Austin Real Estate Report July 2016: The Donut Effect: High Prices Push Sales Toward Suburbs

Austin home prices keep climbing, but so do sales as the Austin region continues on its path toward another record-breaking year for real estate activity.

In Austin, 4,465 single-family homes sold in the first half of 2016. That’s a 3.4 percent increase from the first half of 2015, which was a record year in the city.

Across the 18-county Central Texas region, there were 21,036 sales — about 21 percent of which were in the city of Austin. The median price in Austin climbed 5.6 percent compared to the first six months of last year, reaching $339,652.

“The Central Texas housing market is performing very well, but extreme housing shortages across the region continue to be a challenge,” said Jim Gaines, Chief Economist at the Real Estate Center at Texas A&M University. “Homes under $300,000 have less than two months of inventory in the Austin-Round Rock MSA, which means that housing at these price ranges is essentially nonexistent. The growing ‘donut effect’ of homes sales activity as homebuyers move outside Austin city limits in search of more affordable housing is on pace to continue in the near future.”

If you look only at the metro area, which includes five counties, single-family home sales increased by 6 percent year-over-year in the first half of 2016. That happened while median prices rose 7 percent to $282,200. And listings are on the upswing, with a 5.7 percent increase (or 20,060 listings) as pending sales rose by more than 7 percent.

That’s means the area is still a hot and fast-growing market for sellers and buyers. While affordability remains Austin’s most prominent housing issue, the influx of high-pay tech jobs has fueled sales and driven up prices. Meanwhile, many residents, especially first-time buyers, are flocking to the edges of the city for more affordable properties.

“It’s important that we think of the growing housing affordability crisis not just as an Austin issue, but also as a regional challenge,” said Aaron Farmer, 2016 President of the Austin Board of Realtors. “Housing supply shortages have reached critical levels throughout the region and areas with affordably priced homes are becoming smaller and father away from jobs. Some homebuyers are now looking at homes an hour or more outside of Austin to find a home that they can afford. City of Austin leaders as well of those of surrounding cities must come together to solve our region’s challenges in housing supply, affordability and infrastructure.”

Here’s a closer look at Travis County housing statistics from June

  • Median Price for Single-Family Homes: $357,500 — a 10 percent increase from last June
  • Single-Family Homes Sold: 1,567 — a 5 percent increase from last June
  • Average Days on Market: 40 days — or 1 percent more than last year
  • Total Dollar Volume of Homes Sold — $711.7 million — 20 percent more than last June

Maxavenue Staff