Changes to watch

I have told you several times that the Austin-area residential market calmed down a bit mid-way through 2021. We are still in the longest market boom in history, with still-limited listing inventory and rising sale prices. It’s reasonable to expect those conditions to continue into and probably through 2022, but the out of control bidding wars and unlimited appraisal waivers that were almost routine in the first half of the year have been less frequent in the second half.

I’ll write more on this when polished December data is available from the Texas Real Estate Research Center in about a month from now. Going into the final days of the 2021 holiday season, though, one graph using only MLS data shows important changes to keep an eye on next year:

That covers monthly sales of houses, condos, and townhouses in our 5-county MSA. You can see that the Days to Sell metric began shrinking in mid-2020. As I have pointed out previously, we reached a tipping point in September 2020, when monthly units sold exceeded the number of new listings. We consumed inventory for 12 of the following 13 months. The impact of that shift is visible in December and January, with Days to Sell falling rapidly almost to the end of 2020. Many of those December contracts closed in January, when median closing prices shot upward. That trend peaked in June-July 2021, and at the same time Days to Sell began to grow month by month, and has more than doubled from 9 to 21 days since July.

Remember that 21 days to sell is by no means normal. Sales have been quicker since 2013 than in most years before then, but this chart shows the contract between 2020-2021 and previous years in this very long market boom:

Will we see this kind of market behavior again in 2022? Without increasing the supply of homes — which seems unlikely — then this kind of accelerated sale cycle is probable. I’ll update you in a few weeks with more details about 2021, but the trends shown in the graph at the top of this post are worth watching.