Zillow forecasts a 0.4% increase in home values for the Austin housing market by September 30, 2023. The Austin-Round Rock Metropolitan Statistical Area (MSA) has witnessed significant changes in its housing market. In this detailed report, we’ll delve into the key statistics and trends affecting the Austin housing market in September 2023 by the Austin Board of REALTORS®.
In September 2023, the housing inventory in Austin-Round Rock MSA reached a critical point, with 4.0 months of inventory, marking the highest level in over eight years. This has substantial implications for both buyers and sellers, as it signifies a shift in the market dynamics.
The Austin housing market experienced a notable drop in closed sales, with a significant 18.2% decrease year over year, resulting in 2,387 sales. The median closing price also dipped by 4.3% year over year to $452,080. These trends are indicative of the challenges posed by higher mortgage rates and underline the necessity for buyers and sellers to collaborate with experienced REALTORS®.
Expert Insights & Forecast
Ashley Jackson, the 2023 ABoR president, emphasizes the importance of strategizing in today’s housing market. She highlights that buyers can take advantage of the increased inventory to get pre-qualified, while sellers should focus on improving their home’s curb appeal. These preparations can lead to better outcomes for both parties in the transaction.
Clare Losey, Ph.D., a housing economist for ABoR, points out that while there is an increase in housing supply, many options may not be affordable for first-time homebuyers or those looking for more budget-friendly homes. The market activity, including the decline in closed sales, may be attributed to various factors, including a lack of affordable housing options and the influence of higher mortgage rates.
Losey suggests that working with a trusted REALTOR® is essential, as they can navigate the dynamic factors of the market and price homes appropriately. Jackson adds that REALTORS® offer more than just contract negotiations; they provide expertise, guidance, and insight to ensure the best possible outcome for buyers and sellers.
Are Home Prices Dropping in Austin?
One of the critical questions on the minds of prospective homebuyers and sellers in Austin, Texas, is whether home prices are dropping. Let’s examine the data to gain insight into the current state of the Austin housing market.
In September 2023, the Austin-Round Rock MSA reported a median home price of $452,080. This figure represented a 4.3% decrease year over year. The decline in median home prices suggests that there has been some price softening in the market.
Austin’s Current Market Condition
To determine whether Austin, Texas, is currently a buyer’s or seller’s market, we need to consider several key indicators. These include housing inventory, days on market, and pricing trends.
As of September 2023, the Austin-Round Rock MSA has a housing inventory of 4.0 months. This marks the highest level in more than eight years. An inventory of 4.0 months is considered a balanced market, indicating a fair equilibrium between buyers and sellers. However, this figure is higher than in previous years, which may be favorable for buyers.
Another important indicator is the average number of days homes spend on the market. In September 2023, homes in the Austin area spent an average of 65 days on the market, which is an increase of 24 days from the previous year. This suggests that homes are taking longer to sell, which could provide more negotiating power to buyers.
Based on the available data, it’s fair to say that the Austin housing market is currently transitioning towards a more balanced state. The increase in housing inventory, longer days on the market, and a 4.3% year-over-year decrease in median home prices suggest that buyers may find more favorable conditions compared to the highly competitive market of previous years.
Specific Area Real Estate Statistics
Now, let’s explore how these trends have impacted specific areas within the Austin housing market:
City of Austin
- Residential homes sold: 682, a 13.3% decrease from September 2022.
- Median price for residential homes: $536,028, 2.5% less than September 2022.
- Months of inventory: 4.1, 1.4 months more than September 2022.
Travis County
- Residential homes sold: 1,085, a 12.7% decrease from September 2022.
- Median price for residential homes: $525,000, 4.2% less than September 2022.
- Months of inventory: 4.2, 1.2 months more than September 2022.
Williamson County
- Residential homes sold: 791, a 20.4% decrease from September 2022.
- Median price for residential homes: $426,752, 6.1% less than September 2022.
- Months of inventory: 3.3, 0.2 months more than September 2022.
Hays County
- Residential homes sold: 341, a 30.3% decrease from September 2022.
- Median price for residential homes: $400,000, 4.3% less than September 2022.
