The short version of this post is that we still don’t have enough homes for sale to meet very high buyer demand. I’ll blame a very fast start in 2019 for my delay in writing this. I have been very busy serving clients.
In one graph here is a snapshot that makes clear the extreme conditions in this very long market cycle:
That is a view of market velocity that clearly shows the contrast between this market cycle and almost thirty years of history in the Austin area. Since 1990 about 26% of active listings, on average, sold each month, with the typical range being between 10% and 30%. In the run-up to the peak in 2000 every month from March 1999 through October 2000 were above that range, with three months above 50%. In contrast, we have now spent 6 years with the odds above 30% of an active listing selling in each month. The average from January 1990 through December 2012 was 22%, compared with 41% from 2013 through 2018!
The market absorption rate is a move formal view:
In that chart, the green dotted line represents “months’ supply” — how long the listing inventory each month would last at the then-current pace of sales. About six months’ inventory is considered “normal” or “balanced.” For six years the Austin metropolitan area has had between 2 and 3 months’ supply of houses, condominiums, and townhouses for sale. We have been and remain solidly in “seller’s market” territory.
And that leads to upward price pressure:
The steady increase in average home prices is clear, and if you compare with the two earlier charts you’ll see that with a slight lag, prices fall below the long-term trend in times of higher inventory and slower absorption and move above the trend-line when inventory is lower and market velocity is higher.
2018 finished strong, and with low inventory conditions continuing 2019 looks like another fast-paced year in Austin-area real estate. I have written in recent months about increasing “days to sell” over the past few years, accompanied by a slowing pace of year-to-year price increases. I continue to believe that is what we have ahead this year, but I will keep you updated. In the meantime, I will post an updated look at price distribution in the Austin metro market soon and offer comments on housing affordability in our area — a real reason for concern.