Austin Market Report - November 2024

[David Ivy]

Happy Holidays! The November 2024 report from the Austin Board of REALTORS® shows stable housing prices in the Austin metro as we approach end of year. The median sales price in the City of Austin rose 2% from a year ago, coming in at $573,400. The median price in the greater Austin MSA increased 2.4% to $435,000 over the same period. Inventory has held steady at around 5-6 months for some time now, with roughly 4% more active listings on the market in the metro now compared to November last year. According to the Texas A&M Real Estate Center, we find a balanced real estate market at around 6.5 months of inventory. The Austin metro market is approaching that territory.

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

On the rental front, a recent Redfin report placed Austin atop the list for the largest year-over-year decline in median rents among US metros:

Appropriate rental pricing and high-quality marketing are vital to navigating the current leasing market effectively. The focus should be on eliminating vacancy and avoiding chasing unreasonable rental rates, especially in the slower winter months.

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

The median sales price for a single-family home in November 2024 was up roughly 8% from the beginning of the year. As listing inventory began building up in the spring, we saw prices soften a bit as we hit the summer months.

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:

Compared to the recent price peak in May 2022, single-family home prices in Austin are down approximately 18%. However, 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 about 47% higher than it was at the start of 2020. For the 10 year period spanning November 2014-2024, single-family prices in Austin nearly doubled, yielding an annualized appreciation rate of ~9% in that period.

With inflation nearing its 2% target and signs of a slowing labor market, The Federal Reserve recently made its third cut to the federal funds rate since the start of the COVID pandemic. Anticipation of these cuts initially moved mortgage rates downwards to their lowest in nearly 20 months. However, rates have since moved upward.

A 30-year fixed rate mortgage is once again sitting around 7% interest:

The real estate industry hoped 2024 would see a recovery in which mortgage rates fell and home sales climbed. However, as we sit here in mid-December, we see that this didn’t pan out. For those still wondering why mortgage interest hasn’t moved down alongside the Fed’s recent rate cuts, check out this WSJ article: If the Fed Is Cutting Rates, Why Aren’t Mortgage Rates Falling?

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 current rate around 6.5%. With an 8% mortgage rate, they would pay more than $650k in interest. However, even if we see lower mortgage rates in 2025, 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 92% of their list price on average. Multiple offers are now the rare 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? There is still strong demand for Austin housing with pending sales in the metro up 16% compared to last year (and up nearly 30% in Austin). Prices are still considerably higher than just a few years ago. However, it’s important to price competitively and be prepared for buyers to request concessions. Days on market are around 75 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. Now is not the time to “test the market” with an ambitious price to “see what happens.” With the increased competition, it’s also crucial to prepare your listing to stand out and work to address buyer objections prior to going on market.