I wrote recently (Case-Shiller and Market Bubbles) about home price trends in the Austin area and other cities around the country, and promised more information about Austin’s residential market environment. This post confirms that prices indeed are up here, a predictable result of high demand and limited supply. It is important to note that changes in average and median prices may or may not reflect actual appreciation of any particular property, but we have certainly seen a shift in demand toward higher priced homes:
For all of the past ten years, the $200,000 to $249,000 price range has accounted for more than 10% of sales in the Austin metropolitan area. Growth in that market segment paused during the recent recession, but gained steam again in 2013. You can see similar growth between $250,000 and $400,000, and note that the more-than-$500,000 segment represented 11.2% of all sales — nearly triple its share in 2004!
It is still possible to buy less expensive homes, but with the rapid growth in population and employment, it is more difficult and competitive, and most often in the suburbs. Still, through September 2014 more than 1/3 of all homes sold in the metro area were priced under $200,000:
The flip side of that percentage is also important. Ten years ago, 53.5% of sales were below $160,000. This year you had to shop up to $250,000 to see the same proportion of the market.
Without doubt, homes are getting more expensive, but drawing conclusions about whether they’re “overpriced” requires more information. More on that soon ….