The Epicenter Of The Next Housing Crash: Austin, Texas

Summary

The video discusses Austin, Texas, as a potential epicenter for the next housing crash. From 2016 to 2022, home prices surged by 101%, fueled by tech industry growth and Californian migration. However, the market nosedived after 2022, with interest rate hikes and a tech market downturn. The city's rapid growth and overbuilding, coupled with a significant increase in housing inventory, suggest a looming real estate crash, with home values already dropping 177% from their peak. The video warns of Austin's vulnerability due to its heavy reliance on the tech sector, drawing parallels to its past oil dependency and subsequent housing correction in the late 1980s.

Takeaways

• 🏙️ Austin, Texas has seen a dramatic increase in home prices, with a 101% rise from June 2016 to June 2022, making it a center of housing bubble discussions.
• 📉 After the sharp interest rate hikes in 2022, Austin's housing market experienced a significant downturn, suggesting a potential real estate crash.
• 📈 The influx of Californians and tech companies like Oracle, Tesla, Apple, Facebook, and Microsoft into Austin contributed to its rapid growth and high-paying job market.
• 📊 Home prices in Austin have dropped significantly since their peak in 2022, with a 177% decrease in value, which is more severe than the 2007 recession.
• 🏗️ Home builders in Austin went on a construction spree, leading to an oversupply of homes that is now exacerbating the housing market downturn.
• 📈📉 The number of job postings for tech positions in Austin peaked in the summer of 2022 and then plummeted by over 70% in the following two years.
• 📈 Inventory levels in Austin have increased substantially, with a 74% rise in active listings, indicating a growing market imbalance.
• 📉 The 78746 zip code in Austin is experiencing a decline in home values much worse than the metro area's average, with a rapid increase in inventory.
• 💰 Sellers in Austin are struggling to adjust their expectations to the new market reality, with many homes likely being overvalued by 20 to 30%.
• 📊 Historically, Austin has been vulnerable to economic downturns, shifting from oil dependency to tech industry reliance, which could make it susceptible to another crash.
• 🔮 The video suggests that while a housing crisis like 2007 may not occur in other cities, a strong market correction is likely for Austin, making it one of the most vulnerable cities in the US.

Q & A

What was the percentage increase in home prices in Austin, Texas from June 2016 to June 2022?

Home prices in Austin, Texas skyrocketed by 101% during this period.

Why is there concern about a housing bubble in Austin?

The sharp increase in home prices coupled with a downturn in the housing market after interest rate hikes in 2022 has raised concerns about a potential housing bubble and subsequent crash.

What major tech companies have significantly increased their presence in Austin, contributing to its growth?

Tech companies such as Oracle, Tesla, Apple, Facebook, and Microsoft have greatly increased their presence in Austin, turning it into a new tech hub.

How did the influx of people and high-paying jobs affect the Austin housing market?

The influx of people, especially from the West Coast, and the high-paying jobs from tech companies led to a massive increase in home prices and a housing boom in Austin.

What was the typical monthly mortgage payment for a house in Austin in the summer of 2016?

In the summer of 2016, the expected monthly mortgage payment for a typical house in Austin was around $2,500.

How much did the typical monthly mortgage payment increase by the summer of 2022?

By the summer of 2022, the typical monthly mortgage payment had increased by 140% to nearly $4,900.

What happened to the number of job postings for software developers and IT positions on Indeed after peaking in the summer of 2022?

The number of job postings dropped over 70% in the next 2 years, indicating a significant change in the tech market.

How much has the typical single-family home in Austin lost in value since its peak in 2022 according to Zillow?

The typical single-family home in Austin has lost 177% of its value since the 2022 peak.

What was the trend in residential building permits in Austin from 2018 onwards?

There has been an excess of homes being built, with a 989% increase in building permits compared to the levels during the last major recession.

How has the real estate inventory in Austin changed from February 2021 to the present?

The real estate inventory has increased by 74%, from about 1,300 homes actively for sale to 10,913, indicating a growing supply in the market.

What historical event in Austin's housing market is the current situation being compared to?

The current situation is being compared to the housing market crash in the late 1980s, which was largely due to falling oil prices and a significant housing correction.

What is the role of foreclosure.com as mentioned in the video script?

Foreclosure.com is a premier resource for distressed homes for sale in the United States, offering a vast repository of listings including foreclosures, pre-foreclosures, bankruptcies, tax leans, and other distressed assets.