Austin, Texas is a boom town right now. Actually, it has been for the last several years. Currently though, Austin ranks #2 in the Trulia survey of Best Places to Live based upon its job market and quality of life indexes. It’s the “Live Music Capital of the World.” It hosts the internationally know South By Southwest Festival. The city has 250 parks and the University of Texas. It hosts the X Games and Formula I racing at the Circuit of America. And every day, 50 more people move to Austin to stay.
All that being said, Austin is a very tough city for home buyers. Sales prices of homes are currently two times the national average and rising. Home inventories are low and falling.
It’s even worse for homeowners wanting to “flip” their home in Austin. (A “flip” is a home purchase at market rate and subsequent sale of that same home at a higher price due to improvements made by the owner in the home for a short term pricing gain.) Trulia ranks Austin among the worst for home flipping at a rate of 3.4%.
Markets that took huge hits in the 2008 housing crisis are doing much better than Austin in terms of home flipping. Cities such as Las Vegas (currently at a 10.5% rate by Trulia), and Florida’s Daytona Beach (9%) and Tampa (8.4%) along with distressed cities such as Detroit where values are far below the national average are now in better positions to flip.
No wonder Austin with its 3.4% ranking in terms of home flipping is having such a difficult time. It had one of the strongest housing price appreciation rankings in the country, 7.9%. Diving deeper into flipping statistics according to Trulia, some 44 of 100 U.S metros saw percentage gains of at least 5% in flipping houses. Just not Austin.
The juxtaposition of Austin’s home real estate market couldn’t be wider. On the one hand, the market is booming with higher prices and stiff competition within that market. And on the other, the flipping market is on a downward spiral.