Say hello to Fall! Temperatures in Austin dropped a bit over the past couple weeks as the seasons change, the 4th quarter of 2020 begins, and Austin’s lifestyle in the new normal due to COVID-19 continues to unfold.
The latest big development in reopening our local economy is Governor Abbott’s announcement this week that will allow bars to partially open. Also, businesses not already at 75% capacity will be allowed to increase accordingly.
Also, with the presidential, general and special elections right around the corner, there are important local and national issues on the ballot. The outcome will not only impact the Austin lifestyle, but also its future growth and economic development, including transportation and affordable housing.
Meanwhile, one thing that hasn’t changed is our local real estate market remains one of the hottest in the nation. As a result, home prices are skyrocketing. Read on to learn more about the current supply and demand dynamics driving the Austin housing market and what it means for your real estate future.
Real Estate Market Report Summary
Nationally, existing-home sales continued on a strong, upward trajectory in July, marking two consecutive months of significant sales gains, according to the National Association of Realtors®. Each of the four major regions attained double-digit, month-over-month increases, while the Northeast was the only region to show a year-over-year decline.
“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days,” said Lawrence Yun, NAR’s chief economist. “With the sizable shift in remote work, current homeowners are looking for larger homes and this will led to a secondary level of demand even into 2021.”
Low mortgage interest rates are driving the demand. According to Freddie Mac, the 30-year, conventional, fixed-rate mortgage decreased to 3.02% in July, down from 3.16% in June. The average commitment rate across all of 2019 was 3.94%.
National Real Estate Market
Existing-home sales across the nation continue to climb in August, marking three consecutive months of positive sales gains, according to the National Association of Realtors®. Each of the four major regions experienced both month-over-month and year-over-year growth, with the Northeast seeing the greatest improvement from the prior month.
“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market,” said Lawrence Yun, NAR’s chief economist. “Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery.
“Housing demand is robust but supply is not, and this imbalance will inevitably harm affordability and hinder ownership opportunities,” he said. “To assure broad gains in homeownership, more new homes need to be constructed.”
Properties typically remained on the market for 22 days in August, seasonally equal to the number of days in July and down from 31 days in August 2019. Sixty-nine percent of homes sold in August 2020 were on the market for less than a month.
According to Freddie Mac, the average for a 30-year, conventional, fixed-rate mortgage decreased to 2.94% in August, down from 3.02% in July.
NAR’s Pending Home Sales Index for August is scheduled for release on October 29, and Existing-Home Sales for August will be released October 21.
Source: National Association of Realtors®
Austin Metropolitan Statistical Area
Last month we reported that the most recent closed sales showed that the rate of price appreciation in the Austin MSA was accelerating. This month, the trend is confirmed with significant, double-digit year-over-year increases in September’s average sale price for both Travis and Williamson Counties.
With strong demand forecasted to continue and no relief in sight for the housing shortage, as well as the likelihood of continued historically low mortgage interest rates, price appreciation will likely also continue to gain momentum through the 4th quarter and into 2021.
Looking back at the last 12 months, Austin home prices averaged out at $415,793. That’s up from $398,906 in 2019 and from $388,786 in 2018. Meanwhile, the number of days homes are on the market, on average, climbed from 54 days in 2018 to 57 last year, and dropped to 52 days in the past 12 months. The number of homes sold decreased from 33,430 in 2019 to 33,460 in the past 12 months. The number of closed sales was up 13% in August 2020 compared to August 2019.