I recently shared data showing that the frantic pace that we experienced early this year in the Austin residential market had calmed. (See Calmer market conditions? and Our changing market.) I don’t see a return to anything like “normal” market conditions any time soon, but a couple of months of declining sale prices at least hint at a trend, and in September we actually listed more homes than we sold for the first time in a year! (Not by much, but it’s worth noticing.)
This chart from my market dashboard shows the pattern over the past several years:
You can see the declining prices at the right side of that chart, but you can also see what aggressive bidding wars did to our market during the first several months of 2021. Yes, median and average prices peaked in July and came down in August and September, but it’s obvious the prices are up dramatically year-over-year.
The Texas Real Estate Research Center at Texas A&M University provides some great tools. One of those is the Home Price Index. Below is a look at that data for alsmot 21 years:
With that long look at history, the recession that followed 2001 is visible, as is the “Great Recession” after the near-collapse of the mortgage industry in 2007-2008. Notice that neither of those events affected the Austin real estate market as severely as it did other parts of the U.S.at that time — a testament to the resilience of our local and regional economy. The darker vertical line denotes the beginning of the current market cycle for our area, with 2012 being the recovery that led to the longest market boom we have ever seen.
The data in that chart is indexed to 1st Quarter 2000, and you can see that over the 12-year period from then to 1st Quarter 2012 market prices were up a little less than 25%. You can also see the very real difference in price behavior over the past couple of years. To highlight that change, here’s another view of the Home Price Index data, now indexed ten years later than the chart above:
In this view, the indices for all three price tiers emerge above 100% near the beginning of 2012. As I pointed out in Our changing market, a major shift began in early 2020 with the erosion of listing inventories and rapidly falling “Days to Sell.” In the chart above, notice that it took 8 years — 32 quarters — for prices to rise 50%. Then, in just 7 quarters, prices increased another 30% to 40% compared to 2012!
In 3rd Quarter 2021, the pace of change in all three price tiers flattened somewhat, as we should expect from the shape of the Market Price Movement chart at the top of this post. With real increases in residential listings over the past several months, sales disruptions that have historically accompanied the holiday season, and small increases in mortgage interest rates that we’re seeing now, we may well see improvement between now and January 1, 2022. We still have just over 1 months’ supply of homes for sale, and employers are expected to bring thousands of jobs to our area, pointing to continuing challenges, but we should have a few months’ reprieve from the pace we experienced in the first months of this year and maybe calmer conditions continuing into next year.