I offered some thoughts yesterday about where we are in the current market cycle. For a broader view of the Austin-Central Texas residential real estate market, this post will cover my ongoing Market Dashboard, now updated through 3rd Quarter 2018.
First, Trends to Watch commented on listing inventory. Here’s the big picture since near the end of the last market cycle:
Most market analysts consider 6 to 6 1/2 months’ supply to represent “normal” or “balanced” market conditions. Notice how long our local market inventory has been at or below half of that level. Listing inventory in September was 3.0 months, unchanged from August and the same as September 2017. Seasonal performance looks very much like each year since 2014.
My earlier post also discussed market absorption — i.e., the “odds of selling” for an active listing each month. For historical perspective, this chart clearly shows how different this market cycle has been from all others in almost 30 years:
The steep decline from 46% to 31% between May and September is noticeable. As I said earlier, though, one data point is not a trend. This metric will bear watching in the coming months.
Finally, I wrote previously about the slowing pace of year-over-year price appreciation, but the view of actual average and median prices is important:
Notice that very strong demand has pulled prices upward and above the long-term trendline in recent years, most noticeably since 2015. Prices have moved closer to the trendline since June, which hasn’t been unusual in recent years, but it is more noticeable and coincides with the decline with the decline in “odds of selling.” Again, there isn’t enough data here to state with certainty whether this is the beginning of a market transition or just typical seasonality.
Market economists remain confident in our strong market conditions through 2019 and into 2020, and I agree. Inevitably, however, we will see prices moderate, interest rates increase, “days on market” grow, and inventory will begin to catch up with demand. I don’t see signs right now of a sharp change but instead anticipate a fairly smooth transition. Of course, external factors that we don’t know about today could change that, but that’s another post for another time, if needed.