region also has a more plentiful supply of land and lots — and fewer impediments to developing it — than in some of the boom-bust states, said Eldon Rude, director of the Austin office of Metrostudy, a housing market research firm. This resulted in lower price appreciation in our housing market during the most recent housing boom, he said.
In contrast, a run-up in demand in the hardest-hit states, coupled with a limited supply of land and lots, resulted in significant appreciation of those lots, which made the homes more expensive, Rude said.
Rude said several key indicators provide “powerful insight” into the differences in the housing industries and underlying economics of the Austin area when compared with the boom-bust markets.
• Pricing: Home prices locally didn’t experience a big boom-bust cycle like they did in Las Vegas, where prices went up 44 percent per year at the peak ; Phoenix, up 41 percent per year at the peak; and Orlando, which saw 33 percent annual appreciation at the peak, according to the Federal Housing Finance Agency. By contrast, Austin’s peak annual home price appreciation was 10.5 percent, according to the agency’s data.
On the flip side, prices have dropped sharply, down 16 percent in Las Vegas from mid-2010 to mid-2011, and by 15 and 10.7 percent in Phoenix and Orlando, respectively. The decline in the Austin area was much lower at 2.3 percent during the same 12-month period.
• New-home construction: Home starts plunged nearly 90 percent from early 2007 (roughly the housing peak) through September of this year in Las Vegas. Phoenix and Orlando also saw dramatic declines, nearly 85 and 72 percent, respectively.
By comparison, the Austin area registered a 61.4 percent decline, the lowest during that period among major Texas cities and well below the most troubled markets.
• Construction employment: Comparing September 2006 — roughly the peak of new home construction — with this September, construction employment fell 62 percent in Las Vegas, and Phoenix and Orlando each lost more than half of their jobs in the sector. During the same period, construction employment in Austin dropped slightly more than 8 percent.