Life in Austin continues to evolve and adapt to the impact of COVID-19. Schools are in varying stages of being back in session, some in the classrooms, others online. High school football is already into their 2020 season and college football, including the University of Texas Longhorns, are scheduled to return to the gridiron in the coming days.The local economy continues to roar and the housing market is hotter than ever. At least for sellers. Buyers, however, are often left exasperated by the critical shortage of listings for sale. For every top bidder there are two, three, or more, other buyers who lose out in a multiple offer bidding war and either move on to the next listing or drop out in frustration.
With fall right around the corner, and soon the holidays, the local real estate market remains one of the hottest in the nation. 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%.
Home Prices Up, Inventory Down
The median existing-home price for all housing types in July was $304,100, up 8.5% from July 2019 ($280,400), as prices rose in every region. July’s national price increase marks 101 straight months of year-over-year gains. For the first time ever, national median home prices breached the $300,000 level.
Total housing inventory at the end of July totaled 1.50 million units, down from both 2.6% in June and 21.1% from one year ago (1.90 million). Unsold inventory sits at a 3.1-month supply at the current sales pace, down from 3.9 months in June and down from the 4.2-month figure recorded in July 2019.
Yun notes these dire inventory totals have a substantial effect on sales.
“The number of new listings is increasing, but they are quickly taken out of the market from heavy buyer competition,” he said. “More homes need to be built.”
NAR’s Pending Home Sales Index for August is scheduled for release on September 29, and Existing-Home Sales for August will be released September 21.
Source: National Association of Realtors®
Austin Metropolitan Statistical Area
The fact that the Austin Metropolitan Statistical Area has experienced a housing shortage for quite some time has been well documented. Every month we report that the housing inventory is shrinking, which puts upward pressure on pricing.
Now we have evidence from July’s closed sales that the pace of price appreciation began accelerating a couple of months ago and is firmly in place to continue. The average price of July’s closed sales in the Austin MSA was $459,001, a huge 13.9% year-over-year increase as compared to the same time last year. There’s more. The median price was up to $360,000 and the average price per square foot jumped to $199, which are year-over-year increases of 11.5% and 10.2%, respectively.
To put these figures into perspective, from January to June, 2020’s average monthly sale prices were ranging between 0% and 6% higher, with an average of 3.5% higher, than 2019 sale prices from the same time period.
Preliminary data from August indicates that the double-digit price increases seen in July will continue, and likely accelerate, as we move into the fourth quarter. Clearly, in spite of potential short-term fluctuations due to COVID-19, mid- and long-term forecasts for strong demand, limited housing supply and price appreciation remain intact.