Key highlights from this report:
- The Austin housing market still suffers from an inventory shortage.
- This, combined with a growing population, is pushing home prices north.
- By some measures, Austin is still the hottest real estate market in Texas.
Home prices across the country are slowing down, as of summer 2019. And properties are staying on the market longer, often undergoing price cuts. These are signs of a general cooling trend that is happening in many cities across the country.
But in some local housing markets, tight supply and steady demand continue to drive competition among home buyers. The real estate market in Austin, Texas is a prime example of that. By some measures, it is one of the hottest metro-area housing markets in Texas as of summer 2019.
Home Prices in Austin Keep Climbing
According to Zillow, the median home value for Austin, Texas rose by more than 6% over the past 12 months (as of June 2019). And a recent forecast issued by the company suggests that prices will continue to climb for the foreseeable future, albeit at a slower pace.
In June, Zillow’s research team wrote: “Austin home values have gone up 6.5% over the past year and Zillow predicts they will rise 3.4% within the next year.” This forecast was issued in June 2019 and therefore extends into early summer of 2020.
Home values within the Austin housing market have risen steadily since 2012, as shown in the chart below. And while this is true for many cities across the country, real estate conditions in the Texas capital city are more competitive than most.
One of the Hottest Housing Markets in 2019
You can see just how hot Austin’s housing market is when you look at recent trends and statistics.
Take the median “days on market” (DOM), for example. This metric shows how long it takes for properties to sell, from the initial listing to the contract. A lower DOM shows that homes are selling quickly within a particular market, while a higher number indicates more sluggish conditions.
Austin currently has one of the lowest median days on market in the country, and certainly the lowest among the major metros in Texas.
As of early May 2019, homes listed for sale in Austin, Texas spent a median of just 12 days on the market before going under contract. That indicates a fast-moving housing market with strong demand from buyers.
For comparison, the national median DOM for that same period was 40 days.
Among Texas’s major metro areas (including Dallas, El Paso, Houston and San Antonio), Austin currently has the “fastest” housing market in 2019. At least when you measure it by median days on market.
The city also has a lower level of supply, when compared to the other major cities in Texas.
As of May 2019, the Austin area still had less than a two-month supply of homes for sale. A “balanced” real estate market has closer to five or six months worth of supply. The nation as a whole had about a three-month supply of homes during that same period.
A Popular City With a Growing Population
Population growth has a lot to do with the hot housing market in Austin, Texas. This city comes up on a lot of “best places” lists. In its 2019 “Best Places to Live” ranking, U.S. News and World Report put Austin in the #1 spot. That’s just one recent example.
The city’s many attributes attract new residents from elsewhere in the state, and also from across the country.
While home prices in Austin have climbed steadily over the years, the local housing market is still mostly affordable (relative to household incomes in the area). It’s a lot more affordable than most western markets, such as Seattle and San Diego. So it’s no surprise to see many people fleeing those pricier housing markets in search of more affordable options.
According to a May 2019 report from the U.S. Census Bureau, Austin is one of the fastest-growing cities in the South. The city gained about 12,500 new residents during the one-year period from July 2017 to July 2018. That made it the 11th most populous city in the United States.
To quote that report (with emphasis added):
“Cities in the South that experienced a surge in population growth [from 2017 to 2018] were Austin, Texas (12,504); Jacksonville, Fla. (12,153); Frisco, Texas (10,884); McKinney, Texas (9,888); and Miami, Fla. (8,884).”
As a business-friendly, tech-heavy city, Austin also has a bustling economy with jobs aplenty. This factor tends to attract young, educated, and upwardly mobile residents. And many of those newcomers enter the housing market soon after arriving.
A ‘Perfect Storm’ of Real Estate Conditions
To sum up, Austin is one of the hottest housing markets in the U.S. as of summer 2019. This is the result of several overlapping factors:
- The region’s strong economy and relatively affordable housing market attracts new residents from elsewhere in the country.
- Austin’s population has grown steadily in recent years, outpacing most other cities of similar size.
- Real estate inventory remains tight in 2019, forcing home buyers to compete for limited options.
- This supply-and-demand imbalance is boosting house prices and leading to quick sales.
This “perfect storm” of supply and demand is why Austin remains one of the hottest housing markets in the country in 2019. And while home prices are expected to slow down a bit over the coming months, they will likely continue rising for the foreseeable future.
Our Advice for Austin Home Buyers
Home buyers planning to enter the Austin real estate market in 2019 or 2020 will have their work cut out for them. Due to scant inventory and strong demand from other buyers, they’ll have to bring their ‘A’ game.
Here are some tips for buying a home in Austin in 2019 – 2020:
Start early. We talked about the inventory situation earlier. Currently, this housing market has a limited number of homes for sale (relative to the number of buyers seeking them). So you’ll want to give yourself plenty of time to locate a suitable property.
Don’t delay: Home prices in Austin are expected to continue rising through the end of 2019 and into 2020. And that’s a realistic forecast, when you look at the current supply-and-demand situation. A strong case could be made for buying sooner rather than later, to avoid higher costs down the road.
Make a strong first offer. The Austin real estate market is very active right now. On average, homes listed for sale in the area tend to go under contract much faster than the national average. This means home buyers should make a strong first offer, instead of trying to “low-ball” the seller. Use recent, comparable sales in the area to support your offer.
Capitalize on low rates. Mortgage rates have plummeted over the last few months. The average rate for a 30-year fixed mortgage loan sank to 3.82% during the first week of June 2019 — its lowest level since September 2017. But there’s no telling how long they’ll stay at this low level.
Disclaimer: This article includes forecasts for the Austin housing market that were provided by third parties not associated with the Home Buying Institute. Real estate predictions and forecasts are the equivalent of an educated guess and should be treated as such.