- Months of inventory: 4.7, 1.5 months more than September 2022.
Bastrop County
- Residential homes sold: 133, an 11.9% decrease from September 2022.
- Median price for residential homes: $340,000, 10.7% less than September 2022.
- Months of inventory: 5.0, 1.2 months more than September 2022.
Caldwell County
- Residential homes sold: 37, a 9.8% decrease from September 2022.
- Median price for residential homes: $289,330, 13.9% less than September 2022.
- Months of inventory: 4.7, 2.1 months more than September 2022.
Is Austin Housing Market Overpriced?
The question of whether the Austin housing market is overpriced is a subjective one and can depend on several factors. Firstly, it is important to note that the Austin housing market has been experiencing an unprecedented level of demand over the past few years. This demand has been driven by a combination of factors, including a strong local economy, a growing population, and an influx of out-of-state buyers. This increase in demand has resulted in a significant rise in the median home price.
Recent research suggests that homes in Austin continue to be among the most overvalued in the United States. The study conducted by researchers from Florida Atlantic University and Florida International University reveals that homebuyers in Austin are still paying almost 51% more than what is expected for homes. Only Boise, Idaho, has a higher premium, with homebuyers paying an exorbitant 81% more.
However, it is equally essential to compare the affordability of homes in Austin to other major cities. Although the median home price in Austin is high compared to historical norms, it is still lower than in cities like San Francisco, New York, or Los Angeles. Additionally, Austin’s cost of living is generally lower than other major cities, which can make it more feasible for some buyers to own a home.
Another aspect to consider is the potential growth of the Austin housing market. While it is impossible to predict the future, many experts believe that Austin’s robust economy and growing population make it a worthwhile long-term investment for homebuyers. Furthermore, the city has a diverse economy, making it less vulnerable to economic shocks.
Ultimately, whether or not the Austin housing market is overpriced is subjective. While some buyers may find the high prices unaffordable, others may see it as a sound investment in a thriving city. It is crucial for prospective buyers to assess their financial situation and goals before deciding to purchase a home in Austin or any other market.
Austin Housing Market Forecast 2023-2024
What are the Austin real estate market predictions for 2023? Despite cooling off from its peak. Austin will remain a seller’s market despite nationwide inflation and rising interest rates. The prices continue to rise across Austin MSA. The main reason is strong in-migration and a rapidly recovering local economy. According to the Census Bureau’s 2021 population estimates, Austin’s population is increasing by 146 people every day. This type of expansion places immediate and substantial demands on infrastructure, especially housing.
Austin’s rapidly expanding economic industry is driving more people into the city which is increasing the housing demand. A number of reasons have affected the present situation of the Austin housing market, one of which is the high migration of firms and persons relocating to the city from Texas and out-of-state, which has led to a robust and varied economy that attracts people seeking opportunity.
A surge of people moving in, combined with rapid population growth and low mortgage interest rates, has turned Austin and its surrounding area into a sellers’ market. Austin’s engine of job and population growth is not projected to slow down anytime soon—the biggest drivers of residential real estate demand. Its economy has diversified and strengthened over the past two decades.
Companies like Google and Tesla are moving operations to Austin. The software giant Oracle has also relocated its headquarters here. As more companies move here, that means more people looking for homes, and the city is also attractive to outside investors. With a steady influx of job creation in the pipeline, the housing market will continue to post strong numbers. Big companies moving here will also play into what happens to the housing market.
With an all-time high in corporate relocations, the housing demand is way up and the supply side cannot match up. All these factors indicate that this region has a higher probability of withstanding economic downturns due to the current pandemic. To determine the best local real-estate markets in the U.S., WalletHub compared 300 cities of varying sizes across 24 key indicators of housing-market attractiveness and economic strength.
They looked at factors like median home-price appreciation to home sales turnover rate to job growth. The city of Austin’s real estate market came in at number 7 overall and 3rd among large cities. Boise was found to be the best market in the nation, followed by Seattle, Frisco, Nashville, and Gilbert in the top five.
If you’re interested in the current and future state of the Austin housing market, Zillow’s comprehensive data and forecasts provide valuable insights into what you can expect. Let’s dive into the specifics of the Austin housing market, as of September 30, 2023, and explore the forecast provided by Zillow.
