Bill Morris: Home values still strong in Washington D.C., and in Austin

Home values still strong in Washington D.C., and in Austin

Austin, Texas and Washington, D.C. have a lot in common.  Both are beautiful cities built on rivers that feature prominently in their ambience.  They are also both capital cities, which has much to do with other aspects of the cities' character.  Both offer moderate climates and active cultural and recreational opportunities.  I love living in Austin, and I have enjoyed the time I have spent in the Washington area.

I can't write this without pointing out a couple of differences, though.  First, the Texas Capitol building is almost 20 feet taller than the U.S. Capitol building (308 feet vs. 289 feet).  I have not verified this personally, but I have been told the height of the dome in Austin was a conscious decision under the heading of "everything's bigger in Texas."  Makes sense to me!  Second, politicians in Washington are always around.  It seems to me that the folks that wrote the Texas constitution were very wise in allowing for the Texas legislature to meet for about 4 1/2 months every two years.  That's plenty.  The rest of the time legislators should be working for a living and doing something besides passing more laws!

-- Now, back to similarities, and the real point of this post --

RISMedia published an article a few days ago about the latest (March 2011) results for the S&P Case-Shiller Home Price Index:

I have written frequently about how changes in home values in the Austin/Central Texas market compare to those in Case-Shiller cities.  (Most recently, see Home values around the country ..., 05/17/11.)  This time I'll focus primarily on Austin and Washington, D.C.

First there are a couple of important points of similarity mentioned in the linked article:
  • Strong employment/low unemployment, and
  • "Legacy issues" that helped Washington (and Austin) avoid problems with housing oversupply, speculation, and rampant foreclosures.
I have highlighted those aspects of Austin's circumstances in the past.  However, having worked with clients from the D.C. area and knowing what happened to home prices there over the past few years, I really didn't expect to read about "strength" in that housing market.  But there it is!

RISMedia also noted that Washington is a strong relocation market -- another factor that I have highlighted supporting Austin's resilience.

So what about the data?  Here's the comparison since January 2000:

Austin, Washington DC, and Case-Shiller

I included the 10- and 20-City Case-Shiller indices for comparison.  In addition, although it's not all that visible, the Austin data includes one more month (April 2011) than the others.

Now, I have no doubt that homeowners in Washington and  the Case-Shiller cities had a lot more fun than Austinites watching their property values climb -- until late 2006.  Not so much since then.  I am not sure that I see evidence of a "lack of speculation" in that Washington data, but I'll take the word of the experts quoted in the RISMedia article.  As I have pointed out previously, homeowners in the Case-Shiller cities who purchased before 2004 are probably still "even" now, and that is certainly true in Washington.

In fact, over the 11-year period charted Washington property values were substantially stronger than Austin.  The difference is what happened from 2006 to 2009.  In Austin, it is still true that over any 5-year period in the past the average home gained value.  That is NOT true of Washington, nor of the other Case-Shiller cities.

Congratulations to Washington for its strong performance.  I am genuinely happy to see strength building in a major housing market.  But I'll go to Disneyworld when I want to ride a roller coaster.  I much prefer the Austin trendline above when considering the value of my home.

Bill F. Morris, ABR, CRS, CDPE, e-PRO, MBA
RE/MAX Capital City
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Comment balloon 0 commentsBill Morris • June 10 2011 11:19AM