Austin Real Estate Market Update - October 2022

[David Ivy]

The October 2022 report from the Austin Board of Realtors shows the Austin metro market continuing to normalize in response to high inflation, mortgage interest rates around 7%, and a possible recession in the US. Here are some important notes:

• The median home price in Austin was up 3% over October 2021 at $555,000. This is the same price as last month.
• The median home in the greater metro sold for around $474,990 last month, which is up 4% year over year. This is also basically flat from last month.
• So, while appreciation has slowed significantly, median home prices have yet to show a year-over-year decrease. Prices are down, though, from their peak in April/May 2022.
  
  
• Austin’s housing inventory held steady month-over-month at 2.8 months. However, that was 1.8 months higher compared to this time last year. Metro inventory was at 3.2 months. That’s similar to last month, but it’s 2.2 months higher than this time last year
• So, inventory suggests that Austin is still a seller’s market with inventory that could be finding its equilibrium. Time will tell.
• Closed and pending sales were both down last month compared to the year prior. New listings were down slightly, while the number of active listings was up substantially compared to this time last year. In fact, there were 180% more homes on the market in the Austin metro for buyers to choose from last month compared to October 2021.
  
  

Here is commentary from Dr. Jim Gaines, an economist at the Texas Real Estate Research Center: “The 2021 housing market numbers we saw were an anomaly compared to previous years, so anything different from those numbers can appear significant. Homes that are coming on the market are not staying active for long, but they are also not flying off the shelves or going into a bidding war like they used to. That previous, hectic pace of home sales has stopped…The desire to live in Central Texas remains high compared to other metropolitan areas in the state. The continued creation of jobs and influx of people moving to Austin coupled with companies relocating to the region place Austin in a unique position to weather any potential downturn.”

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

If you’re a seller, you can expect it to take longer to sell a home and much more competition from other sellers. You have to respect the available comparables, even those 3+ months old, and strongly consider other active listings in the area when pricing your property. An asking price is no longer a jumping off point for a bidding war in the Austin metro. Buyers have much more selection and can now be more picky about a property’s condition. Sellers often have less negotiating leverage compared in previous years. Preparing a home well, staging when appropriate, and having strong marketing are crucial to help your listing stand out.

If you’re a buyer, you have many more properties to choose from and significantly fewer buyers competing for them. You have much more negotiating leverage. In many instances, you’ll find that you’re the only buyer making an offer on a property at a particular time. Yes, rates are the highest they have been in a couple of decades. However, I’m beginning to see some sellers offering to buy down a buyer’s interest rate or at least being receptive to covering a more substantial portion of a buyer’s closing costs. New home builders are being especially aggressive on that front at the moment. Most of my clients still looking to buy are taking advantage of the favorable buying conditions and betting on refinancing when (they hope) rates fall again within the next few years.