AUSTIN (KXAN) — With mortgage rates rising and housing prices continuing to climb, a new study finds Austin has the second most overpriced housing market.
The study by researchers at Florida Atlantic University looked at housing data from the top 100 housing markets and compared it to historical pricing information.
It found that based on historical trends, the average price of a home in Travis County in February should have been $347,775. Instead, the study found that the actual average price is $573,123. That’s 65% higher than where historical data shows they should be.
Only Boise, Idaho has a higher premium, with homes costing 76% more than historical data shows they should be.
With such a high premium, FAU Housing Economist Ken H. Johnson said he would normally consider advising prospective home buyers to consider renting instead and then reinvest the money they would have otherwise spent on a mortgage payment elsewhere.
However, he says Austin is uniquely situated with the booming population growth expected to continue for at least 10 years.
“I think that the inventory shortage is going to persist, which will help prop up housing, but it’s going to make affordability a major issue, both in renting, and homeownership in Austin for quite some time to come,” he said.
A separate analysis of home prices by Realtor.com found Travis County leads Texas in the most expensive median home listing prices.
Johnson said eventually we should see home price increases slow down as mortgage rates keep going up, and he even believes a housing recession is on the horizon.
However, he said the housing demand in Austin will likely help it avoid the hits other cities could see.
“I just can’t see Austin crashing because too many people are coming,” he said. “You’re not building fast enough, and so that’s going to drive it. Affordability is what you’ll be talking about for several years to come.”