The Austin Board of Realtors say that median home sale prices have risen by 13 per cent year-over-year and the average price has risen 14 per cent. Since the two measures are close in number, in essence it means individual houses are becoming more expensive to buy.
It’s only when you break down the numbers that you can see the real picture of what’s happening, and that the future of the Austin housing market relies on move-up buyers and relocations – click here for the summary version.
Eleven per cent more homes sold in January 2015 than in the previous January, with 54% being priced between $200,000 and $500,000. The under $200,000 bracket, traditionally the preserve of the first time home buyer represented only 35% of sales. This is a very vague approach – I prefer the statistic from the Texas Association of Realtors which puts Texas first time home buyers at only 29% of the total. Their quote in the Austin Business Journal also puts Texas household income on the rise – three times faster than the rest of the US. Wage increases still lag house prices though, so affordability is dropping.
Housing starts are up – more new homes are being built in Austin than ever before, and this analysis from Metrostudy shows that builders are moving to higher priced homes. Finished vacant units (built homes waiting to be sold) is still only at two months of inventory, though has risen from Q3 2014 to Q4 2014.
So despite prices outstripping income increases, houses are moving on up – literally the builders are targeting move-up buyers who are looking for a home in the next price bracket up while interest rates are low. So if the builders are banking on move-up buyers (and relocations) surely the new wave of first time buyers needs to come and buy the move-up buyers’ homes.
Surely then the market for condos and town houses which can target lower price points is increasing? Apparently not, or at least not in the MLS, with 30% less condominium and townhouse sales than the previous year.
The most interesting figure hidden in all of these studies is from Metrostudy:
New home starts in 2014 are up 13.7% over 2013, a successful year by any standard. Closings, only up 5.2%, are not quite keeping pace
That to me sounds like something beginning to get out of balance. Are we going to see a rise in new home inventory in a saturated over $500,000 market? Unless we see some changes to land development practices and see denser housing at the under $300,000 range, I think we’ll end up with a top-heavy market at some point in the next few years.
If we look at the condo and town house sales in the City of Austin (as opposed to the broader Austin area used for MLS purposes), and compare it to the detached house sales in the same area, we see the following:
For single family detached homes, the under $250,000 sales have slowed, and the under $200,000 has died in the last three years.
For attached homes in the City, the $200,000 to $250,000 range saw the biggest increases, but overall sales numbers are down. So there has been some response to the need for affordable housing close to the center but overall the higher price detached houses have seen the biggest gains.
Right now there’s no real imbalance in the overall volume of sales in the market, just in the skew of pricing.
Austin Housing Market Summary
- House prices have risen an average of 14% in one year throughout the region
- More houses are selling, and inventory is still low – a sellers’ market
- New housing starts are up – vacant completed inventory is still low, but sales lag starts
- In the City of Austin, the more affordable home sales are slowing
- Builders seem to be banking on move-up buyers and relocations, but move-up buyers need buyers lower on the price ladder than them to sell to.
Sherlock Homes Austin helps home buyers and sellers throughout the Austin area. Get in touch with one of our Austin Realtor team to discuss your housing needs – 512 215 4785.