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Although the central Texas real estate market is cooling somewhat, it remains in a hot spot as average house prices hit records in both the region and within the Austin city limits in August.
However, good news for home hunters is that the pace of price growth may slow down a bit.
That’s according to the latest monthly report released by the Austin Board of Realtors on Thursday.
Some local housing experts also agree that the house price rate in the five-county Austin area is slowing somewhat from its frenzied pace – although it remains to be seen what that rejuvenation looks like.
“The housing market in the area is calming compared to the hustle and bustle at the beginning of the year,” said Susan Horton, president of the Austin Board of Realtors, in a written statement. “While it wouldn’t be fair to say that market conditions are normalizing – inventory is still at an all-time low and houses are still being sold as soon as they hit the market – August housing activity is closer to what we are usually in autumn. “
More:As prices continue to rise, Austin home sales have slowed. Is the market cooling down?
The board said the rejuvenation was “because typical seasonality in terms of the number of deals has returned, even if average sales prices have maintained the profits made over the course of 2021”.
“Although prices for the month of August have set a record for the entire (region) with an average sales price of $ 470,000, prices are no longer increasing significantly from month to month,” said the board of directors.
August closed 3,849 sales in the five-county Austin area, 4.6% fewer than the previous August, according to the board of directors.
The average price of these sales rose 34.7% year over year to $ 470,000, which was a record in August, the board said. The median means that half of the homes were sold for more than that amount and the other half for less.
Within the Austin city limits, 1,244 homes changed hands, up 0.2% in sales volume from August 2020. Average price rose 27.1% year-over-year to $ 540,000, also a record in August.
The figures cover the sale of single-family houses, townhouses and condominiums – mostly used, but some new buildings are also included in the figures of the board of directors.
“I would say Austin is the absolute strongest new home market in the United States,” said Glenn Gehan, founder and CEO of privately held GFO Home. Gehan founded the home builder in Austin in 2018, two years after selling his 23-year-old Dallas-based company, Gehan Homes, the country’s eleventh largest private developer.
The central Texas market has been struggling with a gap between strong demand for housing and low inventory for some time – an imbalance that has been driving prices soaring for years, experts say.
Gehan said Austin “has had a limited supply of new homes for the past 10 years due to high demand and a relatively small housing stock … and demand seems to pick up very quickly after each slowdown. We All Need to Be More Efficient “Building Austin Housing Across All Housing Types.”
In the past year in particular, Gehan said, the market has seen “a very significant and rapid surge in demand due to the COVID-19 hiatus, low interest rates, and the fact that Austin is recovering faster than any other economy Landes “. . “
More:New 41-story condominium tower in Austin’s booming Rainey Street district
“Slowdown” in price growth?
Gehan has an opinion on the market that is likely to be seen as welcome news by potential buyers.
“Personally, I think we’re going to see a pause in new house price hikes, definitely a slowdown from the rises we’ve seen over the past 12 months,” Gehan said. “That’s pretty obvious when prices are reported to rise by 30 to 40%. There is no way that these increases are sustainable. “
If prices continue to rise “unsustainably” there is a risk that at some point we will cause permanent damage to central Texas housing demand and the property market in general, prices will get out of reach … The risk could be long-term damage, like we saw him in California. “
Mark Sprague, a longtime Austin real estate market expert, said he doesn’t think the Austin market is overvalued as some reports suggest.
“From an economist’s point of view, my question is, ‘Overrated versus what?'” Said Sprague, Austin State Director of Information Capital for Independence Title, in a statement from the Austin Board of Realtors. “With so much demand, it’s difficult to see an entire market as overvalued.”
Sprague said Austin’s market is “right where it should be based on demand.
“The Austin market is resilient, and sales and prices have been driven by real demand,” said Sprague. “A combination of events, including increased market job creation, low interest rates, changing priorities for potential buyers, and in many cases increased personal savings after staying at home orders during COVID, are why Austin ( Region) is a top market in the country. “
Sprague pointed out that Austin’s economy outperformed most of the country, with job creation and application for single family homes being key indicators. He said the national average for permit applications was down 31% compared to the peak applications in 2002-08, but the Austin area was up 28%.
Justin Boyd, vice president of JB Mortgage Group, an Austin-based mortgage company he founded, also said fears of a real estate bubble were unfounded.
Today’s price hike, Boyd said, “is due to record low inventory levels and strong demographic demand that wasn’t the case in 2006,” in the years leading up to the 2007-09 recession.
Rianna Alberty, director of sales and marketing at JB Mortgage Group, said that despite a significant year-over-year decline in mortgage applications, there have been more cash buyers than ever and those buyers are absent from mortgage applications.
“I’ve also heard that there are more big companies moving to Austin later this year and into the spring,” said Alberty. “There’s no shortage of demand and as long as we have demand, we don’t have a bubble.”
More:Rents Soar: Austin housing market enters overdrive as the pandemic rebounds
Austin House Prices Are Not Falling “Materially”
Mary Anne McMahon, a real estate agent who owns RE / MAX Posh Properties in Austin, said consumer confidence “remains bullish in the hot Austin real estate market.”
At the company’s monthly meeting this week, McMahon said, with more than 40 real estate agents and five loan officers in attendance, “The mood was that there is a very slight slowdown but the market is about to return. There is no crystal ball that shows how many companies will be moving here in the months and years to come, and we are still seeing decades of low interest rates. “
She said that many offers continue to sell above asking price, “but that is starting to weaken a little”.
In some cases, McMahon said, “We have had to go back to an old-school activity and actually lower the list price if a property doesn’t move. In some cases, finding the price sweet spot can be difficult, especially in We’re Seeing, too.” Buyers, particularly from other areas who have seen this type of healthy market, are buying homes to meet a need, even if it is only for the short term. “
Although agents “may not see dozens of offers per listing, prices keep rising,” McMahon said.
Despite soaring prices, Gehan said the Austin area “still produces many homes valued at $ 350,000 to $ 450,000 within reach of some potential buyers who may not think they can,” he said.
House prices “will not go down significantly”. said Gehan. “Things are more affordable than ever.”
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