I’m going to talk about changes we are seeing in the Austin real estate market, review the most recent real estate statistics and talk about what we expect to see in the near future.
We do know why prices have risen so dramatically this year. It’s because there have been so few homes for sale, that’s no secret. When a home is called “Active” it means it is not under contract, you can actually buy that house. If we go back 2 years there were 7,133 Active homes for sale in June, 2019. In June, 2020 we dropped to 5,300. By January of this year, we were barely over 1,000 but slowly the inventory of homes is increasing. In June, 2021 there were 2,265 Active homes.As I shoot this video in mid-July there are over 3,000 Active homes on the market. 3,000 homes is still a super-low number of homes for sale but that’s significantly more than we had in January so there’s no doubt that will effect the perception buyers have in the market.
Some buyers are thinking the tide has turned and the market is dropping. We put 2 homes on the market this weekend and we have multiple offers so in my opinion the market is still excellent for sellers. I think many buyers are going to confuse the market going from 40-50% appreciation to a more normal appreciation market and not understand that still means prices are going up.
If you are selling it’s important to understand the velocity of the market when you are selecting your listing agent. Not every home is going to sell with 20 offers the first weekend. I’m seeing a lot of newer real estate agents and some veterans posting on Facebook groups in a panic when their listing doesn’t sell over the first weekend and they don’t know what to do. If I was selling my own house, I would want to hire a Broker who has been through the ups and downs of the real estate cycles and can give you advice for the changing market we are in.
If you are planning to sell you would benefit from attending one of our upcoming Free Online Home Selling Seminars. See dates and sign up at KopaWorkshop.com.
We are seeing more price reductions and homes not selling. In some cases, that’s due to buyers going through “buyer fatigue” and simply giving up. In my opinion those buyers are making a mistake. Typically, we see a slower market in the late summer. We didn’t know what to expect this summer. Would buyers pause their search to go on vacation or would everyone stay home? All you have to do is watch the news and see how crowded the airports are to know the number of people travelling has exploded. If you are buying this is the best time to stick with it and get a home under contract.
Other homes are not selling because sellers are pushing the envelope on price. In some instances, sellers are just testing the market and if the home doesn’t sell, they are going to lease it out again. If you are planning to sell and really want to sell you have to be careful about not setting your price based on homes with inflated prices that won’t sell. If you’re buying you need to be working with an agent who can help you evaluate the pricing and see what strategy the sellers are taking. Many times, a quick call to the listing agent will let you know how they arrived at the price and if there’s any chance of it selling or if you’re going to be negotiating only against yourself if you make an offer. In the end if you’re a buyer you must understand that seeing some sellers reducing the price may not be an indication the market is crashing.
Before we get into reviewing the statistics whether you are a buyer or a seller be careful who you are taking advice from. Some real estate agents will say nothing can slow down the Austin real estate market. Others say we are going to see a huge number of foreclosures and the market is going to crash. In a great example of confirmation bias the agents on either side will point to information that supports their position and ignore any contrary evidence.
In my opinion to think Austin is immune from any macroeconomic financial challenges would be foolish. We may be heading into a period of higher inflation, higher taxes and higher interest rates. That would certainly affect our real estate market.
When people talk about all the foreclosures, they expect I ask where they are going to come from? To have a market crash you’d need to have a large number of sellers forced to sell where they are upside down on their home. Occasionally I will take a market segment and analyze the down payments buyers are using. This is a chart from Cedar Park sales in May where I took a sampling of 20 home sales to compare the sales price and loan amounts. These are home sales at the top of them market and to forecast future foreclosures you’d expect to see buyers with high Loan to Value loans with low down payments.
Out of these 20 home sales in May there were 5 cash sales which is 25% of the sales I analyzed. Of the remaining sales there were only 3 with down payments under 10%. Remember, these are homes purchased at so far the top of the market. Think of all the other homes purchased months or years earlier that have tremendous equity and almost no chance of having a foreclosure. Looking at this data, you tell me where all the foreclosures are going to come from?
Now let’s take a look at the statistics for the entire Austin MLS area. In June there were 4,505 sales, up 4% from June, 2020 but the number of sales is now up 16% Year to Date over last year. Months of inventory is still at about 2 weeks.
The average sold price was up 40% to $586,908. The appreciation rate did slowdown in June, up only $4,584 from May. Of course, that’s an annualized increase of over $55,000. In a normal market wouldn’t you love to have that type of appreciation?
It’s going to feel like the market is slowing down or crashing because it’s the first month we didn’t see monster increases but we know the market isn’t going to increase $40,000 per month forever.
The average sold price per square foot increased to $276 which is $81 more than last June. On average homes sold for 7.9% over list price and the average days on the market was at 14, a whole month less than last June.
The median sold price was up to $473,000 which is $137,000 more than June, 2020 and $73,513 more than January this year.
The median home sold for 6% over list price and sold in only 5 days. The reason the median days on market is lower than the average is the average number of days for a home to sell can be more easily influenced by some homes staying on the market for a very long time, not necessarily an indication of the overall speed the market is moving. The median number of days is probably a better reflection of how fast homes are still selling.
You can call me at 512-791-7473 if you have questions about the real estate market or you want our help buying or selling in the area. I’ll continue to update you on what’s happening in the Austin real estate market. I appreciate your support. Make it a great day.
*Statistics courtesy of the Austin Board of Realtors and Independent Title.
Have a Question?
Contact Us Now!
Posted by Eric Peterson on