Is Austin TX a Good Market to Invest in Now?

A recent article declared that Austin, TX is the "hottest real estate market to invest in 2017." Interestingly, Austin hit the 1op 10 list five years ago according to the company that conducted the analysis/survey: PwC US and the Urban Land Institute. Some of the top concerns were affordability and transportation. Of course, at Housing Price Trends, we are mostly concerned about price, which directly affects affordability.

Let's take a close look at the price change (adjusted for inflation) chart above of Austin. You will notice that 5 years ago, 4Q2011, prices were still declining. Without adjusting for inflation, the price change would be near zero. Most reports dealing with prices to not account for inflation. That may be OK for most home owners, but certainly not for investors. Over time, inflation takes a big hit to your profits.

Another point, from the investor perspective, is that the time to get into the Austin market to capture appreciation was some time ago. In fact the Housing Price Trends system indicated a BUY signal for Austin in 4Q2013. That signal occurred after a reliable price trend had been established. Investing in the Austin market at this time carries more risk and you would have missed 3 great years of appreciation.

Also, take a look at the overall chart and you will see that, since 1985, we are in the 4th period of appreciation. The first 2 periods were about 4 years long, and the last was about 3 years long. We are into the 5th year of the current cycle. How long will it last? No one knows. But what you do want to know if you have an investment property in Austin: when should I sell? You would want to know that for any city in which you are invested. Why stay in a market that is not appreciating, when you could invest in a market that is appreciating after a trend has been established?

That's the power of Housing Price Trends: knowing when to BUY and knowing when to SELL. Remeber Warren Buffett's first rule of investing: "Never lose money." (The second is: "Don't forget rule #1").