Monday Morning Scoop - Austin Poised For Healthy Growth In 2024
Austin Poised For Healthy Growth In 2024
Austin’s economy will be firing on all cylinders in 2024.
Economic development leaders continue to market Central Texas for corporate investments — a new incentives program is also ready to go — and $25 billion in infrastructure projects are underway in Austin that are expected to improve connectivity and boost quality of life. Plus, the housing market continues to stabilize from the high-flying days of the pandemic, and initiatives from Austin City Hall may help move the needle on affordability issues.
“It is easier to sell Austin (and) it’s easier to sell Texas” to companies looking to expand than it ever has been, Aaron Demerson, president and CEO of the Texas Economic Development Corp., said during a panel discussion.
He’s at the tip of the state’s spear when it comes to encouraging corporations like Tesla Inc. and Samsung Electronics Co. Ltd. to make major investments in the state, and he hinted at some potential wins on the horizon.
“Austin’s going to have some announcements down the line,” Demerson said. “The pipeline has not stopped in the Central Texas region.”
But Demerson also joked that he would lose his job if he revealed specific details. Still, he said Central Texas representatives will be joining state officials on overseas trips to court businesses this year.
“The rubber meets the road at the local level,” he said. “If we don’t have things happening at the local level … folks will go elsewhere.”
And as Austin catches new corporate fish, jobs and people will follow. Over the last few years, that’s put a strain on the region’s housing market, which experienced sky-rocketing prices and dwindling supply.
The market began normalizing in 2023, and that’s expected to continue this year, said Clare Losey, a housing economist with the Austin Board of Realtors.
Losey said it’s unlikely there will be meaningful change to housing prices and inventory over the next year. But, she said the moderation of home prices in 2023 is positive for the economy over the long term and should keep the gap between home prices and income from widening.
This graphic shows 30 years of Austin-area housing statistics, illustrating the correlation between inventory and prices.
To afford Austin’s $450,000 median home price, households must earn annual incomes of nearly $150,000, according to ABOR data. That leaves about 40% of households priced out of the city, which is also why people continue to flock to the more affordable counties surrounding the city, she said.
Housing advocates are hopeful that pro-density initiatives coming from Austin City Hall, such as the first phase of the HOME Initiative, will help move the needle for affordability.
The initiative, which allows up to three homes to be built on a single-family lot, represents another step in the city’s ongoing effort to establish more “missing middle” housing options. But the roll-out of the initiative may not have an immediate impact on the city’s need for more affordable housing, Losey said.
She said it’s likely developers will use the new tool in more desirable neighborhoods, which could lead to higher-priced homes.
“We may not necessarily be adding supply, potentially to the lower-income brackets,” she said. “But overall, it should begin to ease a little bit of the (upward) pressure on home prices in general, over the long term.”
The second phase of the HOME Initiative, which aims to decrease the city’s minimum lot requirements, could help move the needle more, she said. City Council plans to consider the change this year.
“It will allow for a little bit more room for prices to come down over the long run,” Losey said. “It’s a long-term game.”
Infrastructure to fuel economic activity
A slew of infrastructure investments are also expected to create tens of thousands of jobs annually and create opportunities for developers and businesses.
Work is underway to implement a new 15-stop light rail system through the center of the city, extending from near 38th Street to south of Lady Bird Lake. The exact route and station locations haven’t been solidified. A future extension to the airport is possible with additional funding.
What’s on the books could cost up to $4.8 billion and will create opportunities for the real estate crowd to develop near the transit stops. It is also expected to slow the rate of traffic growth and boost quality of life even for those who don’t use the transit system.
“When you have a transit stop, economic development happens around that,” said Greg Canally, executive director of the Austin Transit Partnership. “We want to make sure that we can leverage that and partner those opportunities where we can with the local business community. We think there are really great upsides there when it comes to housing, jobs and office as well.”
He said appropriate land use along the light rail line is key to ensuring federal funding for the transit project.
“Attracting those investments require us to look at our land use policies, and we feel confident that conversation will be positive this year,” he said.
Plans are also underway to expand I-35 through the center of Austin, along with the long-anticipated redevelopment of the Austin-Bergstrom International Airport. Both projects are emphasized in economic development circles as key to sustaining Austin’s growth.
By: Mike Christen
Source: Austin Business Journal