Austin Real Estate Blog

It once was the American Dream to move out of that cramped apartment in the city to a spacious new home in the suburbs, leaving behind the noise and crowd for greener pastures, so to speak.  As the price of a gallon of gasoline rises, more and more home owners are looking to the city as their new permanent destination.

Urban living is once again becoming the vogue. Commuters are finding it harder to shell out the cost of filling the gas tank for their daily drive and are looking seriously at homes closer to their place of employment. Urban revitalization is on the rise as people begin to realize the savings in transportation costs alone. A recent Caldwell Banker survey found that 78 percent of their clients were making the decision to move to the city based on the rising cost of gas.

The desire to make a difference in their impact on the environment was also cited. Our long love affair with petroleum products has most of the scientific community warning of impending severity of global climate change wrecking havoc on weather patterns and contributing to rising sea levels. As more of the population moves closer together, the number of gasoline burning vehicles on the road decreases, slowing the rise of carbon monoxide polluting the air and reducing the amount of wear and tear on the infrastructure.

Another side effect of moving closer to the job, recreation areas, and retail spaces is a healthier lifestyle as well, as these destinations are now within walking distance. Even new suburban communities are planned with this in mind – developers are adding amenities such as a community center or neighborhood pool, as well as retail and professional service space.

I’ve got to say the whole time the boom was going on in the last 18 months and our developments were selling out as fast as we could build them, I still felt that the downtwon market was being overbuilt. As Neal mentions in the excerpt below, the jobs in dowtown Austin are just not numerous enough or well paying enough (given all the state and local government jobs) to support the amount of $300+/sq ft condos going up. Some of these condos have MONTHLY HOA fees in excess of $600. That’s the cost of a $100k mortgage on a home.

Needless to say, there is bound to be some number of folks who get burned by the glut. If you’re in the market for a downtown condo, make sure you strike a good deal. You might be facing a lot of competition from the new builders if you decide to sell in the next 3 years.

Excerpt from the Neal Spelce Austin Letter.

Despite the mantra being heard of “live and work downtown,” Austin traffic patterns could change dramatically once the surge in downtown high-rise condo construction nears completion and occupancies reach saturation.

The problem is simple. Currently there are not enough jobs in the downtown area to support full occupancy of the new high-rise condos and apartment buildings that are nearing completion. And the pace of job creation in the downtown area is not yet vigorous enough to meet that demand, should the demand materialize. So, living downtown and walking to work may not be possible for hundreds of residents in the Central Business District.

What does this mean? Well, it means that many of those who rush to live downtown will find themselves part of a new traffic pattern during rush hour. You might call it a reverse commute. Cars will start streaming out of the downtown area to places of employment at the same time cars are converging on the downtown area from the suburbs and other neighborhoods.

This potential alteration is based on the assumption that downtown living units will be occupied at a reasonably fast clip (as owners, developers and lenders are hoping!!!). With that assumption, the only thing that could stem this traffic pattern change would be for more major employers to move into the downtown area. These major employers would need to pay a higher-than-average wage so their employees could afford these new units. So far, not many major employers have rushed to acquire pricey downtown space for their companies.

Remember, the majority of the employees in the downtown area right now draw government paychecks; they don’t fit the target profile for the new condo and apartment marketers. When the day is done, they head to their living units in the less expensive parts of town. It will be interesting to watch this develop as our downtown undergoes dramatic changes.