Real estate is booming in Texas, where average home prices in the Lone Star State have climbed nearly 30% over the past year, according to data from real estate agency CBRE.
But it’s far from cheap, as the average annual rental price in Texas is now more than $1 million.
While prices in some of the state’s pricier areas are on the rise, they’re still far from the $1,500 per month that real estate professionals were used to earning in the early 2000s.
“We’re in a bubble,” says John Burt, director of real estate for Austin-based CBRE Real Estate Group.
“And that bubble is not going to burst.”
While there are some signs that prices in Austin may be getting closer to those in some other major Texas cities, many of those same factors are driving prices down elsewhere in the state.
In San Antonio, for example, average rent for a one-bedroom apartment is $1.2 million.
And in Dallas, which is home to the nation’s second-most expensive real estate market, the average rental price for a two-bedroom is $719,000.
That’s more than double the average monthly rent in San Antonio and Dallas combined.
But while the average rent in Dallas is still significantly higher than the average Austin rent, many other metro areas are beginning to catch up.
The median home value in the Austin area is now over $600,000, and median monthly rent is $2,500.
While these numbers are still relatively low compared to those found in other Texas cities like Houston and Dallas, the median price of a home in the city of Austin is now $1 billion.
It’s also nearly $700,000 more than the median monthly rental price.
In fact, prices in San Francisco and New York City are already above the $2 million median price in Austin.
“The reason it’s not just Houston and New Jersey is because the median home price in San Jose is over $1 mil.
Now, you may be able to buy a one or two-unit home, but it’s a really difficult thing to do in San Diego and New Mexico,” Burt says.
“But, in the Bay Area, it’s still a very viable opportunity.”
And while Burt acknowledges that a lot of the rising prices in Texas may be driven by a strong housing market, he says that the region’s overall housing market has grown substantially over the last several years.
The average price of an Austin home increased by 5.2% between January and March of this year, and the average home price growth is forecast to continue in 2017.
“It’s definitely the most expensive place to live in Texas,” Burts said.
“When you have the economy like it is right now, it just drives prices down.”
For real estate agents, Burt is optimistic about the state of the housing market.
“I do believe that we are in a very good place right now,” he says.
He says that some of those factors include low unemployment and affordable housing, but that there’s still room for growth.
“There’s still growth in the housing sector, and I think we’re going to see a big jump in prices in 2017,” he said.
But some of that growth is also due to a relatively small number of people moving to the state, which could make it hard for agents to sell houses in areas like San Antonio.
“You don’t want to lose all your agents to Texas.
They are your best asset in your portfolio,” Burbts says.
Still, he sees a lot more room for optimism in the future.
“For sure, the economic environment has improved and people are starting to move back home,” he adds.
“As long as the economy improves, I think Texas will continue to be a great place to do business.”