Austin's real estate market is so hot it's overheating. That's according to a new report from Realtor.com declaring the Capital City No. 3 on a list of overheating housing markets in the U.S.
To determine the rankings, the real estate website looked at 50 of the largest housing markets and analyzed home prices, rental costs, and median income, as well as popularity of mortgages, new developments, and flipping homes. Using 2001 as a baseline, Realtor.com culled data through 2015 to see how it compares to the infamous housing bubble of 2007.
Right now, homes in Austin are listed at a median price of $400,000. That's 17 percent higher than in 2001 — and only 1 percent less than the peak market price.
But that doesn't mean we should start preparing for the bubble to burst. Realtor.com chief economist Jonathan Smoke says we're not headed toward a market collapse.
"There are places that have risks," says Smoke. "But even those places do not resemble what they looked like in their actual bubble years."
Realtor.com also notes that the recession "didn't hit Austin nearly as hard as other parts of the country." With less to bounce back from, the city's tech sector was able to thrive, serving as a magnet to Austin. And as more people move to the top city for millennial buyers, the cost of homeownership has skyrocketed.
Austin isn't the only Texas market heating up; Dallas comes in close behind at No. 5. With a 13 percent price increase since 2001 and a median list price of $335,000, Dallas rests at 2 percent below the peak market price. However, like Austin, Dallas was not as affected by the recession as other cities, and experts believe the high housing costs will slowly simmer down rather than plummet.
Only two markets are hotter than Austin — California's San Jose (No. 1) and San Francisco (No. 2). Rounding out the list are Salt Lake City, Utah (No. 4); Los Angeles (No. 6); Fresno, California (No. 7); Buffalo, New York (No. 8); Charleston, South Carolina (No. 9); and Portland, Oregon (No. 10).