Austin Market Report - December 2023

[David Ivy]

Happy New Year! The December 2023 market report from the Austin Board of REALTORS® (ABoR) shows that the median home price in the City of Austin remained stable over the past 12 months, falling just 1% from a year ago to $511,250. The greater metro area fared similarly with a 1% year-over-year decline to $443,753. Listing inventory settled at 3 months in December, which is down a bit from the month before. While still technically in seller’s market territory, inventory is well above extreme lows seen in recent years. New, active, and pending listings were all up compared to this time last year. Closed sales, however, were down about 8% from the year prior.

Overall, the Austin real estate market looks relatively stable and poised to exhibit its typical seasonable behavior as we head into the spring/summer selling season, where more buyers enter the market and more owners aim to list their properties.

Here are the full stats for Austin and the greater metro:

Here’s a look at the median single-family home price in Austin over the previous year:

For broader context, here’s the same chart, but now pulling in the past 10 years:

Buyers will be happy to hear that, over the past few months, single-family homes in Austin have sold for a median 93% of their original listing price. Moreover, Austin is among the the bottom 10 markets for homes selling above list price:

However, the overall Austin economy remains one of the strongest among major US metros:

The broader economic engine creating demand for housing in the Austin metro is still very robust. Here are some quotes from a recent Austin Business Journal article:

• Peter Rodriguez, dean of Rice University's Jones Graduate School of Business, said, “As long as there is not a major economic disruption (nationwide), Austin is going to be at the head of the pack. It would take something really strange to make Austin stumble.”
• Luis Torres, senior business economist at the Federal Reserve Bank of Dallas, said, “Right now, I can't see any redlines or red flags. People still want to move to Austin and people still want to live in Austin."
• Jason Schenker, president of Austin-based Prestige Economics, said, “I don't want to discount the individual pain of layoffs, but on net we are still adding jobs [in Austin]. That means for everyone who gets laid off, there is more than one person getting a job…"It should be a good year [in 2024]. I think there are a lot of reasons to be optimistic about both the Austin economy and the Texas economy."
• Dirk Mateer, an economist and University of Texas professor, said, “I don't think [Austin] can touch the local GDP of 7.4% [we saw in 2022], but if it were 5%, that would be fantastic. There are so many new people in the area that it just naturally increases the GDP, so 4 to 5% is an easy call. All these major companies are here and all these related businesses are here and there is still a lot of migration into Texas — it's a perfect confluence."

Mortgage interest rates have pulled back somewhat sharply from their 8%+ peak in October. Mortgage News Daily has a 30-year fixed loan around 6.6%:

What if I’m a buyer? In many ways, this is the best market for buyers in Austin in years. There are more listings to choose from now than any other time in nearly a decade. Prices have fallen. Only about 13% of listings are selling over asking. Multiple offers are now the exception, not the norm. Buyers have significantly more negotiating power. They can take time with their search and be more selective about a property’s location and condition. So, if interest rates are a buyer’s primary reason for staying on the sideline, my recommendation is to focus on opportunities to negotiate a reduced interest rate from a seller or take a look at new construction, where builders are offering rate reductions and other substantial incentives.

What if I’m a seller? Sellers should know that there is still strong demand for Austin housing and that prices are still considerably higher than just a few years ago. However, it’s important to price for today’s market conditions. Days on market are up and the majority of listings are reducing prices at least once during the process. However, properties priced appropriately can still go under contract in a matter of days, sometimes with multiple offers. Now is not the time to “test the market” with an ambitious price to “see what happens.” Since there are many more listings competing on the market than in previous years, it’s crucial to prepare a listing to stand out among the rest and work to address buyer objections prior to going on market.