Austin's Economic Prospects
Given the current climate of the economy, looking at the economic prospects of cities across the country before you decide to move there can make the difference between accessing opportunities or struggling to make ends meet. We can all see how a variety of factors severely impacted the economy over the last few years, but when it comes to the capital city of Texas, things seemed to take a different turn.
Business activity in the city of Austin, Texas, is expected to continue its growth through 2022 and push further in the future despite the struggle many industries have faced in the recent past. Substantial gains are expected to be fueled by the area’s diverse and flourishing market opportunities, highly educated workforce, and incredible quality of life. Every aspect of the local economy proves to have the tools necessary to sustain future growth by attracting both employers and employees with high-quality and profitable opportunities.
While the country’s economy is overcoming the threats posed by the effects of the pandemic, with supply shortages slowly leveling out, we’ll take a closer look at what Austinites can expect from their local economy. The nutshell analysis shows that the city’s economy is bound to surpass the country’s growth rate and exceed market expectations.
Austin’s Economic Future
As we look at the high potential that the city of Austin’s economy shows, we also have to consider some of the challenges it faces. Similar to the situation across the country, Austin, Texas, is dealing with an ongoing housing shortage that prices out the city’s workforce. This makes it difficult for employees to live close to their work which results in a congested transportation network. The last factor that needs to be addressed for a thriving economy in Austin is the increasingly stretched workforce, as many Austinites are left behind due to accelerated development in industries and lack of training to meet the demands in the job market. Simply put, jobs require constantly developing skills that the workforce struggles to keep up with.
These are all issues that are in the attention of the local authorities, and plans are being put in place to bridge those gaps. Major corporate developments move to Austin or are looking to the city’s economic growth for the immense potential it shows. This will only fuel the city’s economic future further, and with Tesla’s investment in the area, other major corporations are likely to follow in its footsteps. The future economic growth for Austin, Texas, is bright. The only thing necessary is for local authorities to sustain this growth and provide it with the necessary tools.
Market Conditions
The COVID pandemic was determined to be the worst event for supply chains in over 100 years, including the First and Second World Wars. During the lockdown, many industries were on the verge of shutting down with only basic services being performed, and that was felt by every aspect of the economy. From construction material shortages to unemployment rates reaching 12.2% during peak quarantine, the world saw unprecedented drops in production and, as a result, supply.
While economies across the country fought tooth and nail to get back on their feet, Austin’s economy was strong. Still, the city’s unemployment rate was the third-lowest, managing to bounce back only by 2022. Currently, wages are growing at a rate that almost reaches 5% year-to-year, which is more than the previous average of 2.5%. Due to this increase, people can spend more on goods and services, leading to growth in business investments and one of the economy's best moments in the past 100 years.
Inflation Trends
Inflation is the topic on everyone's lips right now, and with the recent talks of a Fed rise in interest rates by 75 basis points, it is expected that inflation will be eased through an overall slow of the economy. What is important to avoid is a rise in unemployment and a recession, and further decisions will need to be sensible to reach neutral levels for the benefit of the future economy.
Currently, households are in good shape when it comes to saving rates and debt levels. This led to steady consumption levels in Austin and an increase in productivity that resulted in an influx of overseas investors that decreased the cost of goods and services in the city. Inflation rates need to be further observed and kept a close eye on with global trends and the fear of recession growing.
Migration
Austin is at the forefront of growing migration trends from states like California, New York, Illinois, Minnesota, and New Jersey across the country. Factors such as the affordable cost of living, low taxes, and no income tax fuel this migration in the city, and the housing market needs to pick up the pace in order to supply the increasing demand for housing.
We already mentioned that the economy in Austin is on an accelerated growth trend, but some employment sectors are exceeding the local trends, pushing the economy forward. Those looking for employment opportunities in finance, insurance, information, real estate, professional and tech services, waste services, administration, and the management of companies and enterprises should zoom in on the scope of jobs available in Austin, Texas. Remote work makes it possible to work from anywhere in the world, so those that want to stay in the US contact real estate agents in Austin TX, to move somewhere with a lower cost of living, further appreciating housing costs.
Real Estate Market
The biggest challenges for the real estate market in Austin, Texas, are the supply chains and labor issues. During the pandemic, the number of new homes being built in the city was faced with issues related to both supply chains and the uncertainty in the market brought by increasing prices for building materials. Many builders waited to see what was going to happen and halted many projects.
Something else that authorities should consider is simplifying the housing development process, as it can take up to 4 months to get a building permit. As a comparison, the city of Houston can give these permits in 30 days. There is currently less than a month’s supply of housing available, while the recommended is a six months supply. Because of that, housing costs are above income affordability, impacting the rental prices. While, normally, the housing market and the rental market don’t compete, the lack of housing supply accelerates rental rates, making it difficult for Austinites to buy or rent a home.
The median home value in Austin, Texas, is $676,000 while experiencing a light decrease since May. Still, values have gone up by 22% since the same time in 2021, and the rental costs reached $1,800, exceeding the national growth rate. What’s more, the leasing occupancy rate is higher than the normal rate of 93%, reaching 95% over the last year. Unit occupancy rate is high for both ownership and renters due to the influx of migrants moving from parts of the country with a higher cost of living like California.
Job Market
Based on the latest information, by July of 2022, all of the 140,000 estimated jobs lost during the pandemic were recovered and created over 28,000 additional jobs or 10% annual job growth.
The past 18 months came with a growth in the local business climate from several giants of industry that will only motivate other investors to choose the city of Austin for their business. The tech giant, Tesla, is investing in a $1.1 billion manufacturing family located in Travis County and intends to move its headquarters to Austin in the future. Samsung is also looking to Austin and Taylor for their $17 billion semiconductor factory. Oracle chose Austin as its new corporate headquarters, and Apple continues its $1 billion office campus.
These companies carry their brand, and world-renowned brands attract further investors as the city of Austin becomes a hot destination for high-tech manufacturers. The message has been sent, and advanced manufacturing firms are now looking to Austin's workforce after being told the water is fine in Austin.
Conclusion
The city of Austin, Texas, is proving to be a real catalyst for economic growth in Texas by becoming a tech hub that rivals others in the country. While the job market is much more flexible and not limited to the city’s current workforce, Austin competes for jobs with other tech hubs like Raleigh, Charlotte, Nashville, and Atlanta. It is likely to surpass them in the near future.
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