It was a busy summer for real estate agents in Austin . Take a closer look at the latest stats and happenings that are making the Austin real estate market hotter than a midday walk around the Lady Bird Lake hike and bike trail.
Austin-Round Rock Metropolitan Statistical Area (MSA)
Median Home Price: $320,000 (up 6% y-o-y)
Number of Sales: 3,103 (up 8.8% y-o-y)
Pending Sales: 3,065 (up 10.8% y-o-y)
Total Sales: $1.3 billion (up 14% y-o-y)
Average Days on Market: 44 (no change y-o-y)
Months of Inventory: 2.9 (decrease of 0.2 months y-o-y)
City of Austin
Median Home Price: $390,000 (up 6% y-o-y)
Number of Sales: 952 (up 14% y-o-y)
Pending Sales: 904 (up 12% y-o-y)
Total Sales: $451 million (up 19.8% y-o-y)
Average Days on Market: 32 (down 1 day y-o-y)
Months of Inventory: 2.1 (decrease of 0.4 months y-o-y)
Median Home Price: $375,000 (up 4.5% y-o-y)
Number of Sales: 1,594 (up 16% y-o-y)
Pending Sales: 1,503 (up 12% y-o-y)
Total Sales: $770 million (up 18% y-o-y)
Average Days on Market: 40 (down 3 days y-o-y)
Months of Inventory: 2.8 (decrease of 0.3 months y-o-y)
Median Home Price: $280,734 (up 2.1% y-o-y)
Number of Sales: 1,054 (up 6% y-o-y)
Pending Sales: 1,055 (up 11% y-o-y)
Total Sales: $326 million (up 8% y-o-y)
Average Days on Market: 46 (up 3 days y-o-y)
Months of Inventory: 2.8 (decrease of 0.2 months y-o-y)
Median Home Price: $265,000 (down 3% y-o-y)
Number of Sales: 347 (up 3% y-o-y)
Pending Sales: 366 (up 6% y-o-y)
Total Sales: $113 million (down 1% y-o-y)
Average Days on Market: 51 (down 1 day y-o-y)
Months of Inventory: 3.6 (increase of 0.1 months y-o-y)
Data based on the Austin Board of Realtors July 2018 Central Texas Housing Market Report single-family sales.
Trends and Happenings Impacting the Austin Real Estate Market
Summer Seller’s Market With High Demand and Low Inventory
High demand and tight inventory have been long-holding trends in the Austin-Round Rock Metropolitan Statistical Area (MSA). It’s a combo that means very good things for sellers (and all other property owners).
The latest data coming from ABOR shows that both new listings and active listings were down mid-summer and the inventory is continuing to get tighter. When demand exceeds inventory it all but guarantees a seller’s market where home values are appreciating. That’s exactly the case in Austin right now. Across the board, the summer stats show that seller’s are enjoying short times on market and prices that are steadily going up at a healthy rate.
Most In-Demand Areas of the MSA
There’s nowhere buyers would rather be than Austin. Inside the city limits homes sales are increasing at a faster pace than the MSA at large. But the rising list prices are pricing some buyers out.
Of course, there are also buyers that prefer the slower pace of the suburbs. Three Austin suburbs were among the fastest growing cities in the nation from 2016-2017. Pflugerville (#3), Georgetown (#6) and Cedar Park (#13) are popular spots where buyers are showing interest this summer.
Anywhere that has homes at $250,000 or less is also going to be flush with buyers. Local agents note that at this price level sellers are regularly receiving multiple offers that come within days of listing.
Surprisingly Multiple Offers Aren’t as Common as They Used to Be
Agents have noted that while demand is as high as ever, buyers at higher price points aren’t as aggressive as they were a few years ago. Homes are still selling at a quick clip, but multiple offers are less common this summer compared to 2015 and 2016. Although there are fewer offers to consider, sellers are still getting 99% of the list price according to Redfin data. This signals that buyers are being more patient and going all-in when they find the right home.
