Sellers’ markets are making a comeback. In cities like San Francisco, Phoenix and Seattle, homes are selling quickly and for top dollar. Could Austin, Texas join the ranks of these hot real estate markets?
Recent sales numbers released by the Austin Board of Realtors (ABOR) show a real estate market that is shifting into overdrive. In January, home sales in the Austin area were up 33% from the same time last year. The sales pace is expected to rise further as housing demand continues to increase. The median sales price (the midpoint at which properties are sold) rose 10% during the same 12-month period
Homes appear to be selling faster in the Austin real estate market, as well. The average number of days on market in January of this year was 71. That’s 14 days fewer than the same time a year ago.
Fewer Homes for Sale
Inventory has a lot to do with these trends. The local housing market has shrunk over the last year, when measured by the number of homes for sale. According to Realtor.com, the number of homes listed for sale in the Austin metro area dropped by 19% over the last year. This comes at a time when demand is growing.
This enables sellers to ask more for their homes, which can be seen clearly in list-price trends for the last year. The median list price (the midpoint for asking prices) has risen by nearly 9% over the last year or so.
According to the real estate website Zillow, list prices have risen most in the following neighborhoods:
- Sweet Briar
- Pecan Springs
- Franklin Park
- University Hills
We’ve talked about supply. But what about demand? There are two key factors that will increase housing demand in the Austin area through the rest of 2013 — job growth and mortgage rates.
Austin’s Job Market Supporting Real Estate Prices
The state of Texas has always been a standout in terms of job growth. You can see this clearly enough when you compare the state’s unemployment rate to the national average. This trend applies to Austin as well. The city’s unemployment rate was 5.8% in January of this year, compared to the national average of 7.9%. A strong job market is one of the reasons Austin’s real estate market has performed so well compared to other major metros, even during the worst of the housing crisis.
Low mortgage rates will also do their part to bring more buyers into the market. The average rate for a 30-year fixed mortgage has hovered between 3.5% and 3.6% for weeks. It is expected to remain below 4% through the end of 2013. But some analysts and economists have predicted a gradual rise in interest rates over the coming months. This should create a sense of urgency among buyers.
Well-informed home buyers will look at these trends and realize that now is a great time to buy a house. Affordability is high in Austin. Home prices are stable and rising. Mortgage rates are low but slowly rising. Home-buying conditions probably won’t get much better than they are right now.
Austin’s real estate market is not as hot as, say, San Francisco or Seattle. Those cities are true sellers’ markets. But the capital city is clearly heating up. Over the last couple of years, we have seen a clear shift from buyer to seller, in terms of market leverage.