Austin Market Report - January 2022

[David Ivy]

The median home price in the greater metro is up 30% compared to this time last year at around $476,000. However, the 2022 Austin metro market still shot out of the gate in January looking very much like the wildly frenzied seller’s market we experienced throughout most of 2021.

I’ve already seen many 20-30+ offer situations this year on single-family homes priced $500k or below throughout the area. However, multiple offers are the current norm on appropriately priced properties even up to $1M. For much of the metro, a $1M home is no longer considered a “luxury home.” A move-in ready home under $400k is a very quickly vanishing product.

Why is this still happening, despite significantly higher prices and the looming threat of inflation and interest rate hikes? It comes down to low inventory. How low? Try an absurd 0.4 months of inventory (0.3 months in Austin). The demand is sky-high, even at these new price levels, but there’s nothing to buy! This explains why sales volume in the metro area was down 5% in January compared to this time last year.

Here are the numbers for Austin and the greater metro area:

This is an absolute dream for sellers who are moving elsewhere or cashing out on investment property. However, it’s difficult to conceive of a worse market for buyers. In some cases last month, I saw it take 30-40% over asking price win, which is similar to the very "worst" of it in 2021. I saw several homes in the high $300s go in the $500k+ range. If you’re planning to buy in current conditions, be prepared to waive your appraisal and financing contingencies and have the cash in reserve to cover the gap between the contract price and the appraisal value. For my clients who can't swing that, I've been having some success working with companies or lenders who equip buyers to make all cash offers.

But of course, every situation is unique and will have its own set of considerations. Despite the overall conditions, for example, I recently got a client under contact on a fantastically located duplex in Austin for $45,000 below asking. Overall, though, it's extremely rough business out there for buyers so far in 2022, even for 2-4 unit properties.