Austin May 2016 Real Estate Report: Suburban Home Sales are Hot, Highlighting High Prices of Urban Core

Looked at from afar, Austin’s 12.5 percent increase in home sales in April looks like a great thing for homeowners. And, for some, it is.

But when you drill down on the figures, they highlight a couple important trends in the Austin and its surrounding areas. For one, the price of homes in the central Austin area have climbed rapidly out of reach for many people. The median price of a home within Austin’s city limits in April was $359,450 — or 10.6 percent higher than during the same month last year, according to the Austin Board of Realtors.

But Austin is still a hot spot, adding jobs and experiencing the lowest unemployment rate it has seen in 16 years — at 2.9 percent. And those factors translate to many more people looking to suburban areas for affordable housing.

“The City of Austin’s housing market is drastically different than surrounding areas,” said Aaron Farmer, 2016 president of the Austin Board of Realtors. “In Austin, home sales growth is suppressed, inventory is more constrained and home prices are much higher.”

But that 12.5 percent increase in overall single-family home sales in Central Texas can be a little misleading. About 80 percent of those sales happened outside Austin’s city limits. Hays County, for example, saw a 17.8 percent increase in the pace of sales. When you just look at Austin, the 829 home sales in April only represent a 1.7 percent increase from April 2015.

It’s easy to see why.

“Hays County is one of Austin’s few surrounding areas with entry-level homes priced less than $200,000, a price point with high demand,” said Mark Sprague, State Director of Information Capital for Independence Title. “In Williamson County, demand is highest for homes priced between $200,000 and $400,000, but there is not sufficient housing stock to meet demand, particularly in Round Rock and Pflugerville.”

In Travis County, median home prices are now at $339,500. That’s 8 percent more than a year ago. That’s $20,000 less than the median price inside the city of Austin itself. Meanwhile, the median sale in Williamson County was $255,000.

These pricing changes and the limited availability of housing inside the city create opportunities for many homeowners in areas with more stable home prices. But the ongoing dynamics raise big questions for Austin as it tries to accommodate rapid growth without pushing traditional residents out of the city.

And it highlights the need for homeowners to take advantage of every opportunity to reduce costs.

“Housing affordability includes not only a home’s sale price, but the homeowner’s ability to continue to afford the home as property values rise from year to year,” Farmer said. “The Austin Board of Realtors encourages homeowners to learn how their home is being appraised and all property tax exemptions they might qualify for. A Central Texas realtor can help homeowners contest their assessment by identifying comparable properties and gathering the necessary background information to formulate an appeal.”