Dec 24
Mortgage shake-up, job growth, and why Austin rocks for businesses
The tightened credit in the home mortgage field may actually be helpful to Austin area businesses. As we have reported, the impact of the subprime mortgage crisis has slammed the door on many borrowers — even those with “good”credit.More and more Austin area residents who, just a few months ago, might have sailed through a second mortgage application, a refinancing or a home purchase are finding it more difficult – if not impossible – to be approved for those loans today.This is where business borrowers come in. For the most part, Austin area financial institutions are eager to lend to businesses – especially small businesses with good credit records. This helps to offset their dwindling mortgage income. Not to minimize the crisis that is tightening the screws in the mortgage market. It’s a serious problem. But out of this problem an opportunity is emerging for businesses that may need to seek more money.
Jobs are a basic driver of the economy. And the Austin area is among the strongest in the nation in creating new jobs.For more than two years now, the Austin metro area has been adding new jobs at one of the strongest paces in the nation.Our metro includes the counties of Travis (Austin), Williamson (Round Rock, Georgetown), Hays (San Marcos) Caldwell (Lockhart, Luling) and Bastrop. The pace of job growth shows no signs of letting up.
Not only does Austin lead the state economically, but by at least one measure Austin is the best place in the US for business.
Moody’s Economy.com Inc. gave Austin the top spot over almost 400 US metro areas, based on current conditions and expected trends as well as potential risks.
- Excerpt from From The Neal Spelce Austin Letter (www.AustinLetter.com).
The Austin Market
When I read these tidbits yesterday I remembered that, like all markets and businesses, there are ups and downs. While the mortgage fiasco has made the real estate market slow a bit, Austin is still outperforming most places in the United States. I think the reactions from people has to do with the incredible (by Austin standards) year that 2006 turned out to be for real estate. Comparing the 2007 real estate market to the 2006 real estate market and going bearish, resembles stock market investors worrying about a few hundred point drops when the DJIA is higher than it’s ever been.
As you might guess, I’m still optimistic about the market in Austin as a whole.
That said, there’s at least one place where I wouldn’t want my money right now.
Downtown Austin Condos
Yesterday, Avera Development removed The Magnolia development from it’s website and is reevaluating it’s development plans. The Magnolia was planned to be 139 units and no definitive direction was announced by the owners although some sources expect the land to be used for an apartment complex.
Additionally, another development group working on a project announced as The View is selling the land and scrapping plans for their 69 unit green development.It’s understandable that people are starting to reevaluate their developments. With the number of planned and in development units for downtown at an all time high, I’d hate to be the last guy to complete my condos. While the condos in many of the developments have sold quickly, if the pace of building keeps up I wonder if we’ll wind up like Denver or Miami were 2006. Given that our market generally lags the nation a bit, we could be in for a bumpy ride in the chic downtown Austin condo market.
