May 2022 statistics have been released for the Central Texas Housing market. There was no increase in median sales price from the preceding month and a 19% increase from the preceding year for the entire Austin Metropolitan Statistical Area.

The City of Austin saw a change in median home price from $640,000 to $667,000, a month to month increase of $27,000 and a 18% increase from the previous year. The Austin-Round Rock MSA saw no change from the previous month with median home price of $550,000 and a 19% increase from the previous year.

The following infographics and data is courtesy of the Austin Board of Realtors:

Housing inventory remains at low levels, 1.2 months for the entire MSA which is 0.7 months increase over the preceding year. The City of Austin also remained at low levels, 1.0 months which is 0.5 months increase over the preceding year. The strong relative increase in housing inventory comes from an 18% increase in new listings (new homes hitting the market), a 146% increase in active listings (current homes available on market), and a 14% decrease in pending sales. As a reminder, a balanced market between sellers and buyers is considered 6 months of inventory.

These numbers caused the Austin MSA housing inventory to nearly double in year to year comparison and saw a 50% increase in month to month numbers. The leaden shackle limiting buyers right now is interest rates. The Federal Reserve announced yesterday a benchmark interest rate increase of 0.75%. This is the most aggressive rate hike in nearly 30 years. This was not wholly unexpected with the Consumer Price Index release for May 2022 showing a 8.6% year over year increase. The relentless rise of inflation only highlights that previous rate increases have not been drastic enough to achieve the economic parameters the Fed is aiming for.

The Fed has essentially admitted this course of action will result in an increased burden, notably on first time home buyers. Couple other factors such as the slowdown in new construction and we may see that prospective buyers are forced into renting. This may open a prime opportunity for investors looking to employ alternative strategies such as seller financing and housing hacking which both have potential to secure higher returns than the majority of buyers out there are able to achieve under other circumstances.

Article Links:

https://www.npr.org/2022/06/16/1105397522/who-are-the-winners-and-losers-of-the-fed-hiking-interest-rates

https://www.bls.gov/opub/ted/2022/consumer-prices-up-8-6-percent-over-year-ended-may-2022.htm

Disclaimer: The information provided here is for educational purposes only, past performance is never a guarantee of future performance.

Austin, Texas

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