It’s hard to find a happy medium for buyers and sellers in any real estate market (conditions that favor one never favor the other), but if you’re looking to sell and call Austin, Texas home, it’s just passing the peak of one of the most extraordinary sellers’ markets since the housing bust.
Like most things in life, good times in real estate don’t last. Eventually conditions change enough to tip the balance in favor of one side over the other, which is just starting to happen to Austin. There aren’t enough homes for the people who want to buy them and Austin’s booming economy will be attracting even more in the near future.
The Homebuying Institute calls Austin’s current situation a ”perfect storm” of real estate conditions. Home values within the Austin housing market have risen steadily since 2012, increasing by double digits in 2017, then settling down to a calmer pace. By April 2019, the median home price in the five-county Austin-metropolitan area had increased 69% over the past decade.
The Nation’s Fastest Growing City
The secret to Austin’s success is its economy. Home to the University of Texas, Austin has become one of the fastest growing technology centers in the nation. Adding over 26,000 new jobs with a growth of 2.5% makes it the 12th fastest growing major metropolitan in the nation. With a 2.3% unemployment rate and wages that are 2% above the national average, Austin is brimming with jobs. Fortune 500 companies including Whole Foods Market, Samsung, Facebook, and Oracle have facilities in Austin. Both Google and Apple recently announced that each is bringing 5000 new jobs to Austin.
Austin isn’t just a good place to work, it’s also a great place to live. In U.S. News and World Report’s 2019 “Best Places to Live” ranking, Austin was listed in the number one spot for the third straight year.
Inventory is a worry
If there is a kink in Austin’s real estate market, it’s inventory. Demand is so strong that Austin’s home builders can’t keep up with it and for six straight years supply has lagged demand. After a busy February, Austin started reporting shortfalls in March and by May inventories were short by more than 10%. Through the spring, Austin’s supply of inventories languished for about two to three months. The time it took to sell a home fell from 72 days in January to just 50 in April and sales soared by 15%. “Because Austin’s economy is thriving and the city continues to remain one of the most popular living destinations in the country, the housing market remains extremely tight,” said Kevin Scanlan, president of the Austin Board of Realtors. It’s remarkable that Austin’s tight inventories have only had a temporary impact on sales; prices this year calmed down but are still steadily increasing month over month.
Will new home production increase enough to meet demand or will shortages of homes for sale drive prices up as they have in hot markets around the country? Prices in Austin have moderated this year, rising only 2% each month over 2018 levels compared to 4% last year and 5% to 7% in 2017. Should inventories continue to remain manageable, Austin’s market may become more balanced, making life a little easier for buyers. If not, it will remain one of the best sellers’ markets in the nation.