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Austin, Texas: boom town or about to bust?

Hot Stock Minute

Austin, Texas is buzzing with thousands in attendance for the South by Southwest Interactive Conference. The speakers at the conference range from NSA whistleblower Edward Snowden to Lena Dunham, creator of the HBO show "Girls." Austin has been experiencing a boom of its own beyond South By Southwest. It’s becoming a tech hub and reaping the rewards of all the new business flooding into the city.

In addition to the major companies whose corporate headquarters are in the Austin area, such as Whole Foods and Dell, many more major companies are opening offices in Austin including Apple, Athena Health, Samsung, DropBox, and Nasdaq OMX. It's a bit of a circular process with big companies moving to Austin because of the base of talent in the area, while the talent is moving to Austin as more companies open offices there.

Yahoo Finance Editor in Chief Aaron Task says the process can be self-fulfilling with a lot of people in one industry moving to the same city. Once one company opens an office, others in related fields follow so they can take advantage of the same talent pool. "That recruits other people to the area to do business with them. Which makes it easier to hire workers,” said Task.

That cycle is feeding a population boom. About 110 net new people move to Austin every day and that influx of new people is creating a housing boom as well. Some might even call it a housing bubble. A study in late 2013 said that home prices in Austin are overvalued by 10%. But the boom is pretty recent. According to Task, it started in 2000 and was helped by Dell. “Dell’s growth really spurred the long-term boom that’s been happening here now for the last 15 years plus,” said Task. A bubble could be on the horizon, but Task says real estate brokers are bullish, claiming there’s still much more demand than supply in Austin.