Austin, one of the fastest-growing tech metros in the U.S., increased employment at a robust rate through the first three quarters of 2014. In 2014Q3, Austin added more than 9,930 jobs, most of them in the service-producing sector. Yet the unemployment rate ticked up to 4.3 percent, slightly higher than the previous quarter. The current unemployment rate is still lower than the Texas average, at 5.1 percent. While the high-tech sector has grown in importance, the regional economy is still exposed to lower oil prices. Oil and natural gas production is concentrated on the eastern and southern edge of the metro area. We expect job growth to moderate in Austin in 2015, reflecting a cooler Texas economy as oil prices moderate. In addition to high-tech industries, the presence of the State Capitol and the main branch of the University of Texas will help to buffer the drag to the Austin economy from lower oil prices.
Austin’s housing market is very strong with house prices are growing around 12 percent year-over-year. According to Trulia, current house prices in Austin are 19 percent above prices suggested by economic fundamentals (such as price/income ratio, price/rent ratio, and current prices vs long-term trends). Strong income growth along with high-wage job growth and strong net migration is fueling housing demand and boosting home prices. With the solid demand, both single- and multifamily housing starts are increasing in Austin.
Austin is a pro-tech and pro-business metro area with a growing reputation for incubating businesses, highly ranked educational programs, and a family-friendly environment. Austin ranked number five among the U.S. metro areas in terms of high net worth software companies founded after 2003, number seven in terms of best cities for young entrepreneurs, and number three in terms of private company tech acquisitions since 2012. We expect Austin to remain a top U.S. area for high-tech industries.
Click here for the complete Austin MSA Regional Economic Update: Austin 2014Q3.