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May was another record month for the central Texas real estate market.
Average home sales prices reached all-time highs in both the Five Counties and Austin boundaries – $ 465,000 and $ 566,500, respectively, according to the Austin Board of Realtors.
Some real estate agents say potential buyers are pushing back because they’re fed up with soaring prices. That will lead to a reduction in the number of offers some homes are receiving, it said.
In terms of volume, sales across the region hit a record for every May since records began, increasing 48% year-over-year to 3,976 sales, the board said. Monthly housing stock fell 1.5 months to a critically low supply of just two weeks, the board said in its latest monthly housing report.
More:A look at how the Austin area’s housing market continues to sizzle
Within the Austin city limits, sales rose 54.5%, with 1,270 homes changing hands.
“The Austin housing market has become one of the most competitive markets in the US,” said Susan Horton, chairman of the board of directors, in a written statement.
Underlining a well-known issue, Horton said the region’s housing demand had “created a critical inventory shortage that affirms that the affordability and accessibility of housing is a real concern across our region and should be a top priority for local leaders”.
“With real estate prices soaring, access to affordable home ownership has become a challenge for many Austin residents, but shrinking inventory, land and labor shortages, and rising construction costs mean that bringing more affordable housing to market is not an easy process.” said Horton.
More:Austin’s real estate tech startup AnthemIQ raises $ 10 million for growth
Last month’s home sales data is comparable to May 2020, when home stay orders were still valid due to the COVID-19 pandemic. The pandemic temporarily caused a dramatic slowdown in transactions – especially for this time of year, which is usually a busy sales season, the board said.
Active listings fell 71% in May, showing how quickly homes are being signed up, the board said. Across the region, households spent an average of just 16 days in the market last month. Pending sales rose 7.4% with 4,355 in the pipeline to complete.
For years, the Austin Board of Realtors has been pushing for an increase in leave for local homesteads. Last week, Austin City Council voted to increase homesteads’ exemption from city property tax by 20% from 10%. The new exemption does not apply to property taxes paid to school districts that make up the bulk of a Texas homeowner’s property tax bill. Still, the Austin Board of Realtors called the move a “solid policy decision to make housing affordable.”
“The tightest market I’ve ever seen”
The Austin market reflects what is happening in the country’s major metropolitan areas: A scarce supply of housing is lagging behind strong demand, a trend that is driving prices higher, say housing industry experts.
“The housing market today is exceptional,” said Terry Mitchell, a longtime home builder and property developer in the Austin area. “We have seen tight markets in the past, but this is the tightest market I’ve ever seen. And this is a nationwide phenomenon – people who bid above asking price are in most major metropolitan areas.”
Mitchell said a family member recently bid on a home in the Dallas area and bid more than 10% above the asking price because they were lost on two previous offers. Your third attempt was successful.
Mitchell said the middle-income household – both in the Austin area and nationally – could no longer afford the middle-priced home. Home prices exceed incomes, which are relatively stagnant for many people, he said.
How hot is the housing market in Austin ?:Homes that regularly sell for $ 100,000 or more
In April, the National Association of Realtors put the national median sales price for existing homes at $ 341,600. The average price for a new home was $ 372,400.
Across the country, about half of households with a statewide median income of $ 68,000 would not be able to buy a home for $ 250,000, let alone the much higher statewide median, Mitchell said.
The shortage of supply and the resulting price hikes “are getting much worse for metropolitan areas, including Austin, where average household incomes cannot come close to the average house price,” said Mitchell.
As a result, Mitchell predicts that “a far higher percentage of households will rent” in the future.
Fatigue for buyers
Some buyers are tired of soaring house prices and are starting to pull back, said Stefan Benteler, a realtor at Realty Austin.
“You can only jump on the frog that often,” said Benteler. “Buyer fatigue sets in and that is ultimately what drives buyer pushback. Buyers are exhausted. They are tired of giving everything and losing anyway.”
“You are still seeing several offers for a property whose price corresponds to the highest comparable sales in the area,” said Benteler. “But the offers are not coming as fast as before, and the conditions are starting to shift somewhat in favor of buyers versus sellers.”
“These gradual changes are being noticed by listing agents and their sellers,” said Benteler. “It’s a big part of the broker talk I have with other top agents.”
A recent Redfin report found that January 1 through May 23, more than 1,500 homes in the Austin area sold for at least $ 100,000 above their asking price, compared with just 22 homes in the same period last year.
“It is still quite common for offers to be between 5 and 25% above the asking price,” said Benteler. “What we don’t see the way we did three months ago, however, are dozens of offers in every listing. Buyers don’t throw their hats in every ring. They are more cautious and picky, and that’s because” of the unparalleled appreciation our market has received . The well of money is not endless. “
Benteler said it listed a 1,342-square-foot home in the Cherry Creek area of South Austin for $ 300,000 in November. It sold the first weekend it was on the market, fetching around $ 450,000.
Fast forward not even a year later. Homes in this area generally sell in the upper range of $ 500,000 to over $ 600,000, he said. He recently saw a three-bedroom house built in 1969 that is listed for $ 705,000 and is under contract. The house, just a few blocks north of the Cherry Creek neighborhood, was claimed in three days.
“That is breathtaking,” said Benteler. “It’s bananas. This is an unprecedented seller’s market. The demand is insolently high.”
Pandemic increases appetite for home purchases
Mark Sprague, a longtime expert on the central Texas real estate market, said economic conditions in Austin and nationally were “in good shape”.
Alongside a host of other positive economic indicators, from booming corporate earnings to more air travel, Sprague said job creation “remains robust”.
“The job openings are at a record high,” said Sprague, an Austin-based housing and finance professional with Independence Title, in an email. “We’re almost full employment – 5% is considered full and the Austin area is 4.8%.”
“This is great news, especially when you look at where we were 14 months ago,” said Sprague. “Massive layoffs, economic repression (e.g. offices, retail stores, restaurants closed) and none of us knew what the next week, the next month would bring.”
But despite everything, “we still needed somewhere to stay,” said Sprague. “We still needed jobs. Many took another look at their work situation and decided, if they could work remotely, why not live where you can get the home / lifestyle you wanted / needed. Austin and Texas stood at the top of many lists. “
Consumers started working remotely, looking for bigger and better homes. They saved more, spent less and spent more time at home, Sprague said. For those who didn’t move, they looked for home improvement.
“All of these investments, whether buying a bigger home or renovating, meant that the homeowner wanted to add value and be comfortable with it because they planned to live there longer,” said Sprague. “Many in Texas were buying rural real estate in addition to their current homes. Many were looking to buy bigger, and many were making a long-term purchase in Austin.”
House sales in May by price range
Price segment sales% change
$ 100,000 – $ 149,999 11 -54.2%
$ 150,000 – $ 199,999 50 -58.0%
$ 200,000 – $ 249,999 115 -76.8%
$ 250,000 – $ 299,999 345 -40.5%
$ 300,000 – $ 399,999 850 27.6%
$ 400,000 – $ 499,999 809 90.3%
$ 500,000 – $ 749,999 1,003 162.4%
$ 750,000 – $ 999,999 427,330.4%
$ 1,000,000 + 362 291.9%
Source: Austin Board of Realtors
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