Austin’s housing market is in the midst of a brief period of decline — but it’s not all bad news.
In June, the metro area saw a ~9% decrease in the median sales price compared to the same time last year. Sales are also down by ~8%, new listings are down by ~23%, and listings are staying on the market for an average of 43 days longer (around 61 days).
Of course, there’s more to the story than that.
The Austin Board of REALTORS® met yesterday for the Central Texas Housing Summit to discuss the long-term and short-term future of the local housing market. Here’s what we learned.
Weathering the turbulence
Median home prices are down by ~0.9% year-over-year nationwide, in part due to rising interest rates caused by COVID-19-induced inflation.
Although home prices have been dropping since last summer in Austin, ABOR economist Clare Losey points out that the median housing price in Austin is still much higher than it was pre-pandemic.
The city’s strong economic standing also gives indication that the area is poised to see continued growth, she said.
“We are weathering the broader macroeconomic turbulence well,” Losey said.
Presenting economists appeared to agree that interest rates will fall, but debated exactly when that might happen, with predictions ranging from next year to as many as three years from now.
Building supply
Mark Sprague, State Director of Information Capitol with Independence Title, said it’s important to note that Austin’s housing market has always been different from that of other US cities. Even in the 2008 recession, he points out, Austin saw an 11-month period of stability while many other cities saw steep declines.
“We’re in a unique market, a very educated market, a very dynamic market,” Sprague said. “Our biggest problem is managing our growth.”
It’s a challenge Austinites know well. The housing market has long struggled to keep up with Central Texas’ rapid boost in population and currently, Sprague said, there’s not enough housing to meet the demand in the pipeline.
At the moment, the metro area has about 3.7 months of housing inventory, an increase of 1.6 months compared to last year. Generally, a healthy market is recommended to have five to six months of inventory.
According to research presented during the summit by CoreLogic Chief Economist Dr. Selma Hepp, Austin is seeing some of the most new home construction in the US, ranking at No. 5 in the country. (Dallas and Houston ranked Nos. 1 and 2, respectively.)
Addressing affordability
Housing affordability continues to be a primary issue. During the summit, Losey said a small portion of homes sold in recent months were less than $300,000, the target price for families earning Austin’s median annual income of $110,000.
“We’re getting a little bit out of line there with respect to what the average Austin household can afford,” she said.
So, what’s happening to address this? Mayor Kirk Watson spoke at the summit to outline recent City Council efforts to increase housing supply and bring down costs. These efforts target:
- Increasing density on transit corridors
- Making it easier and cheaper to build on small lots
- Reducing minimum parking requirements
- Utilizing public property for affordable housing
- Increase density for single family housing
‘Being able to find a place to live that’s affordable is key to building our future in Austin,” Watson said. “The next generation should have a right to build lives in Austin, and build wealth.”
Learn more about the city’s efforts here.
