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Market News and Trends

Austin Housing: supply, demand, and prices


A year ago I began writing about changes in the Austin residential real estate market (Thoughts on this Market Cycle – Trends to Watch). Our regional market remains strong, driven by real demand to live in the Austin area and supported by continuing job creation.

In some ways that strong demand is our challenge because it is coupled with inadequate housing supply. Rather than looking at monthly snapshots, here is a comparison of market performance for the first three quarters for each of the past ten years:

Notice that the number of homes sold (January 1 through September 30) peaked in 2012, just as we emerged from the last recession. Unit sales dropped for the following four years, but have begun climbing again more recently. The “Year over Year Listings Change” column in that table shows a key issue: Unit sales during the first three quarters of 2019 were about down about 10% from the 2012 peak, but the number of listings was down more than 15%.

The far right-hand column shows that we’ve been badly under-supplied for 7-plus years, with less than half the invenstory that most market economists consider “normal” or “balanced.” That’s a recipe for price increases, and in the aggregate home prices are still going up, but at a slower pace than a few years ago:

In that chart you’ll see that average sale prices for the first three quarters of each year are up 58% over the ten year period, and median prices are up 64%. The trend was downward from 2013 but as the market tried to find equilibrium they seesawed a bit through 2016. The peak in both, though, was 2015, and as of September 30, 2019 average and median prices in 2019 were up just 2% compared to the same period last year.

You can see both trends in these graphs:

And two other metrics show a changing market as well:

Since the Austin market area emerged from the last recession the number of expired listings has been trending steadily upward with the trend line rising from about 2,700 in 2012 to 3,700 now, a change of almost 30%. Also, as the pace of year-over-year price increases began to decline in 2014, the ratio of final sale prices to original list prices went from about 98.2% to about 97.7% — not dramatic, but noticeable.

I am not sounding an alarm here. We’re going to be fine. As I said at the beginning of this post, strong demand continues and is forecasted to continue for another year or more. It’s also worth noting that homebuilders are catching up a bit, and all of their numbers aren’t reflected in the MLS data I used in this post. So far it’s not enough, though. Home sellers in some parts of our market area should be prepared for a calmer market environment than they would have experienced just a couple of years ago, but it will remain a frustrating time to be a home buyer in the Austin area. These remain trends to watch.

About Bill Morris, Realtor

More than thirty years of business experience (high tech, client service, business organization and start-up, including many years in real estate) tell me that service is the key to success and I look forward to serving you. I represent both buyers and sellers throughout the Austin metropolitan area, which means first-hand market knowledge is brought to bear on serving your needs: -- Seller Representation is a comprehensive process that begins with thorough market analysis and consultation, continues with properly staging the home to achieve the highest price possible in a reasonable time on market, a complete program of marketing and promotion, ongoing updates and communication, closing coordination, and follow-up throughout (and after) the sale. -- Buyer Representation is also full service: shopping, previewing, price and market consultation, contracting, negotiating, coordination of inspections, appraisals, repairs, and closing details, and follow-up beyond the closing of your purchase to ensure your lasting satisfaction. Because the real estate industry is becoming more sophisticated and challenging every day, you need a professional that understands the industry and is positioned to stay ahead of the game. I go the extra mile to help you achieve your goals. That's why I constantly research the market and property values so your home is priced effectively from day one. I also make sure the public knows your home is for sale by using innovative advertising and marketing techniques to attract potential buyers.

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