A friend recently saw so many coming soon signs in his neighborhood that he was concerned that the Austin sellers’ market was over and that a flood of inventory was going to bring the market back into balance in no short order. Indeed there are more $500k+ Austin homes for sale than last week. To allay his fears I said that this was the traditional peak selling time, and that this was to be expected – more listings, more buyers, frantic activity.
Here are a few different views of the market. The first is months of Austin home inventory over the last five years. I restricted it to homes from $500,000 – $1m and for homes in the City of Austin.
As you can see, since the 2012 summer season, inventory has been below five months. Three months is a balanced market in the lower price points, and in this price point, five or six months is balanced. So we’re in a sellers’ market per the inventory chart. The spikes in inventory are in the winter months typically – homes that are left over from the peak summer demand can languish over the holidays when there are far fewer buyers, and sometimes are withdrawn from the market and sometimes sell much later.
The next chart shows the typical annual cycle of MLS listings over the years – purely the supply side of the equation. This is for the same price point and location as above.
I can see two things here.
- The typical summer cycle – the rationale is that people often want to move when there are more homes to choose from, and people like to get settled by the start of the school year. Listing in May or June means the potential of an August close, assuming a minimal time on market and a 45 day period from contract to closing, though some of the jumbo loans take a little longer to close depending on your lender.
- Just looking at the last line on the right of the chart, it looks like we may be seeing the start of increasing supply. It’s perhaps too early to say right now, but the slope of the line may point to a higher supply than the previous years.
Traditionally, extreme market conditions tend to exist for a short period of time, so I expect that by the end of the summer we will see the swing back towards a balanced market. I’m deliberately not talking about price right now – that’s another matter.
If you would like more information on a smart way to buy in a swinging market, or need information about selling your home with the least hassle, please get in touch – 512 215 4785