Known as the live music capital of the world, Austin, TX has been ranked as the #1 “Best Place to Live in the U.S” by U.S. News and World Report. Accordingly, people are packing up their bags and heading to Austin to find out for themselves. With this growth in residents, the Austin Texas real estate market is experiencing a high demand for homes and a shortage of inventory.
So if you’re one of the many thinking about joining the movement to “keep Austin weird,” the first step is to understand the Austin real estate market. Let’s look over the current trends…
1. The median home price in Austin has reached a record high.
The higher Austin Texas median home price is illustrated by the decrease in home sales and the concurrent increase in sales dollar volume. As of May 2019, single-family home sales decreased 3.4% to 1,010 sales while the total dollar volume of single-family homes sold increased by 7.1% to $512 million.
Up 5.8% year over year in Austin, the median price of a single-family home has risen to $407,400. The Austin-Round Rock MSA also experienced a rise in the median home price but by a smaller percentage of 4.2% to $335,095. The new all-time high price in Austin has contributed to a greater demand to move to surrounding suburban areas. For first-time homebuyers, the Austin real estate market struggles with limited affordable housing options as the median home price steadily increases.
Yet despite the steady climb in Austin’s median home price in recent years, the pace of the rise has slowed. According to Zillow, the median home price is expected to increase by 3.4% within the next year. However, this hike is smaller than the Austin real estate market has seen in previous years – price increases were as high as 9% between 2012 and 2015. The narrower margins may indicate that home prices are starting to stabilize in the Austin market.
2. Austin is continuing to be a seller’s market due to the lower inventory of homes for sale, pushing homebuyers to compete for limited opportunities.
Fewer new homes for sale are coming onto the market in Austin while more current homes for sale are going under contract. As of May 2019, the volume of new listings decreased 3.6% to 1,263 listings and active listings decreased 11.3% to 1,349 listings. However, the number of pending sales increased 3.3% to 1,009 pending sales. The imbalance of the supply of homes and the demand of homes has contributed to these faster sales.
Next, let’s look at the monthly housing inventory. The monthly housing inventory decreased 0.2 months year over year to 1.7 months of inventory. This represents how many months it would take to sell the current inventory of homes on the market, given the current rate of home sales. A balanced real estate market constitutes 6.5 months of inventory, representing a balanced supply and demand for homes. Generally, a real estate market that favors sellers has less than 6 months of inventory, whereas more than 6 months of inventory indicates a surplus of homes for sale that favors buyers.
With 1.7 months of inventory, the Austin real estate market is definitely a seller’s market. Existing homes for sale are selling quickly with increasing demand to move to the city. In Austin, the average number of days homes spent on the market decreased by 6 days year over year to 29 days. The high quality of life paired with the affordable cost of living has made Austin an attractive destination for home buyers and investors. In addition, people who work in the city are looking to live closer to their jobs because of the traffic and mobility issues.
So what does this mean for you? If you’re interested in selling your home in Austin, it is a great time to sell. The Austin real estate market has seen homes receive 2 offers on average. The competitive landscape has led to homes in a good condition and in good areas to sell significantly over list price. On the flip side, if you’re interested in buying a home in Austin, you will have to be mindful of the high competition when submitting an offer. Lowball tactics will be a waste of time in Austin’s current real estate market in which competing buyers are bidding above the list price on the same property. Especially when the inventory of homes is limited, your expectations for the perfect home may need to be slightly adjusted unless you choose to postpone your home purchase until the Austin real estate market shifts. But keep in mind that it may take years to see a drastic shift to a buyer’s market in Austin.
3. Population growth is a major factor in increasing home prices and declining inventory in Austin’s real estate market.
As the third fastest growing city in the U.S., Austin, TX holds the number one spot atop Forbe’s list of next biggest boom towns in the nation. The population of the Greater Austin area has grown to over 2 million. Part of the population growth can be attributed to the increase in migrating talent as huge tech companies like Apple and Google build out their campuses in Austin. Even REX moved its headquarters to Austin in April of this year.
The influx of tech-focused jobs has attracted young and upwardly mobile newcomers, many of which enter the housing market soon after moving to Austin. While supporting the booming economy, the onset of new residents to the city has pushed home prices north and narrowed inventory.
And even so, the Austin real estate market has remained relatively affordable, compared to some other tech-heavy regions like Seattle and San Jose. This factor has made Austin a hot real estate market in 2019, and more people are continuing to move to Austin, TX to experience all the live music and Tex-Mex food the city has to offer. However, with sparse inventory and high demand from other buyers, buying a home in Austin will be a challenge. So if you’re ready to take the next steps, REX is here to help walk you through the process to become a happy Austin homeowner!