While the Austin market is hot, not all locations are equal.  For perspective, consider the factors at work in the California market about 15 years ago.  At that time, properties closest to the beach were in the highest demand.  But investors soon realized that there were only so many beachfront properties available.  As beachfront opportunities diminished properties with an ocean view were the next in line for the highest demand.  Again, as view properties became harder to find, homes within one block from the beach became hot.  The same principal applies in the Austin market today.  The question is: where is the beach? 

Clearly, Austin doesn’t have a beach, but downtown Austin – home to the University of Texas and the state capital, an array of restaurants, and a vibrant nightlife – represents the equivalent to California’s beachfront.  In short, the downtown area is the place to be in Austin.

Due to recent development, however, prices in downtown Austin have surpassed $250 per square foot.  Indeed, newer construction is fetching closer to $300, and luxury condominiums with a view command $500 per square foot or more.  The cost of downtown property exceeds the pocketbook of some investors, and many young professionals are moving into the surrounding areas as a result.