Current Austin-Round Rock Home Value
As of September 30, 2023, Zillow reports that the average home value in the Austin-Round Rock area is $468,350. This figure represents an 11.6% decrease over the past year. It’s essential to note that this decrease indicates a notable shift in the market dynamics, making it an intriguing time for prospective buyers and sellers.
Key Market Indicators
Let’s take a closer look at some of the key market indicators provided by Zillow as of August 31, 2023:
- 1-year Market Forecast: Zillow forecasts a 0.4% increase in home values for the Austin housing market by September 30, 2023. This modest increase could suggest a potential stabilization or even a slight recovery in home prices.
- Median Sale to List Ratio: As of August 31, 2023, the median sale to list ratio is 0.984. This ratio indicates that homes are generally selling very close to their list prices, which can be an important consideration for both buyers and sellers.
- Percent of Sales Over List Price: Zillow reports that 17.9% of sales were over the list price as of August 31, 2023. This indicates that a portion of homes in Austin continues to sell above their initial listing prices, which may create competition among buyers.
- Percent of Sales Under List Price: Conversely, 63.9% of sales were under the list price as of August 31, 2023. This suggests that a significant majority of homes are selling below their original listing prices, providing opportunities for buyers to negotiate favorable deals.
- Median Days to Pending: As of September 30, 2023, the median time for homes to go pending is 43 days. This figure is essential for understanding the pace of the market and how quickly homes are being snapped up by buyers.
Will Home Prices Drop in Austin?
Based on Zillow’s 1-year market forecast, there is a modest 0.4% increase in home values expected for the Austin housing market by September 30, 2023. While the data shows that home values have experienced an 11.6% decrease over the past year, this forecast suggests a potential trend towards stabilization.
It’s essential to remember that real estate markets are influenced by various factors, and forecasts can change. Therefore, prospective buyers and sellers in Austin should closely monitor the market, stay informed about the latest trends, and consider working with real estate professionals who can provide expert guidance tailored to their specific needs.
Overall, the Austin housing market is showing signs of evolving, and the forecast indicates a potential turning point in the near future. Whether home prices will drop or rise depends on various economic and local factors, making it crucial for individuals to make well-informed decisions regarding their real estate transactions.
Is Austin a Good Place for Real Estate Investment?
If you’re considering real estate investment, Austin, Texas, is a city that should be on your radar. Known for its vibrant culture, strong economy, and population growth, Austin offers numerous opportunities for real estate investors. Let’s explore in detail why Austin is a promising destination for real estate investment.
Population Growth and Trends
Population Growth:
- Austin has been experiencing consistent and substantial population growth for many years. The city’s population has been steadily increasing, making it one of the fastest-growing metropolitan areas in the United States.
- The city’s appeal to newcomers is driven by factors like its vibrant tech scene, cultural attractions, and overall quality of life.
Trends:
- The population growth trend in Austin is expected to continue, with projections indicating a significant increase in residents over the coming years.
- As the city’s population expands, the demand for housing, both rental and owned, is likely to rise, creating opportunities for real estate investors.
Economy and Jobs
Economic Strength:
- Austin’s economy is robust and diverse, with a thriving technology sector, a burgeoning startup scene, and a strong presence of major corporations.
- The city consistently ranks high in terms of job creation and economic growth, making it an attractive destination for professionals seeking employment opportunities.
Job Market:
- The city’s job market is diverse and dynamic, with a focus on technology, healthcare, education, and entertainment.
- Employment opportunities continue to draw individuals to Austin, contributing to the population growth and housing demand.
Livability and Other Factors
Livability:
- Austin consistently receives high marks for its quality of life. The city offers a vibrant cultural scene, excellent healthcare facilities, and access to outdoor activities.
- It’s known for its music and arts culture, making it a desirable place to live for professionals and creatives.
Education:
- Austin is home to top-tier educational institutions, including the University of Texas at Austin. This draws students, academics, and their families to the city, further boosting the demand for housing.
Infrastructure:
- The city has invested in infrastructure and transportation improvements to accommodate its growing population, making it more accessible and commuter-friendly.
