According to the chief economist for Stewart Title Guaranty Company, Ted Jones, the upcoming retail boom will surely blow the socks off any other retail estate industry.
The retail sector of the retail estate market has returned investors at least 12.4 percent last year. Yes, that goes for the entire country, but corporate housing in Austin stands to match or exceed the forecasts in the industry.
One of the main reasons probably is that there is a significant boom in the supply of money in the households. Households are able to pay down their debts since the recession and there is an increase demand for consumer goods, according to Jones in his interview on Monday with the CoreNet Global Central Texas at the Four Seasons Hotel.
However, the retail sector is still tight in Austin and there are only few developments that are taking place. But, this is actually a good opportunity for commercial developers, according to Jones.
Meanwhile, Jones has something to say for hotel and apartment owners: “Sell”.
Austin obviously belongs to the supply portion of the market for apartments and hotels. This is not a shock with the W Hotel Austin that is on the market. In fact, some brokers say that Four Seasons Hotel is on the block.
According to Jones, it is less risky to invest in the industrial, office, and retail industries at the moment.
Jones is a former top dog of the Real Estate Center at Texas A&M University. He said that in relation to reports, Austin has the most overvalued housing industry. Some local observers; however, objected to these surveys that show increased appreciation of housing values since it is unsustainable.
They believe that there’s increase in pricing may be simply because of the low supply and high demand of housing. Jones, however, argues that it is a bit more complex than that.
Jones said, “Housing prices are pretty aggressive compared to the median income. It’s definitely being driven by upper middle class jobs and if you have a hiccup happen there, well…”
Furthermore, he said, “One thing is for certain, the market for homes priced at $500,000 and above is oversaturated. The challenge is building much-needed affordable housing in a market where land prices and construction costs have skyrocketed.”
Jones cautions homeowners, though: “Increase your insurance coverage”. This is in the event of catastrophes since the cost for rebuilding is really high.