Happy Tuesday! I hope you’re well as the world, or Texas at least, begins to open up a bit. As I’m considering what the next few weeks will look like for me personally, I’ve been reflecting on a quote I saw.
“In the rush to return to normal, use this time to consider which parts of normal are worth rushing back to.”
I’ve certainly spent plenty of time thinking on that question!
Let’s talk about what’s going on in the market. I wouldn’t say it’s ‘normal’ but the numbers are still promising for Austin’s real estate market. Unless you’re a buyer hoping for some screaming deals. But generally speaking, it’s good news for our economy overall, and home owners in particular, that real estate prices in Austin are holding steady, increasing even, and demand for housing is strong.
Inventory is still below “normal” at about 1500 active listings of single family homes in Austin. In May of 2019 we had more like 2300 homes for sale, and 2018 was even higher at 2600. So inventory is tight, but slowly ticking up week by week.
As inventory increases, so do contracts (pendings). This makes sense. One thing that is restricting buyer activity, in addition to COVID, is too few options to choose from. So as more options become available, more buyers who have been waiting are able to match up with a home. We’re currently seeing about 38 homes go pending each day in the city of Austin. And we’ve had about 19 closings per day on average in May so far.
So no matter how you look at these numbers, we’re still in a seller’s market. We have between 1-2 months of inventory. The traditional measure for diagnosing a “buyer’s market” is more than 6 months of inventory. Meaning it would take more than 6 months for current demand to buy up what’s currently available. At 1-2 months, we’re still seeing more leverage to call the shots on the seller’s side. This is nothing new in Austin. We’ve been in a seller’s market for more years than I can count at this point. It’s only notable because Austin’s strong seller’s market seems to have been almost undisturbed by an unprecedented global pandemic.
This can, however, vary by price range and neighborhood, because supply and demand in real estate are so hyper-local. So as a buyer or seller right now, you’ll want to be paying close attention to the inventory in your particular area and price range to assess how best to price your home, or negotiate on a home you’re considering.
But as a general rule, you probably have more downward pressure on pricing right now in the over $700K price range and more competition and upward pressure on prices below $700K. What I’m seeing is for the higher price ranges, longer days on market, a larger gap between asking price and sales price, and more inventory. It doesn’t appear to be terribly dramatic and again, this can be hyper local. But if you’re having trouble moving a home right now over $700,000 that would be supported by the data. And if you’re seeing multiple offers around $400,000 right now, that would also be supported by the data.
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Thanks for reading and everyone have a great week!