AUSTIN (KXAN) — A new report from the non-profit Urban Land Institute (ULI) claims that the real estate sector will need a "new era of thinking" in 2024, and can no longer relay on metrics that were once relied upon.
The report "Emerging Trends in Real Estate 2024" is an annual publication by ULI in its 45th year. Previous reports, according to a ULI spokesperson, ranked Austin in the top 10 for overall prospects since 2010. This year's report ranks the city as fifth in that list and as the top for homebuilding prospectus (financial security of the industry).
These results are the topic of a Dec. 5 luncheon held by the local ULI branch. A report co-author reviewed the report, and a panel discussion covered the local market's place in the data.
ULI Programs Committee Chair Lance Copeland attended the meeting and shared his takeaways in a December 8 interview.
"The report was perhaps more somber than reports of past. Everybody being pretty realistic about the impact of higher interest rates on our industry," Copeland said. "The panel was very optimistic about Austin's prospects, our fundamentals and some of the growth pieces of our story have remained pretty resilient through this rate hike cycle."
There is no "crystal ball" for predicting interest rates, Copeland added, but noted that long-term positivity about the market was felt in the room.
"Consensus on the panel was rent growth is expected to kind of level off over the next 12 months, just given how many multifamily apartments have been put on the ground lately and so that perhaps will give us a break from the crazy rent increases that we've seen over the past two years, but time will tell," Copeland said.
Copeland said that Austin's HOME initiative, which would increase housing density in the city, will likely not have an impact on the local market in 2024.
"I think the industry would appreciate any efforts [the City of Austin] can put forth to try to make it a little bit easier to get more houses built. Austin, in general, is one of the more difficult places to adjust regulation," Copeland said.
The Austin of the past isn't the Austin of today, and it may be that the "secret's out."
"For a long time, there was a sense that if we don't build it, they won't come, or if we make it difficult to grow, the city won't grow," Copeland said. "Pretty much the opposite has played out in terms of growth in the city. That's not in spite of the regulation, the secret's out on Austin — this city has a lot of things going for it economically."
Increasing density won't be brought to the city without a fight. Opposition to the HOME initiative drew hundreds of residents to give public comment during a Dec. 7 Austin City Council meeting.
"I do think that the city could do the changes in a in a thoughtful way...[by] clearly identifying where they would like more density. Nobody wants a high rise next to their single-family residential home, or anything that would diminish the value or make their taxes go up to where they'd have to move," Copeland said.
Another problem comes with encouraging density — transportation.
"We do need to figure out something on the transportation piece if we are going to encourage more density, we do have to encourage folks to find alternative ways to getting around town," Copeland said. "I think that is a super complex issue and anything that the city can do to encourage more transportation options and more thoughtful regulation, I think would be well received by the market."
