November 2020 Austin Market Report

[David Ivy]

As we finally close out 2020, listing inventory has absolutely cratered in the Austin area. There is roughly one month of inventory in the entire Austin-Round Rock MSA, which is down 1.2 months from where we were in November 2019. Inventory is even tighter in more “affordable” price points below $400k. The median sales price was up a whopping 19% to $365,000 in the metro area compared to this same time last year. Austin was up 10% over the same period to $433,493. It's overall bad news for those would-be buyers who hoped that COVID would present them a more favorable market. Here are additional stats for November 2020 for the City of Austin and the greater Austin area:

It’s no understatement that the Austin housing market is going into 2021 in an absolute frenzy. Buyer demand seems to have only increased throughout this year, with historically low interest rates, a strong inflow of new residents, and people re-evaluating their post-COVID housing needs. Over the past few weeks, I’ve personally seen 20+ offers on several otherwise unremarkable single-family listings. Builders can’t keep up with demand. Even several luxury builders in SW Austin have large buyer waitlists (one with 80+) for homes priced $1M+ in multiple communities.

Low inventory is the single largest hindrance to Austin’s market. The current extreme imbalance between inventory and demand is unsustainable in the long term. In the near term, we’ll see prices continue to rise and all but the strongest buyers continue to struggle. Yes, there are many would-be sellers on the sidelines due to COVID and other property owners needing to sell in 2021 after finding themselves in financial difficulty in one way or another due to the pandemic. However, the market is so imbalanced at the moment, that it would take much more than “temporarily above average” inventory levels to truly make a difference.

The market is absolutely screaming for inventory. In previous years, buyers could turn to the suburbs for more affordable homes and a bit more breathing room on available inventory. However, with prices up nearly 20% or more in the greater metro area. Many buyers are finding fewer and fewer places to turn to find a home that fits their budget and needs. Developers need the green light from the City of Austin and other area policy making bodies in order to meet that demand. We can only hope that Austin finally completes its rewrite of the outdated Land Development Code in 2021 and that serious efforts are made to address the supply side of the housing market equation.