Friday, September 22, 2023

Austin Texas Real Estate Market Update

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Shreya Christina
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As with several other major metro areas, Austin’s housing market is booming. While sales have fallen slightly in recent months and news points to slowdowns across the country, Austin’s market data points to a bright future.

As of mid-July, Austin remains a seller’s market as the economy continues to recover rapidly from the impact of COVID and the influx of potential new homeowners into the area continues at a steady pace. Housing prices have risen significantly year on year compared to last year, despite rising interest rates and rising inflation.

The Census Bureau estimates that Austin’s population is growing by nearly 150 people every day, meaning nearly 5,000 people are becoming new city dwellers each month.

This population influx bodes exceptionally well for the housing market, which is a major reason why the Austin housing market is setting new records for the red-hot sales pace. The Austin Board of Realtors predicts that 2022 will be a record year for home sales in the city, and the number of active ads has increased by more than 146% since last year.

The Austin metro area witnessed a rise in median home prices from $640,000 to $667,000 from April to May, representing a $27,000 increase in one month. That, in turn, represented an 18% increase over the previous year. Total sales for Austin itself were valued at $923 million, and for Austin-Round Rock, home sales were valued at $2.48 billion. Since Round Rock is just north of Austin, the stats are often lumped together with the city proper for convenience.

Housing Statistics

Last month, home sales fell 6.7% year-on-year, but the median home price rose 19.6%, so slightly fewer homes were being sold for more money. The median selling price of $550,000 for Austin-Round Rock, MSA is an all-time high, and the average time on the market for a new home was 12 days. In January last year, the available stock was dangerously low at 0.4 months. Still, that figure has begun to rise to more normal levels. It’s safe to say that the Austin housing market has been one of the strongest in the country in recent years, and the trend is set to continue for a while.

Austin’s booming economy has attracted many people from across the state of Texas and those from out of state. Combined with natural population growth and historically low interest rates, Austin’s appeal is simply unstoppable. As of last year, Austin was ranked by Zillow as the #1 most popular housing market in the United States. Although the city has dropped a few positions in Zillow’s rankings this year, it is still in the top ten (10).

New Construction Homes

Although new housing construction in urban areas is booming, it is not nearly enough to keep up with demand. Builders of luxury homes and single-family homes face challenges beyond their control, including increases in material costs. Although these have problems

The inventory of new homes is meager and continues to decline. Right now, at 1.2 months, it would only take about four months (at current demand levels) to bring supply down to about zero. Construction costs continue to rise, while the labor market is tight and there is a scarcity of available plots to build on. To stabilize the housing situation in the city, homebuilders must complete construction of the new homes in the Austin area and continue to create new home communities. With all their challenges, homebuilders may find it more challenging to bring affordable housing to market.

Ever since interest rates and low inventory have made it expensive for new home buyers, some have decided to rent. This situation has made it ripe for investors to use alternative strategies such as house hacking and seller financing to gain greater returns. Coupled with the city’s inability to keep up with the pace of demand, it seems likely that more buyers will be forced to look for options other than buying a new home.

The future, a prospect that can change

Experts do not expect available inventory to rise significantly above its current 1.2-month level. However, some news outlets report that new home construction is on the rise and Austin homebuilders are building more homes than usual. Still, the influx of new residents into the city seems stable and robust, allowing stocks to remain low.

The number of resale and new construction homes is not enough to alleviate short-term inventory problems. If the market cools, it is likely due to a rise in interest rates and a decline in consumer confidence. That means there will continue to be an increasing demand for housing until the market cools down for a few months as the stock increases.

You can expect Austin to remain in the top ten (10) US housing markets for a few more years. It is a popular place to live with a cozy atmosphere and many activities. In addition, the city attracts businesses and families, and many plans are still in the works, making the future bright. Overall, Austin is one of America’s top cities, which isn’t going to change much anytime soon.

Population growth is why housing demand and inventory issues will continue to be problematic for Austin homebuyers, city leaders and homebuilders. Fortunately, as mentioned above, some news outlets are reporting that Austin homebuilders are building more homes, and many are saying the market is “normalizing.” To reduce construction times, some builders have relied more on building turn-key homes, which: Terrata Houses always does. This process removes changes from home buyers and allows the builder and his partners to focus on completing homes quickly. Fast moving homes may soon allow more homes to come online, but they won’t solve everything.

Austin should remain a strong market in 2022, and most experts agree that the city’s future looks bright for years to come. If you are looking to buy a home in Austin, now may be the right time to buy, depending on your situation. Ask a real estate professional about your unique situation. Austin experts can discuss your needs and your family’s goals and help you choose the best path for you.

Things will change, ask an expert for advice

Keep in mind that data changes and at the moment many different things can affect a given market. Today, Austin-area data suggests that the real estate market will be strong in 2022, even if it has slowed down a bit in recent months.

In a few months, this picture may change. Be sure to check with your financial advisor and real estate expert before deciding to buy or invest in a new home.


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