Where are Austin home prices headed?

By American Statesman staff | Wednesday, November 7, 2007, 03:43 PM

So far, Austin has avoided the worst effects of the deepening national real estate slump. Sales are slowing, but prices are holding up in many segments.

Not so lucky are the former bubble markets on the East and West Coasts, where sales are downright cold and prices are sliding from their lofty highs.

Fortune magazine worked with Moody’s economy.com to forecast price trends for 54 major markets over the next five years, and the bottom line was scary: an average 27.7 percent drop.

The calculations involved a hypothetical upscale home that cost twice the local median price, and the assumption that home prices should return to their historical relationship to the cost of renting a similar house.

In five years, the magazine and economy.com see prices dropping by more than a third in places such as Orlando and Miami, 24 percent in Los Angeles and almost 15 percent in San Jose.

Austin, however, will see only a 4.4 percent drop in that price range, compared to 13.2 percent in San Antonio.

Prices in Dallas and Houston, which avoided the bubble, are forecast to rise a little bit.