maybe too much?
Ever since fall of last year, this has been a high demand, seller market in all of Central Texas.
I help clients work around the stunning prices, multiple offers and successfully have been securing contracts for my buyers. We are shoulder to shoulder with clients navigating through the choppy waters of this housing market, getting them home.
My new construction buyers will be closing on homes with 10s of thousands of dollars in equity at the time of closing. Up to $70,000.
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Explaining the dynamics of our housing market and what effect buyers from California, Colorado, New York and New Jersey have on our housing market is complex, but also simple.
High demand, low supply.
Price bubble? No, say most market experts. This demand is here for a while and when backs off, no property value deflation is expected.
The article below describes the situation well. Best explainer I’ve seen.
From Austin Business Journal April 1, 2021
Appraisals shooting up faster than a speeding bullet. Prices plowing through the pandemic like a locomotive. Values leaping by bounds in tall condo buildings.
Look, up in the air, it’s Austin’s super housing market — and it will remain relatively sky-high for years to come, experts agree.
More than a dozen economic and residential real estate experts interviewed believe this is not a bubble that’s in danger of bursting. “A bubble bursting means demand will go away, and with job growth in Austin the way it is, it’s hard to see how that will happen,” said Kara McGregor senior vice president of business development at Independence Title Company.
Indeed, Austin’s ability to keep the masses coming is cited as the No. 1 reason why this appreciation trend is sustainable.
Employers have proven for over 40 years that they will keep this economy in overdrive. The chance of a $900,000 home dropping to a $450,000 value — which happened in California during the 2008 downturn — simply won’t happen here soon, experts say.
But what if the unthinkable happens? Let’s say a recession combined with a global public crisis hits us. Been there, did that in 2020 and it only propelled prices higher — just as the past two recessions have done because people seek a safe, less-expensive port such as Austin during an economic storm.
When the tech bubble burst at the turn of the century, housing didn’t suffer notably. Even when the housing bubble burst in 2008, Austin kept chugging, relatively speaking.
Which begs the next question: Can we keep up such appreciation?
Austin Board of Realtors reports the median sales price for a home in the Austin area was $395,000 in January, a year-over-year increase of 22%.
That is not sustainable long-term, experts agree. Still, double-digit increases are expected for the foreseeable future — perhaps the next two years at least, several experts predict.
"When we analysts think about bubbles we think of annual market averages in the mid 40% for over a decade as the sand states — California, Nevada, Arizona and Florida — had prior to the financial meltdown," said Mark Sprague, state director of information capital at Independence Title.
The biggest culprit to rising prices: supply and demand. In a perfect world, according to the Texas A&M Real Estate Research Center, a market would have 6 months of housing supply.
That’s just enough to keep prices and values appreciating. Recently, in some parts of Central Texas such as near the Apple Inc. campus being built in North Austin, housing inventory has been clocked as low as 3 days.
The Real Estate Center reports that the last time Austin-area housing inventory was at a healthy 6 months was 10 years ago, in June 2011.
Since then, it has steadily dropped to below 0.4 months.