Housing Market Forecast: Austin and San Antonio, TX

Austin ?and?San Antonio ?are among the fastest growing cities in the United States — and a major area of focus for The True Life Companies' attainable housing thesis.

Austin, the state's capital, has become as well known as a developing hub for technology and IT-related jobs. Meanwhile, San Antonio, the second-most populous metro in Texas, is rich in history and boasts a vibrant cultural scene. And both have seen rapid population growth in recent years.?Here's why investors should pay close attention to this booming mega-metroplex:

• According to census officials, the region is expected to add as many as?7 million new residents ?in the next 20 years.
• Austin and San Antonio's housing markets are?still competitive , despite headwinds in the real estate industry.
• Austin is?quickly becoming a tech hub , with thousands of industry leaders and startups calling the city home.
• New residents are drawn to San Antonio for the city's rich cultural landscape and relatively low cost of living .

Austin: Population and Employment

The population of Austin has steadily grown over the past few decades. In 1974, only 308,000 residents called the state capital home;?that figure has ballooned to nearly 2.3 million in 2024 . According to United Nations studies,?the population of the Austin metro area has grown by 2.06 percent since 2023 .?

Although that's higher than the average population growth rate for the U.S. as a whole (around 0.5 percent), it's a slightly slower pace than before the Covid pandemic, when annual population growth often topped 4 percent. Last year, Austin was knocked from the top spot among America's fastest-growing metro areas as measured by the U.S. Census Bureau — a title it had held for 12 years. However,?Austin still boasts the second fastest-growing population in the country .?And although the U.N. expects Austin's population growth rate to slow in the coming years, it still?predicts annual growth above the national average through 2037 .

Some of that population growth can likely be attributed to the development of Austin as a tech hub. Starting in the mid-1980s with the founding of Dell Computer,?tech startups, as well as established companies, have headed in droves to Austin's "Silicon Hills ." Those companies include Intel, IBM, Hewlett-Packard, Apple, Cisco, and Tesla, among others.?

According to the most recent data from the Austin Chamber of Commerce,?the city is home to nearly 9,800 tech firms , and the tech industry accounts for more than 16 percent of all Austin jobs.

Austin: Housing Market Overview

As Austin's Silicon Hills continue to attract employers, we're seeing a continued need for new housing, according to many of the markers we use at TTLC to guide our strategy.

As in many other cities across the U.S., the real estate market in the City of the Violet Crown has been affected by high mortgage rates that have made home loans unattainable for many would-be buyers. To some extent, those higher rates have dragged down prices. According to Redfin, in June 2024?the median price for a home in Austin was $565,000 — a nearly 6 percent decrease on a year-over-year basis.?However, Redfin also reports that houses are also taking longer to sell in Austin, indicating a market still challenging for buyers. Last year, the?average time on market for a single-family home was 42 days . This year, that figure stretched to 51 days.?The number of sales is also decreasing — from 1,017 in June 2023 to 773 in June 2024.

Perhaps most telling of all: More than 97 percent of homes in the metro were sold at or above list price in the past year, with 16 percent sold above asking. In other words, it's still a seller's market, and buyers (especially first-timers) continue to feel the squeeze of a market that is increasingly difficult to enter.

San Antonio: Population and Employment

Austin may have lost the top spot as the fastest-growing city in America, but that's only because neighboring San Antonio has claimed the lead. In 2023,?nearly 22,000 new residents flocked to the city , pushing its population to nearly 1.5 million, according to the U.S. Census Bureau.

According to U.S. News and World Report, newcomers to the city are drawn to San Antonio's rich cultural and historical heritage and its?relatively low cost of living . They're also coming to San Antonio to work for the city's major employers, which include big names in the tech, aerospace, and bioscience industries. According to some reports, these employers are expected to?help the city's population top 4 million by 2050 .

San Antonio: Housing Market Overview

According to data collected by Redfin, the San Antonio housing market is classified as competitive, with houses selling in 46 days, on average. And although the?median sale price for a home in the city fell to $270,000 in June 2024 ?— a 2.5 percent decrease on a year-over-year basis — the drop?is on par with other metros around the U.S. as mortgage rates remain elevated.

As with Austin, the potentially more salient metric in our analysis of the housing market in San Antonio is the share of homes sold at or above list price. Redfin reports that?more than 97 percent of homes in San Antonio sold at or above list price ?in June 2024 — exactly the same as Austin.

Also notable: People who live in San Antonio largely wish to stay there, and those moving to the city are not content with living outside the official metro area. According to Redfin, 75 percent of homebuyers searching for listings said they wanted to find a home within the city limits. San Antonio is well-known for its slower pace of life and "neighborhood" feel, distinguishing it from other Texas cities such as Dallas and Houston, and making it a desirable choice for many.

Outlook for Austin and San Antonio

The San Antonio-Austin area is poised for continued population growth, with the region expected to add between?6 million and 7 million new residents over the next 20 years , according to U.S. census officials. This influx should significantly strengthen the local real estate market, as demand for homes continues to rise.

The two cities are already offering incentives for homebuilders to increase the supply of attainable units. Austin has implemented SMART Housing, a program that?rewards builders for developments that welcome mixed-income residents ?and are served by public transportation. Similarly, San Antonio's Center City Housing Initiative Policy (CCHIP)?incentivizes the redevelopment of mixed-income and mixed-use neighborhoods .

How The True Life Companies Can Capitalize

For more than 20 years, The True Life Companies has sought to connect investors with real estate opportunities in growing markets across the U.S. with a strategy designed to?transform urban infill sites into attainable residential development opportunities.?

Reach out today to learn more about investing in housing in Austin and San Antonio.

The True Life Companies, LLC securities offered through Orchard Securities, LLC. Member FINRA/SIPC. The True Life Companies is not affiliated with Orchard Securities. There can be no assurance that the objectives or results outlined by The True Life Companies can be achieved. Past performance is not a guarantee of future results.