The latest Austin Housing Market Report reveals a dynamic market with fluctuations in prices, increased sales, and a shifting inventory. Despite challenges such as higher interest rates, buyers continue to find opportunities in the Austin housing market.
Current Austin Housing Market Report 2023
The Austin-Round Rock MSA Housing Trends
In October 2023, the Central Texas housing market witnessed significant shifts, as reported by the Austin Board of REALTORS® (ABoR). Despite higher interest rates, the market experienced a 7.5% decline in the median home price, settling at $435,000. However, the number of residential homes sold increased by 4.1%, totaling 2,337 sales. This indicates resilience among buyers who are finding value in the market.
“An increase in sales and a jump in pending sales indicates buyers continue to enter the market and are finding more bargaining power throughout the transaction,” noted Ashley Jackson, 2023 ABoR president. She emphasized the importance of working with a REALTORⓇ for success in this evolving market.
Key Metrics:
Sales Performance: In October, the sales dollar volume decreased by 1.5% year over year to $1,307,192,441 across the MSA.
Days on Market: Homes spent an average of 68 days on the market, reflecting an increase of 21 days from October 2022.
Inventory: Housing inventory increased by 0.7 months to 3.2 months, with new listings dipping by 0.8% to 3,202 listings.
Active Listings: Active listings increased by 5.2% year over year to 9,942 listings, and pending listings rose by 12.0% to 2,257 listings.
“Despite higher mortgage rates this summer and fall, closed sales across the MSA rose 4.1% year over year in October to 2,337 sales,” highlighted Clare Losey, Ph.D., housing economist for ABoR. She emphasized the negotiating power of buyers, with the close-to-original list price ratio reaching 93.1% in October.
City-Level Insights:
City of Austin:
Residential Homes: 602 homes were sold, marking a 3.5% decrease from October.
Median Price: The median price for residential homes was $540,000, showing a 1.8% decline from the previous month.
Inventory: With 4.1 months of inventory, there was a 1.3-month increase compared to October 2022.
Total Dollar Volume: The total dollar volume of homes sold was $413,742,262, reflecting a 4.4% decrease.
Travis County:
Residential Homes: 957 homes were sold, experiencing a 7.7% decrease from October.
Median Price: The median price for residential homes was $524,500, showing a 1.2% decline from the previous month.
Pending Sales: There were 909 pending sales, marking a 0.3% decrease compared to October.
Total Dollar Volume: The total dollar volume of homes sold was $668,881,399, reflecting a 7.2% decrease.
“Homeownership is still the best way to create generational wealth,” emphasized Losey, noting that the median price is still 44% higher than it was in September 2018.
County-Specific Insights:
Williamson County:
Residential Homes: 844 homes were sold, marking an 11.2% increase from October.
Median Price: The median price for residential homes was $424,990, showing a 7.1% decline from the previous month.
Pending Sales: There were 794 pending sales, marking a 14.1% increase compared to October.
Total Dollar Volume: The total dollar volume of homes sold was $403,613,886, reflecting a 4.1% increase.
Hays County:
Residential Homes: 360 homes were sold, marking a 21.6% increase from October.
Median Price: The median price for residential homes was $373,294, showing an 8.7% decline from the previous month.
Active Listings: Active home listings increased by 24.7% compared to October 2022.
Total Dollar Volume: The total dollar volume of homes sold was $167,405,638, reflecting a 6.3% increase.
“The Truth About Austin’s Missing Housing -District Level Analysis,” ABoR’s newest research report, sheds light on the severe undersupply of housing by City Council District and among different racial/ethnic groups. Ashley Jackson urged policymakers to consider this data for effective housing solutions.
Bastrop County:
Residential Homes: 125 homes were sold, marking a 6.8% increase from October.
Active Listings: Active home listings increased by 16.1% compared to October 2022, reaching the highest inventory in the MSA.
Total Dollar Volume: The total dollar volume of homes sold was $49,146,166, reflecting a 1.8% decrease.
Caldwell County:
Residential Homes: 51 homes were sold, marking a 45.7% increase from October.
Median Price: The median price for residential homes was $318,480, showing a 0.2% increase from the previous month.
Active Listings: Active home listings increased by 71.7% compared to October 2022.
Total Dollar Volume: The total dollar volume of homes sold was $16,851,436, reflecting a 50.8% increase.
Are Home Prices Dropping in Austin?
According to the October 2023 Central Texas Housing Market Report by the Austin Board of REALTORS® (ABoR), home prices in the Austin-Round Rock MSA experienced a 7.5% drop. The median home price declined to $435,000 during this period, reflecting a notable decrease. This indicates a shift in the pricing trend, with buyers potentially benefiting from more favorable market conditions.
