The length of time since my last post, and the lateness of this one, are signs that the Austin-area residential real estate market remains VERY busy in 2017. We remain in a jobs- and population-driven boom, with demand for housing outpacing supply in many areas and market segments.
As a metro area, we have had less than 3-months’ listing inventory for more than four years now:
Most analysts consider a 6- to 6 1/2-month supply to be “normal” — a market environment in which supply and demand are reasonably balanced. With less than half of that inventory level, sellers are able to control negotiations in ways they can’t when inventory is higher, often attracting multiple offers in a matter of days and frequently selling for above list price.
Note the percentage of active listings that sold in each month over the past several years:
In 30 of the past 48 months (January 2013 through December 2016), 40% or more of all active listings sold. (50% or more in 6 of those months.) Reviewing market data from January 1990 to present, we have seen that level of demand in only one other period, in 1999 and 2000, when there were 12 months in which 40% of active listings sold, and 3 months at 50% or higher.
The result is clear in the overall distribution of sale prices in the 5-county area:
Notice the steep decline in sales below $200,000, and the increased share of sales in most higher price ranges. Sales between $200,000 and $400,000 represented about 55% of all sales in 2016, and sales between $400,000 and $500,000 topped 10% of all sales for the first time. The $500,000 to $750,000 price range represented 9.6% of all sales last year.
Obviously, there is still activity under $200,000, but those properties tend to be in need of significant renovation, possibly eligible only to cash purchasers. Moreover, they usually aren’t on the market very long at all, sometimes being under contract in one day (or less than a full day on the market).
Job creation and population growth in the Greater Austin area continue, and area economists expect our residential real estate market to remain supply-bound in 2017. I’ll comment separately on the future outlook and on more details about area market conditions and prices.