How will Dell Layoffs of 900 Jobs Affect Austin Real Estate?

By DeeinAustin™

A surprise announcement by Dell, Inc. earlier this week sent the Austin real estate community into shock. Dell plans to close it's North Austin manufacturing facility, cutting almost 800-900 jobs in early 2009. Globally, the company will remove up to 10% of it's workforce, about 8800 jobs, saving up to $3 billion.

Readers asked me to cover the topic. Specific questions:

"How will the closing of Dell's North Austin manufacturing plant affect Austin real estate values?"

"How will the 800-900 lost jobs impact the local economy?"

"Is this an indication that Austin is set for a real estate bust?"

These are good questions, but there are no easy answers. The purpose of this article is to start dialogs and create a basis for discussion.

Austin Real Estate Stats Since the Tech Bust of 2000 

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Austin Real Estate Market Summary 2000-200.

• Average Home Prices were in the $200s. The average is now $250k.
• Median Home Prices were in the low $150s. The median is now $185k.
• Average time on market was less than 40-60 days.

Austin Real Estate Market Expectations Due to Dell Layoffs

Overall Austin Economy

In 2000-2003, Austin was dependent on high-tech computer companies like Dell, Samsung, and AMD. Austin's economy was nearly devastated during the "tech bust" from 2000 to 2003.  Lessons learned included diversifying our economy by creating more jobs in other sectors, such as healthcare.

North Austin Home Prices and Home Sales

I would not expect North Austin home prices to fall sharply, but they may dip while the market adjusts. Since Dell is shutting their manufacturing plant and not their corporate office, many jobs won't be at higher pay grades. Cutbacks may have the biggest impact the rental market and homes priced below $150,000.

North Austin Rental Market

Expect North Austin, Pflugerville, and Round Rock landlords to have increased vacancies and lower rents. If vacancy reaches 10%, things could get worst.

INTERESTED IN THIS TOPIC? READ MORE RELATED NEWS...

• Last Month's Austin Real Estate Market Update.
• January real estate update: North and South Austin HOT.
• Austin Chamber of Commerce responds to Dell cutbacks.
• Company Lessons Learned from Tech Bust 2000.
• Dell Announces 800-900 layoffs in North Austin.

Comments

[Sam Chapman]

The effect will have some dependance on the level of employees and their salaries. The layoff of lower pay folks will probably impact the rental market in the immediate area, driving prices down a bit. If some of these are highly compensated folks, areas like the north shore of Lake Travis could see some more homes on the market.

[Dee Copeland]

Thanks Sam!

I don't see this affecting all areas of Austin or homes in higher price ranges. I work mostly South of 183 (East, Central and South). We rarely have Dell employees come that far to live.

Seems like North Lake and North Austin are more affected if salaries are in the higher ranges. At the lower end of the pay scale, the rental markets in Round Rock and Pflugerville, perhaps Manor will see a decline. That's a lot of jobs even though the facility will be phased out over time.