Most Shared

NEWS UPDATE

NEWS UPDATE

Top Stories

Top Stories

 
text size

Austin Housing Market Called 'Overvalued'

Updated: Monday, August 18 2014, 05:54 PM CDT

The Austin housing market is overvalued, according to the latest Trulia Bubble Watch report. Eight of the 10 most overvalued housing markets are in California, with Orange County, Los Angeles, and Riverside-San Bernardino in the top four. Among the most overvalued markets today, only Austin looks more overvalued now than in 2006. Trulia's housing research team says that's because Austin (and Texas generally) avoided the worst of last decade's bubble and bust. 

East 11th Street is in transition. Many of the homes on the street are older and smaller. But, one new listing built in 2011 is on the market for $585,000. It has three bedrooms, three and a half baths and is 1,700 square feet. It's a sign of the rising housing prices in East Austin. 

From the new and improved, to the old and out of the way. 

At the end of an alley off East 11th Street is a one bedroom, one bath, 780 square foot home. It's described by realtors as a likely "tear down." The asking price is $310,000. 

"It's unbelievable, unbelievable," said Daniela Moctezuma who grew up in this East Austin neighborhood. 

Rising home prices forced family and friends to move away. 

"They'll just pay whatever price just to live near downtown," said Moctezuma. 

Bubble Watch lists Austin as one of the top five most overvalued real estate markets in the country.

"This is our third home," said Cathy Conley, a long time Austin resident. 

She and her husband bought their first home in the 80s. Then Austin's biggest bubble, burst. 

"We watched the investment in our home dwindle before our eyes," said Conley. 

They were able to wait it out until the 1980s housing market recovered. But, many weren't so lucky. 

"Austin was booming at the time and everyone was investing in new homes and life was great and then the rug was pulled out from under most people in Austin," said Conley. 

She says anyone who struggled through the 80s learned a lesson. 

"We just have to be cautious," said Conley. 

Bubble Watch lists the Austin housing market as being more overvalued now than in the last big bubble - bust of 2006. But, some experts KEYE talked to on Friday say with more than a hundred people moving to the area every day this current "bubble" looks like it won't bust anytime soon.    

According to Trulia, Bubble Watch shows whether home prices are overvalued or undervalued relative to their fundamental value by comparing prices today with historical prices, incomes, and rents. The more prices are overvalued relative to fundamentals, the closer we are to a housing bubble - and the bigger the risk of a future price crash Bubble watching is as much an art as it is a science because there's no definitive measure of fundamental value.

Top 10 Metros Where Home Prices Are Most Overvalued

#

U.S. Metro

Home prices relative to fundamentals, 2014 Q2

Home prices relative to fundamentals, 2006 Q1

Year-over-year change in asking prices, May 2014

1

Orange County, CA

17%

71%

9.6%

2

Honolulu, HI

15%

41%

5.3%

3

Los Angeles, CA

15%

79%

12.7%

4

Riverside-San Bernardino, CA

13%

92%

18.8%

5

Austin, TX

13%

8%

9.7%

6

San Jose, CA

11%

58%

10.4%

7

Oakland, CA

10%

72%

14.8%

8

Ventura County, CA

9%

73%

12.6%

9

San Diego, CA

7%

69%

11.2%

10

San Francisco, CA

6%

51%

11.6%

Note: positive numbers indicate overvalued prices; negative numbers indicate undervalued, among the 100 largest metros. Click here to see the price valuation for all 100 metros: Excel or PDF.

By Bettie Cross

Follow us on Twitter @keyetv and LIKE us on Facebook for updates!

Austin Housing Market Called 'Overvalued'


Advertise with us!

Related Stories

 
Advertise with us!
Sponsored content