Markets to Watch
Austin shines as a 'supernova' real estate market in this 2023 forecast
The Austin real estate market may be changing, but it is still one of the hottest in the U.S. as we head into 2023.
The Urban Land Institute (ULI)'s annual Emerging Trends in Real Estate report, released October 27, names Austin the No. 4 U.S. market to watch in 2023, behind Nashville (No. 1), Dallas-Fort Worth (No. 2), and Atlanta (No. 3).
The report, a joint project between ULI and PricewaterhouseCoopers, "provides an outlook on real estate investment and development trends, real estate finance and capital markets, property sectors, metropolitan areas, and other real estate issues throughout the United States and Canada."
It is based on surveys and interviews with real estate industry professionals.
After an in-depth analysis, the report identifies the top U.S. markets to watch, based on overall real estate prospects. San Antonio and Houston join Austin and DFW in the top 15, at at Nos. 12 and 14, respectively.
A top trend heading into 2023 is the continued "normalization" of markets following the post-COVID boom. Notes the report: "Almost every market in the country received lower ratings for both investment and development prospects this year, illustrating that outlooks are darkening just about everywhere following the brief post-COVID exuberance shown in last year’s survey across a variety of metrics."
However, it continues, "the pandemic seems to have reinforced some trends, notably the dominance of what we called the 'Magnet' markets — many of which are in warmer Sun Belt regions — at the top of the Emerging Trends 'Markets to Watch' standings."
Those "Magnet" markets include Austin, Dallas-Fort Worth, San Antonio, and Houston, among others. The report further categorizes markets into subgroups, with Austin earning the distinction of a real estate "Supernova."
"Like the astronomic source for its name, the five metro areas in the Supernova category markets have exploded into prominence over the past decade or so," it says. "All are smaller markets with 1 million to 2 million residents, but their defining attribute is their tremendous and sustained population and job growth, which are well above national averages. Despite their relatively modest sizes, all the Supernovas have above-average levels of economic diversity and white-collar employment, which explain their strong investor appeal and should help them sustain high growth in the years ahead."
The remaining Texas cities fall into the "Super Sun Belt" group, defined as "large and diverse but still affordable, forming powerhouse economies that attract a wide range of businesses."
According to the report, Austin boasts the highest investor demand of any market, with Dallas just two spots below. Dallas, meanwhile, tops the list for development/redevelopment opportunities, with Austin at No. 6. Austin and Dallas are Nos. 1 and 2, respectively, with the strongest local economies of the markets studied.
The Capital City is no stranger to the Emerging Trends spotlight, having ranked seventh or higher since 2010, according to a release. Austin placed first in 2020, second in 2021, and fourth in last year's analysis. It also ranked No. 1 back in 2017.