Austin Real Estate Update | February 2021
I truly hope this finds you healthy and in good spirits. Thank you for trusting me with your real estate needs. Please think of me should you or your friends/associates have any real estate needs or questions, I'm never too busy to help. This edition features the most recent market updates and is a bit of a doozy, but I wanted to delay this update by a week so that I could get some of the preliminary data from January given how rapidly the market is changing - Enjoy!
Housing demand across Central Texas soars to all-time high
The Austin-Round Rock Metropolitan Statistical Area (MSA) closed 2020 by breaking records as housing demand across the region reached unprecedented levels. According to the December 2020 and Year-End Central Texas Housing Market Report released by the Austin Board of REALTORS® (ABoR), a record-breaking 40,165 homes totaling $17,579,802,503 in sales volume were sold across the Austin area last year.
In December alone, residential home sales across the five-county MSA jumped 16.2% year over year to 3,626 sales, a record for the month of December, and the median price increased by 15.8% to 370,000, an all-time record for the MSA. Sales dollar volume in December also increased 41.1% to $1,784,023,513 and pending sales increased 40.8% to 3,114. Housing inventory declined 1.1 months to a record-low 0.6 months of inventory for the entire MSA. Homes spent an average of 36 days on market, 25 fewer than December 2019.
Dr. James Gaines, former chief economist for the Texas Real Estate Research Center, attributes Austin’s record-high housing demand to a perfect storm of economic growth and increased consumer buying power. “The Austin-area real estate market is experiencing extraordinarily high demand fueled by years of high population growth and employment gains, lifestyle changes following the pandemic and record-low interest rates. The pandemic fostered an environment where many families increased personal savings helping some transition from renting to ownership while others needed to ‘move up’ for more space while working from home. Despite a steep slowdown during shelter-in-place orders this spring, the market came roaring back in the summer with no drop-off at the end of the calendar year.” Gaines added that the outlook for the 2021 housing market was very good, noting that Austin’s demand-driven market will continue to show strength and homes will keep selling quickly. In 2020, the median sales price in the Austin-Round Rock MSA rose 9.2% to $344,000. During this year, new listings decreased 0.4% to 43,816 listings, while active listings declined 34.2% to 4,556 listings. However, pending sales jumped 13.1% to 42,371 pending sales. Pending sales are now outpacing new listings, indicating that homes are selling faster than new ones can hit the market. In 2020, residential home sales in the City of Austin increased 1.7% to 12,745 sales, an all-time record, while sales dollar volume jumped 16.3% to $6,746,602,345. The median sales price for residential homes rose 12% year over year to 420,000 this past year, also an all-time record. New listings slightly increased 1.1% to 14,735 listings while active listings dropped 23.8% to 1,332 listings, and pending sales increased 3.8% to 13,062 pending sales. In December 2020, the median sales price in the city of Austin rose 18.7% to $461,000, an all-time monthly record. Residential sales increased 16.4% to 1,191 sales, a record for the month of December in any year, as sales dollar volume jumped 43.1% to $711,984,698. In the same period, new listings jumped 31.3% to 755 listings, while active listings decreased 33.6% to 753 listings, and pending sales jumped 31.1% to 928 pending sales. Monthly housing inventory decreased 0.4 months year over year to 0.7 months of inventory. The City of Austin now has a higher inventory than surrounding markets like Williamson County, which is historically not the case. In Travis County during 2020, residential home sales increased 4.3% to 20,081 sales, while sales dollar volume rose 19% to $10,663,700,312. The median price for residential homes increased 12% year over year to $405,000. This past year, new listings declined 1% to 22,744 listings and active listings dropped 32.6% to 2,226 listings. However, pending sales increased 8.1% to 20,986 pending sales. In December, residential home sales increased 18.1% to 1,885 as sales dollar volume in Travis County spiked 46.5% to $1,137,805,715. Additionally, the median price rose 20.2% year over year to $435,000. During the same period, new listings jumped 29.5% to 1,216 listings while active listings dropped 54.9% to 1,038 listings, and pending sales increased 38.6% to 1,537 pending sales. Monthly housing inventory fell 0.8 months year over year to 0.6 months of inventory. (information courtesy of ACTRIS)
National Market Update Mortgage applications shot up almost 17% as the 2021 kicked off, and it wasn’t just refis surging to their highest level since March, as purchase applications were up by double digits as well. Freddie Mac’s chief economist notes: “mortgage rates are expected to increase modestly in 2021,” and adds that although “they will remain inarguably low, ...borrowers are smart to take advantage of these low rates now.” Home sellers pocketed a $68,843 profit on the typical home sale in 2020, the most since 2005. The 34.7% return on investment (ROI) was the highest since 2006. Home seller profits went up in more than 90% of the markets evaluated, and both profits and ROI have now grown nationwide nine years in a row. Yet people are staying in their homes longer with average tenure hitting 8.33 years in Q4 of 2020. In years past, the average tenure has hovered around 7 years so this is significant. Realtor.com’s Housing Market Recovery Index stayed above its pre-pandemic baseline, all measures, except new listings, growing faster than a year ago and anticipating growth in the spring. New Home Sales were up 1.6% in December, ending the year up 15.2% from a year ago. Sales in 2020 of new single-family homes were the best in 14 years. The average price is up, but low mortgage rates keep properties attractive. Inventories were up by 12,000 units, yet sales have slowed since summer because there still aren't enough finished new homes. Fortunately, the number of new single-family homes started is up 27.8% from a year ago. Lack of inventory is also slowing existing home deals. CoreLogic tells us homeowners saw their equity gain more than $1 trillion year-over-year in Q3, a 10.8% annual boost. The average equity increase per homeowner was $17,000—the largest in six and a half years. After January’s meeting, Chair Powell indicated that even if the Fed's money printing stimulus spikes inflation, they won't hike rates. A few Fed watchers have begun to doubt that and are looking for a rate increase at some point during 2021. The Fed says no, but may have to hike if we get an inflation spike.
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