Housing prices tied to inflow of residents California sends most residents to TravCo

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Housing prices tied to inflow of residents
Housing prices tied to inflow of residents

After spending 14 years developing careers in Northern California, Frances and Carrell Killebrew opted for the friendlier—in terms of both the neighborhood and the pocketbook—hills of western Travis County.

Growing up in Baton Rouge, Louisiana, the Bee Cave residents were comfortable living in an environment rich with university professors and engineers involved in the state’s hi-tech petrochemical field, Carrell Killebrew said. The couple moved to California in the late 1990s for his career.

When he was offered a position in Austin in 2010, Carrell Killebrew said the family wholeheartedly agreed to relocate even though the move meant his wife would give up her job as a physician at the helm of a Palo Alto area community health clinic.

“If you compare the Bay Area and Bee Cave, even now—lot size, quality of construction, square footage—California [housing] costs four to five times the amount it takes to buy [a house] here,” Carrell Killebrew said.

The Killebrew family is part of a relocation trend that although not new, is clearer than ever because of data compiled by the state demographer. According to the data, Williamson and Travis counties saw a net migration of 44,289 residents from other states in 2013.

According to the demographer’s office, the top states that people came to Travis County from in 2013 were California with 4,353 residents, Florida with 2,632 residents and New York with 1,494 residents.

This migration is part of what contributes to Texas’ thriving economy, experts say. It is also a contributing factor in rising real estate prices.

The October 2014 Texas Relocation Report states that the top 10 Texas counties with the highest net gains of people from out of the county included three counties located in Central Texas—with Travis ranking third, followed by Williamson (fifth) and Bell (seventh). The data-driven report, with its information compiled from the American Communities Survey and the U.S.

Census Bureau as well as the U-Haul 2013 National Migration Trend, analyzed county relocation data for the 43 largest demographic areas in Texas.

State demographer Lloyd Potter said the availability of jobs is the biggest driver for people moving to Texas.

“Texas has consistently outperformed other states,” Potter said. “Texas has really helped drive economic recovery.”

He said that the influx of people moving for their job or to find a job has created a supply and demand issue when it comes to housing. He said that supply-and-demand issue is worsened by the desire to have housing close to economic centers.

“Essentially that real estate gets valued more,” Potter said. “The people are paying more for it either in rent or in price. If you look where there’s a lot of economic activity the value of real estate goes up.”

Potter said people moving from other states with high real estate prices can have a competitive advantage when bidding on houses in Texas, but he said salary is probably a bigger factor.

Barb Cooper, 2015 president of the Austin Board of Realtors, said the migration issues facing the state are more about the sheer number of people moving to Austin than where they come from.

“I don’t know if I would say it’s all California people pricing our folks out of the market, it’s just so many people,” she said.

Although the influx of people moving to Austin is driving up real estate prices, it is a critical component to the area’s economic growth, said Mark Sprague, state director of information capital for Independence Title.

“You have two options—you can have a growth market or not a growth market. There’s no in between,” Sprague said. “I understand if you’re in this marketplace why you’re emotional about it, but it’s a good problem to have.”

Cooper said when companies relocate to Austin and bring their employees with them it contributes to rising real estate prices as well.

Sprague said he does not believe people are being priced out of the Austin market as a whole—just the most desirable sections.

“[When] someone says ‘I could have bought that house for $150,000 10 years ago,’ I say ‘Why didn’t you?’” Sprague said. “I say, ‘Buy somewhere affordable to you.’”

Cooper said in her experience there are people who can only afford certain price points that are not available in the area anymore.

“Right now the median price [in Austin] is $274,000 and the average sale price is $341,000,” she said. “It’s a challenge for buyers just entering
the market.”

Cooper said her clients are more willing to move further out into the suburbs to find more affordable
price points.

“I think people’s definition of ‘centrally located’ has changed a lot,” she said. “People are understanding the market—you’ll probably have a little bit of a commute.”

Jim Gaines, a research economist at the Real Estate Center at Texas A&M University, said the Austin area has seen growth in median home values just shy of double digits for two years. He said economists worry when such growth is sustained for a long period of time.

“It becomes a problem if you move too quickly,” Gaines said. “That’s what caused the bust in California and Florida—they ran several years in a row of having 20-35 percent growth. It does create some problems, but we are not there yet.”

Gaines said economists expected to see the Central Texas market level off in 2015, which it has not done. He said the cities and state need to encourage homebuilders to make it easier and cheaper to build homes to increase inventory. He said regulations and increased cost of construction have made it harder for developers to build new homes.

Cooper said ABoR does not view the rising real estate prices as a bubble, just a supply-and-demand issue.

“We’ve always had a strong market in Austin,” she said. “Even when there was a bubble we didn’t think we were in a bubble.”

Sprague said most analysts would be very optimistic about Texas compared with other states.

“If you had a ton of money would you put it in China, London, the East Coast?” he said. “No, you’d put it
in Texas.”

As for the Killebrews, the family just celebrated their fifth anniversary living in Bee Cave’s Homestead community.

“Living here we know a lot of our neighbors,” Carrell Killebrew said. “[Bee Cave is] the best of both worlds—it feels like a small town, but it has all of the conveniences [of a larger city].”