Is It a Buyer’s or Seller’s Housing Market?
Despite the decline in home prices, the overall dynamics suggest that the housing market is still in a transitional phase. The increase in residential homes sold by 4.1% to 2,337 total sales indicates that buyers are finding value in the market, even in the face of higher interest rates. The rise in pending sales and the extension of days on the market provide insights into a market that is still normalizing. The key takeaway is that buyers may have more negotiating power than in previous periods, emphasizing that it could be leaning towards a buyer’s market.
Will This Housing Market Crash?
The data from the October 2023 Central Texas Housing Market Report does not suggest an imminent housing market crash. While there has been a decline in median home prices, it is essential to consider the broader context. Despite challenges such as higher mortgage rates, closed sales across the MSA rose by 4.1% year over year. The housing market is described as still normalizing, indicating a period of adjustment rather than an impending crash. It underscores the importance of staying informed and working with experienced REALTORSⓇ to navigate the evolving market conditions successfully.
Austin Housing Market Forecast 2023-2024
Source: Zillow
Is the Austin Housing Market Overpriced?
The question of whether the Austin housing market is overpriced is a subjective one and can depend on several factors. Firstly, it is important to note that the Austin housing market has been experiencing an unprecedented level of demand over the past few years. This demand has been driven by a combination of factors, including a strong local economy, a growing population, and an influx of out-of-state buyers. This increase in demand has resulted in a significant rise in the median home price.
Recent research suggests that homes in Austin continue to be among the most overvalued in the United States. The study conducted by researchers from Florida Atlantic University and Florida International University reveals that homebuyers in Austin are still paying almost 51% more than what is expected for homes. Only Boise, Idaho, has a higher premium, with homebuyers paying an exorbitant 81% more.
However, it is equally essential to compare the affordability of homes in Austin to other major cities. Although the median home price in Austin is high compared to historical norms, it is still lower than in cities like San Francisco, New York, or Los Angeles. Additionally, Austin’s cost of living is generally lower than other major cities, which can make it more feasible for some buyers to own a home.
Another aspect to consider is the potential growth of the Austin housing market. While it is impossible to predict the future, many experts believe that Austin’s robust economy and growing population make it a worthwhile long-term investment for homebuyers. Furthermore, the city has a diverse economy, making it less vulnerable to economic shocks.
Ultimately, whether or not the Austin housing market is overpriced is subjective. While some buyers may find the high prices unaffordable, others may see it as a sound investment in a thriving city. It is crucial for prospective buyers to assess their financial situation and goals before deciding to purchase a home in Austin or any other market.
Is Austin a Good Place for Real Estate Investment?
Austin’s rapidly expanding economic industry is driving more people into the city which is increasing the housing demand. A number of reasons have affected the present situation of the Austin housing market, one of which is the high migration of firms and persons relocating to the city from Texas and out-of-state, which has led to a robust and varied economy that attracts people seeking opportunity.
A surge of people moving in, combined with rapid population growth and low mortgage interest rates, has turned Austin and its surrounding area into a sellers’ market. Austin’s engine of job and population growth is not projected to slow down anytime soon—the biggest drivers of residential real estate demand. Its economy has diversified and strengthened over the past two decades.
Companies like Google and Tesla are moving operations to Austin. The software giant Oracle has also relocated its headquarters here. As more companies move here, that means more people looking for homes, and the city is also attractive to outside investors. With a steady influx of job creation in the pipeline, the housing market will continue to post strong numbers. Big companies moving here will also play into what happens to the housing market.
If you’re considering real estate investment, Austin, Texas, is a city that should be on your radar. Known for its vibrant culture, strong economy, and population growth, Austin offers numerous opportunities for real estate investors. Let’s explore in detail why Austin is a promising destination for real estate investment.
Population Growth and Trends
Population Growth:
Austin has been experiencing consistent and substantial population growth for many years. The city’s population has been steadily increasing, making it one of the fastest-growing metropolitan areas in the United States.
The city’s appeal to newcomers is driven by factors like its vibrant tech scene, cultural attractions, and overall quality of life.
Trends:
The population growth trend in Austin is expected to continue, with projections indicating a significant increase in residents over the coming years.
As the city’s population expands, the demand for housing, both rental and owned, is likely to rise, creating opportunities for real estate investors.
Economy and Jobs
Economic Strength:
Austin’s economy is robust and diverse, with a thriving technology sector, a burgeoning startup scene, and a strong presence of major corporations.
The city consistently ranks high in terms of job creation and economic growth, making it an attractive destination for professionals seeking employment opportunities.
Job Market:
The city’s job market is diverse and dynamic, with a focus on technology, healthcare, education, and entertainment.
Employment opportunities continue to draw individuals to Austin, contributing to the population growth and housing demand.
