The 2018 HBA Housing Forecast provided US and global economic statistics and outlooks from UT Economist Dr. Greg Hallman, local economic factors and forecasts on housing from 360 Analytics’ Eldon Rude, and insight into the constantly evolving consumer from Kantar Future’s Lindsay Kunkle. Below are some takeaways from the conference, held at the AT&T Center on the UT campus on January 31, 2018.

Global and US Economy
Dr. Greg Hallman gave some statistics of what overall seems to be a healthy economy that is back to “full potential.” He predicts GDP growth of 2.5-3% in 2018 as we continue this long (101 month) period of expansion. That optimism is provided by the low unemployment rate across all levels of education, wage growth (although slow is outpacing inflation by 1%), consumer confidence at levels not seen in 17 years, and the 10 yr rate remaining steady despite the Fed raising rates. The recent increase in rates could be explained by people offloading bonds to enter the stock market following its stellar performance in 2017. Regardless of cause, Dr. Hallman thinks that our economy is strong enough to sustain growth even if rates were to move up 150 basis points. If rates near 5% he will be concerned about the impact that would have on companies investing in expansion.

Of course that optimism has an asterisk, and there are a few things that raise concern:

  • China – is there debt problem manageable? They are the driver of global growth.
  • Trade War – will there be repercussions from the combative rhetoric from the administration.
  • War. (North Korea?)
  • Fed has to increase rates but also has $4 trillion of bonds to offload.
  • Debt to GDP ratio is at same level as Portugal.
  • Nobody is worrying! VIX remains low.

Other things Dr. Hallman is keeping an eye on are the labor participation rate, which he thinks should see an increase from its current level of 63% (where it has been since recession), wage growth, and the effects of the biggest tax overhaul in decades. Despite the optimism in the stock market with the slash in corporate rates (which he thinks was a no brainer), in his opinion it’s too early to tell how the cuts will affect the economy as a whole.

Local Economy and Housing Forecast

Eldon Rude from 360 Real Estate Analytics gave a positive outlook for the housing market in Austin for 2018. As companies such as Google, Facebook, etc. continue to grow their presence in Austin, the tech economy has provided a helped drive employment in the Austin area. Austin’s 33% increase in Non-AG employment in the 10 year period from November ’07-’17 outpaced every other major city by almost 10% (2nd being San Antonio). Population continues to grow at about 2.9% per year, with that forecast remaining around 3% annually through 2030. Unemployment remains low at 2.7%, and companies are committing to expanding to Austin. In the last 18 months Facebook, Google, Indeed, HomeAway, and Parsley Energy have leased a combined 1.46 million square feet. The apartment market remains strong at just over 92% occupancy, even as rents have increased 47% since 2010. The resale market saw almost 34k closing in the last 12 months (a 2.6% increase), and inventory levels still remain low at between 2-3 months. Resales and new construction also are holding strong in the high-end market, where Months of Supply has ticked down year over year. Eldon predicts new housing starts in the MSA to increase again this year to a level of around 17,000. If you’d like to look more closely at the data, his presentation is attached.

The Evolving Consumer: Change or Be Changed

Lindsay Kunkle provided some really interesting insight on the shifts in consumer behavior. Consumers are evolving and the data supports this claim. According to Kantar Futures, a leader in global foresights, 74% of consumers think it’s important to try things they have never done, even if unsuccessful. In business, 71% believe the old way of doing things no longer works and is in need of radical change. Companies such as Unison, Ecocapsule, Lynko Furniture, and ROAM all have embraced this change and are catering toward a generation that views housing differently.

There are three constraints that Kantar focuses on with the evolving consumer.
1) Economic Capacity – Across the board wealth for 25-34 year olds is down from $25k to just under $11k between 1989 and 2013 (56%). Even for college graduates without debt the wealth change is 40%, with the number for college graduates with debt being down a staggering 92%.
2) Resource Capacity – As population continues to grow, it’s no secret that our resources will be strained, with water being a huge concern over the next 50 years.
3) Information Capacity – 76% percent of consumers say they are always looking for ways to simplify their life. We are increasingly exposed to more and more data each year.

The average person received 10 GB of information per day in 1980, 34 GB per day in 2008, and that number more than doubled to 74 GB in 2015.

Consumers are looking for more than convenience, they are looking for FLOW (time, energy, and headspace). When looking forward, ask your business these questions:
1) What can we add to make a solution more convenient?
2) Are we there before, during, and after the critical moment? (make a transaction into a journey)
3) How can we anticipate the desires of our customers?

There are over 356 million products on Consumers are overwhelmed with decisions. Auto-replenish and subscription services are increasingly popular as consumers look to outsource their decision making.

Consumers are craving more connectivity, they appreciate when companies make their values clear, and they want brands to expose them to new sensations and experiences.

PDF of HBA Housing Forecast presentation can be viewed and downloaded here.

If you would like to talk about the real estate market in Austin and what these statistics mean for your home, call/text me at 512-791-7473 or email me at

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