Home Sales Have Hit the Highest Levels Since 2011
The number of sales, despite the low inventory, is one of the most stunning stats. There wes a nearly double-digit increased in sales during July 2018 compared to the same time last year. Real estate statisticians had to go back seven years to find numbers that exceeded the 3,103 sales made in July 2018.
Busy August Sets the Stage for a Record-Breaking Summer
Month after month this summer the pending sales number keeps getting better. The big increase in pending sales means one thing is for sure - August was set to be just as active as July, if not more. Stats suggest that summer 2018 will be one of the best seasons on record. Buyers aren’t messing around, and they aren’t dissuaded by rising prices and interest rates. They’re competing fiercely to snap up homes before things cool off in the fall.
By the way, records are already being broken this summer. The median price of $320,000 for July 2018 was the highest on record for any month.
New Home Construction Could Increase the Inventory
Can home builders keep up with the pace of demand? Even though home construction is at an all-time high in the Austin area, builders may not be able to complete homes fast enough to move the inventory needle. All the new homes hitting the market could offer some relief for buyers, but home sales are continuing to outpace construction.
During Q218 new housing starts in Austin increased by 3.3% year-over-year. There were 4,537 homes under construction during this period. From June 2017 to June 2018 there was a total of 16,675 new home starts, which is a 1.9% year-over-year increase. At this rate the number of new home starts in 2018 could be as much or more than in 2006 when building was booming.
Metrostudy found the biggest hang ups for builders is finding available land to build on and the rising cost of buildable lots. It’s forcing builders to construct smaller homes on smaller lots. Sixty percent of the homes built in Q218 were on lots less than 54-feet wide.
There’s a tradeoff for the smaller footprint. These new homes have a median price of $290,000. That’s a good deal below the MSA’s median price. But it is on the high-end for buyers that are looking in Williamson County, Hays County and further east of Austin where a lot of the building is taking place. Construction activity is happening in:
- Del Valle
- Cedar Park
- Liberty Hill
- San Marcos
*About half of the 20,000 lots currently being developed are in Williamson County.
Buyers that prefer a new home over a resale should strike while the iron is hot this summer and into the fall. Builders aren’t sure they can keep up the pace given that land is getting harder to come by, and increasing cost of construction will likely push prices higher next year. Case in point: lot delivery was down 13.4% in Q218 compared to the same time last year.
CodeNEXT is Dead in the Water, Which Doesn’t Help Builders
Members of the Home Builders Association of Greater Austin have a collective complaint. The City of Austin permitting process creates too many building delays. Unfortunately, CodeNEXT isn’t going to provide any relief.
For quite some time Austin has been trying to implement CodeNEXT , an initiative to update the land development code. The idea was to simplify the existing code and promote development that supports the character of the city.
But in August the City Council voted to end the CodeNEXT process after six years and two drafts of a new land development code. Back to square one, which means months if not years before the old code is updated. Now it’s up to the city manager to come up with a new process for updating the land development code. The task isn’t going to be easy. The new code has to gel with the Austin Comprehensive Plan, Austin Strategic Direction 2023 Plan, Strategic Housing Blueprint and Watershed Protection Master Plan.
Austin is Still an Employment-Friendly City
Why exactly is housing in such high demand in Austin? There are a number of reasons, but if you had to choose just one jobs would be it.
Check just about any list of cities with the best job opportunities and Austin will be on it. Forbes is one of the latest to determine which cities are the best places to find a job. Using short, medium and long-term job creation measurements, Forbes named Austin the second best city for jobs after top-ranking Dallas. Since 2006 there’s been 39% job growth. Forbes also noted that Austin had the strongest population growth of all the cities that were studied.
Earlier this year Wallethub compared 182 cities across the country to find out where employees can find the best job opportunities. Twenty-six job indicators were examined along with socio-economic factors to prioritize the list. The top 10 was dominated by Arizona, but Austin made a very strong showing by placing 11th. One high note was that Austin had the lowest unemployment rate of all the cities.
Even if Amazon doesn’t select Austin for its next headquarters, the massive online retailer is still increasing its satellite office staff in the capital city. Between May and July there were about 150 new openings at Amazon. It’s further proof that businesses of all sizes are still eyeing Austin, which will keep the real estate market active.