Livability and Other Factors
Livability:
Austin consistently receives high marks for its quality of life. The city offers a vibrant cultural scene, excellent healthcare facilities, and access to outdoor activities.
It’s known for its music and arts culture, making it a desirable place to live for professionals and creatives.
Education:
Austin is home to top-tier educational institutions, including the University of Texas at Austin. This draws students, academics, and their families to the city, further boosting the demand for housing.
Infrastructure:
The city has invested in infrastructure and transportation improvements to accommodate its growing population, making it more accessible and commuter-friendly.
Rental Property Market Size and Growth
Rental Market:
Austin’s rental property market is substantial and continues to grow. The city offers a wide range of rental properties, from apartments to single-family homes, catering to a diverse tenant population.
The city’s dynamic job market attracts young professionals, making it an ideal location for rental property investment.
The Zumper Austin Metro Area Report analyzed active listings across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Texas one bedroom median rent was $1,134 last month. Austin was the most expensive city with one bedrooms priced at $1,530 whereas San Marcos ranked as the most affordable city with one bedrooms priced at $1,180.
The best place to buy rental property is about finding growing markets. Cities like Round Rock, Cedar Park, and Pflugerville are good for investors looking to get started with rental property ownership at an affordable price. These cities look good for rental property investment this year as rents are growing over there. These trends provide a macro look at the growing rental demand. Each real estate market has its own unique supply-demand dynamics with unique neighborhoods that present their own opportunities for investors.
The Least Expensive Rental Markets
San Marcos: San Marcos is ranked as the most affordable city in the Austin region, with one-bedroom rentals priced at just $1,180. This makes it an attractive option for those seeking affordability without compromising on location and amenities.
Pflugerville: Pflugerville takes the second spot in affordability, with one-bedroom rentals priced at $1,240. It’s a great option for renters looking for a cost-effective living arrangement in the Austin area.
Cedar Park: Cedar Park is the third most affordable city in the region, with one-bedroom rentals available for $1,330. While slightly pricier than the previous two, it still offers competitive rental rates.
These cities provide various rental options for individuals and families looking to reside in the Austin area while staying within their budget. The affordability of these locations can make them particularly attractive for renters.
The Largest Declines in Rental Prices (Year Over Year)
Cedar Park: Cedar Park had the most significant decline in rental prices, falling by a substantial 14.7% since this time last year. This presents an opportunity for renters to find more affordable housing in this city.
Pflugerville: Pflugerville takes the second spot in terms of declining rental prices, with rents dropping by 12.7%. This decline provides renters with a chance to secure more budget-friendly rental options.
Austin: Austin ranks as the third city with a notable 11% decrease in rental prices. While Austin is typically known for its competitive rental market, this decline may open up more affordable possibilities for tenants.
These cities with declining rental prices offer potential savings for renters and create opportunities for those looking to secure more cost-effective housing. For investors, these cities may present intriguing possibilities, as the current market conditions allow for potential investment opportunities.
Source: Zumper
Growth Potential:
The city’s population growth and job market strength contribute to the growth potential of the rental property market. As more people move to Austin, the demand for rental units is expected to rise.
Investors can explore various rental strategies, including long-term leases, short-term rentals, and vacation rentals, to diversify their real estate portfolio.
Other Factors Related to Real Estate Investing
Investor-Friendly Environment:
Austin’s business-friendly environment extends to real estate investment. The city offers attractive incentives and a favorable legal framework for real estate investors.
Real estate investors benefit from a strong property rights regime and a well-regulated market.
Tax Benefits:
Texas does not have a state income tax, which can be advantageous for investors looking to maximize their returns.
Investors should explore the tax implications of specific investment strategies, including property taxes and capital gains.
Market Resilience:
Austin’s real estate market has shown resilience during economic downturns, and it is considered one of the more stable markets in the country.
Investors appreciate the market’s ability to weather economic fluctuations and maintain its growth trajectory.
Diversification:
Investors can diversify their portfolios by exploring various types of real estate, from residential properties to commercial and mixed-use developments, taking advantage of Austin’s growing and diverse market.
As a real estate investor, Austin’s population growth, strong economy, livability, rental property market size, and other investor-friendly factors make it a compelling choice. However, it’s essential to conduct thorough market research, consult with local real estate experts, and tailor your investment strategy to your specific goals and risk tolerance. Austin’s real estate market offers exciting opportunities, but informed decision-making is key to success.
References:
https://www.abor.com/new-center/market-stats
https://www.zillow.com/austin-tx/home-values
https://www.realtor.com/realestateandhomes-search/Austin_TX/overview
The post Austin Housing Market Forecast 2023: Home Prices Are Dropping appeared first on Norada Real Estate Investments.