Austin Market Report - August 2024

[David Ivy]

The July 2024 report from the Austin Board of REALTORS® (ABoR) shows housing prices in Austin and the greater metro have been stable over the past 12 months. However, it also shows that the summer 2024 market has been slower so far than last year’s. Closed and pending sales are down year-over-year. Inventory is in the 5-6 month range, with 20%+ more active listings on the market compared to July 2023. So, while prices held relatively firm overall, we are seeing a decrease in buyer demand and a buildup of inventory compared to this time last year.

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

Here’s a chart showing the median sales price of a single-family home in the City of Austin this year through July:

The median sales price for a single-family home in July 2024 was up roughly 12% from the beginning of the year. However, we can see that the increase in listing inventory may have caused prices to soften as the summer progressed. Compared to the recent pricing peak in May 2022, single-family home prices in Austin are down approximately 14%.

For some broader context, here’s a chart of the median sales price of a single-family home in Austin over the past 10 years:

As you can see, pricing in Austin is still substantially above pre-pandemic levels. In fact, the median sales price of a single-family home in the Austin metro is ~53% higher than it was at the start of 2020. For the 10-year period spanning July 2014-2024, single-family prices in Austin nearly doubled, yielding an annualized appreciation rate of ~9.6% in that period.

Recent data has given the Federal Reserve confidence that it has successfully tackled problematic inflation while avoiding a recession. A rate cut seems likely for September. This should have a downstream impact on mortgage interest rates. However, rates have already fallen recently to a 15-week low.

A 30-year fixed rate mortgage is sitting around 6.56% interest:

All else being equal, lower mortgage rates reduce the cost of ownership and, thereby, allow more people to afford to buy. For example, a buyer putting 20% down on a $500k home would pay around $500k in interest over the life of a typical mortgage at the current ~6.5% rate. With an 8% mortgage rate, they would pay more than $650k in interest. However, as this WSJ article points out, falling interest rates won’t solve all the problems faced by many buyers in current market conditions.

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. Listings are selling for roughly 94% of their list price on average. 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 roadblock, then I recommend negotiating a rate buydown at a seller’s expense or looking at new construction, where builders are offering rate reductions and other substantial incentives.

What if I’m a seller? Know that there is still robust 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 around 60 days on average, depending on the area. Many listings are adjusting their asking price at least once while on the market. But properties priced and marketed 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.” With the increased competition among sellers, it’s crucial to prepare a listing to stand out among the rest and work to address buyer objections prior to going on market.