Is Trulia Correct? The data suggests otherwise. I think they are full of it
Its ironic that one business journal picks up on this crap and buys it hook, line and sinker.
http://www.trulia.com/trends/2014/10/bubble-watch-q3-2014/
Now, one must wonder about the data. How did they arrive at that analysis? They say that they look at price-to-income, the price-to-rent ratio and prices relative to their long term trends. That all sounds great but lets see data to support that analysis.
Price-to-income. Are the prices of houses going up by the same level as income? That is an interesting question. I don’t know. Its a curious question.
Price-to-rent ratio. Are the price increases going up proportionately with the rents? I think that rents have been going up by more than the prices but I haven’t really looked at it.
Prices to long term trends. Now how in the world did they ever come to any sorta conclusion based upon the data from Austin? I don’t know. All one has to do is look at the historical prices of houses over time which is super easy to do. Well, a research institution that compiles data and does research on real estate across the spectrum says otherwise http://recenter.tamu.edu/data/hs/hs140.asp
In fact, if you look at the data from the same data table in the Texas A&M link will show that there is only 2.5 months of inventory on the market. That indicates a red hot market. Inventory on the market is the best indication of the hotness of a particular market. Inventory on the market means that if there aren’t any new houses that come on the market then how long will it take to sell the present inventory of houses on the market. If you look at the data over a 20 year period of time then the data shows that Austin will continue to do well.
The demand for houses in Austin is most certainly healthy. There is no other conclusion.
Its also interesting to note that the median prices of houses have been rising steadily for a very long time.
Also, there are some submarkets that are doing better than others for sure. There are some submarkets in Austin achieving over 20% annual returns without regard to rental income or tax breaks or value added scenarios.
The takeway. Trulia and Zillow make money from many different sources and one of them is selling the “analysis” to media publications. I am not buying their nonsense and I hope that you aren’t either.
If fifty million people say a foolish thing, it is still a foolish thing.
Anatole France