Planning to buy a home in Austin, Texas in 2021? Get in line. The Austin housing market is sizzling right now, with strong demand from buyers and a limited number of properties available. That’s the #1 reason why Austin home prices won’t go down in 2021.
House values across the Austin metro area have risen at a steady pace over the past year or so, despite the coronavirus pandemic. And that’s expected to continue for the foreseeable future.
Below, we have outlined the top three reasons why Austin home prices will almost certainly continue rising in 2021. But first, let’s gain some perspective with recent statistics from the real estate data company Zillow.
Quick stats from Zillow:
- Austin’s median home value as of January 2021: $437,800
- Actual home-price change over the past 12 months: 12.8%
- The company’s forecast for the next 12 months: 11.6%
Why Austin, Texas Home Prices Won’t Go Down in 2021
A strong economy, steady demand from home buyers, and low levels of supply within the housing market. Those are the top three reasons why home prices in the Austin area won’t go down 2021. Let’s take a closer look at these real estate-related factors.
1. The local population is booming.
Austin frequently appears on lists of the “best places to live” and the “best places to work.” As a result, it tends to attract new residents from elsewhere in the country.
For years, this region of Texas has benefited from a strong economy with plenty of good jobs. In many ways, the Austin area is like a beacon for job seekers. This has kept the population growing at a steady pace, boosting the housing market as well.
According to the U.S. Census Bureau, the population of Austin, Texas grew by a whopping 22% from 2010 to 2019. The broader metro area has also seen explosive growth in recent years, especially the booming city of San Marcos located to the south of Austin.
Population growth tends to increase demand for housing. After all, those new residents need somewhere to live. It also brings a steady stream of home buyers into the local real estate market, increasing competition.
This is one reason why home prices in Austin, Texas will probably continue rising through 2021 and into 2022.
2. Its economy attracts workers from around the country.
The second reason why Austin home prices won’t drop during 2021 goes hand-in-hand with the first. This metro area has a strong economy that is buoyed by the tech industry and tax breaks for businesses. That attracts skilled workers from all over the country, and also brings new companies into the region.
A couple of recent examples: Tesla is currently developing a new factory in the area, and the software giant Oracle is moving its headquarters from Silicon Valley to Austin.
Granted, the local economy has taken a hit during the coronavirus pandemic, as did every other city in the country. But even so, it continues to show economic strength and resilience in times of turmoil.
According to a recent article in the Austin American-Statesman:
“In addition, the Austin area — which has a big high-tech sector that has adjusted relatively quickly to remote work — appears to be recovering faster than many other areas of the country.”
3. It’s a tight housing market with high competition.
Like a lot of cities across the country, Austin is currently experiencing a supply shortage within the local real estate market.
There just aren’t enough homes listed for sale to satisfy the ever-growing demand from buyers. And that puts sustained upward pressure on house values across the metro area. This is reason #3 why Austin home prices won’t go down in 2021.
On January 7, the research team at Realtor.com published a report with housing-related data for the nation’s 50 largest metro areas. Among other things, that report showed how the total number of real estate listings has changed over the past year. Specifically, it showed changes that occurred from 2019 to December 2020.
In the Austin-Round Rock, Texas metropolitan area, the total number of active real estate listings dropped by -55.9%. That bears repeating: In terms of listings, the local housing market shrank by half in only 12 months.
Similarly, a recent real estate report showed that the Austin metro area had about a 1.5-month supply of homes for sale at the end of 2020. That’s a very low level of supply by historical standards, and lower than the national average for the same timeframe.
Meanwhile, the population of the Austin area continues to grow steadily. So we have a classic (and ongoing) imbalance between supply and demand. There’s a shortage of the former and an abundance of the latter.
There are plenty of people in the real estate market who plan to buy a home in 2021, but not enough inventory to go around.
So there you have them, three reasons why home prices in the Austin area will continue rising through 2021 — and probably well into 2022. Beyond that is anyone’s guess. After all, we’re about due for an alien invasion or zombie apocalypse at this point. But let’s hope for the best.
Disclaimer: This article includes real estate predictions based on current trends within the housing market and broader economy. Such outlooks are the equivalent of an educated guess. No one can predict future home-price trends with complete accuracy.