Rental Property Market Size and Growth
Rental Market:
- Austin’s rental property market is substantial and continues to grow. The city offers a wide range of rental properties, from apartments to single-family homes, catering to a diverse tenant population.
- The city’s dynamic job market attracts young professionals, making it an ideal location for rental property investment.
The Zumper Austin Metro Area Report analyzed active listings across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Texas one bedroom median rent was $1,134 last month. Austin was the most expensive city with one bedrooms priced at $1,530 whereas San Marcos ranked as the most affordable city with one bedrooms priced at $1,180.
The best place to buy rental property is about finding growing markets. Cities like Round Rock, Cedar Park, and Pflugerville are good for investors looking to get started with rental property ownership at an affordable price. These cities look good for rental property investment this year as rents are growing over there. These trends provide a macro look at the growing rental demand. Each real estate market has its own unique supply-demand dynamics with unique neighborhoods that present their own opportunities for investors.
The Least Expensive Rental Markets
- San Marcos: San Marcos is ranked as the most affordable city in the Austin region, with one-bedroom rentals priced at just $1,180. This makes it an attractive option for those seeking affordability without compromising on location and amenities.
- Pflugerville: Pflugerville takes the second spot in affordability, with one-bedroom rentals priced at $1,240. It’s a great option for renters looking for a cost-effective living arrangement in the Austin area.
- Cedar Park: Cedar Park is the third most affordable city in the region, with one-bedroom rentals available for $1,330. While slightly pricier than the previous two, it still offers competitive rental rates.
These cities provide various rental options for individuals and families looking to reside in the Austin area while staying within their budget. The affordability of these locations can make them particularly attractive for renters.
The Largest Declines in Rental Prices (Year Over Year)
- Cedar Park: Cedar Park had the most significant decline in rental prices, falling by a substantial 14.7% since this time last year. This presents an opportunity for renters to find more affordable housing in this city.
- Pflugerville: Pflugerville takes the second spot in terms of declining rental prices, with rents dropping by 12.7%. This decline provides renters with a chance to secure more budget-friendly rental options.
- Austin: Austin ranks as the third city with a notable 11% decrease in rental prices. While Austin is typically known for its competitive rental market, this decline may open up more affordable possibilities for tenants.
These cities with declining rental prices offer potential savings for renters and create opportunities for those looking to secure more cost-effective housing. For investors, these cities may present intriguing possibilities, as the current market conditions allow for potential investment opportunities.
Growth Potential:
- The city’s population growth and job market strength contribute to the growth potential of the rental property market. As more people move to Austin, the demand for rental units is expected to rise.
- Investors can explore various rental strategies, including long-term leases, short-term rentals, and vacation rentals, to diversify their real estate portfolio.
Other Factors Related to Real Estate Investing
Investor-Friendly Environment:
- Austin’s business-friendly environment extends to real estate investment. The city offers attractive incentives and a favorable legal framework for real estate investors.
- Real estate investors benefit from a strong property rights regime and a well-regulated market.
Tax Benefits:
- Texas does not have a state income tax, which can be advantageous for investors looking to maximize their returns.
- Investors should explore the tax implications of specific investment strategies, including property taxes and capital gains.
Market Resilience:
- Austin’s real estate market has shown resilience during economic downturns, and it is considered one of the more stable markets in the country.
- Investors appreciate the market’s ability to weather economic fluctuations and maintain its growth trajectory.
Diversification:
- Investors can diversify their portfolios by exploring various types of real estate, from residential properties to commercial and mixed-use developments, taking advantage of Austin’s growing and diverse market.
As a real estate investor, Austin’s population growth, strong economy, livability, rental property market size, and other investor-friendly factors make it a compelling choice. However, it’s essential to conduct thorough market research, consult with local real estate experts, and tailor your investment strategy to your specific goals and risk tolerance. Austin’s real estate market offers exciting opportunities, but informed decision-making is key to success.
References:
- https://www.abor.com/new-center/market-stats
- https://www.zillow.com/austin-tx/home-values
- https://www.realtor.com/realestateandhomes-search/Austin_TX/overview