Austin, TX maintains a strong real estate market which parallels the many opportunities available in the city. WalletHub analysists compiled a Best Cities for Jobs list that included 150 U.S. locations. Austin came in 22nd, ranking better than 128 metro areas in employment growth, median annual income, and job opportunities. The city is bustling, which has created a need for new homes.
Austin-Round Rock Becomes a Record-Setting Market
The Austin-Round Rock market saw a 2.2 percent increase in Austin single-family home sales compared to last year. There was a slight decline of 1.7 percent in the city. Overall sales volume went up by county, with increases of:
- 2 percent for a total of 274 properties in Hays County
- 4 percent for a total of 794 properties in Williamson County
- 4 percent for a total of 1,124 properties in Travis County
According to Brandy Guthrie, 2017 President of the Austin Board of Realtors, “The Austin-Round Rock housing market continues to slightly outperform last year’s home sales activity, keeping 2017 on-pace for another record year of home sales. At the same time, low housing inventory levels along with constrained housing development activity throughout the city of Austin are preventing home sales growth at the city level.”
New Home Starts Reach 10 Year High in Austin, TX
MetroStudy released an Austin Housing 3Q17 report that revealed that new home starts were up 19.1 percent to 16,719. The last time Austin saw over 16,000 starts was before the Great Recession, with a peak of 18,406 in the third quarter of 2006.
Builders have found that construction schedules take longer because of permit delays and a limited labor market. Most begin construction in late summer with plans to have properties move-in ready by spring. Despite the restrained development, consumers are still buying new homes. For the first time, Austin recorded over $1 billion sales for six consecutive months between March and August 2017.
This year broke multiple records in the area. Austin reached an all-time median price high of $305,000. June 2017 also hit a new high for sales, rising to $1.483 billion. The median price decreased to $289,000 in September. The average days spent on the market also increased to 53 in the same month.
Developers Cash in with Higher-Density Properties
Developers are looking for more ways to grow inventory to meet demand. MetroStudy Austin Regional Director Vaike O’Grady explains that “Developers and builders are beginning to experiment with lower-cost, higher-density products between $200,000 and $300,000 in suburban markets, where products like townhomes and smaller single-family homes can be built more easily.”
Moving into this type of market isn’t always easy. O’Grady also said that “Shortages of vacant developed lots and regulatory hurdles in Austin make it difficult for meaningful housing development activity to occur within Austin’s city limits.”
The Future of Home Construction in Austin, TX
October 2017 saw a steady rise in home prices in Austin. The median price went up 4.3 percent to $286,742 throughout Austin-Round Rock. In the metro area, the median grew 9.1 percent to $360,000. Housing development is the main reason why the region has experienced overall gains recently. Most construction activity centers on markets that surround Austin, like Cedar Park/Leander and Pflugerville.
Guthrie points to local politics as a deciding factor in the future performance of Austin’s new home construction market: “Next to CodeNEXT, the City’s selection of a new city manager will have the single-greatest impact on the direction of our region’s future and the sustainability of Austin’s housing market, so it’s critical that local community stakeholders and business leaders have the opportunity to weigh in on this important decision.” Guthrie also stated that the Austin Board of Realtors will rely heavily on the new city manager to “put a leadership team in place that will bring the cultural and operational changes needed to move forward.”
To satisfy growing demand, Austin developers must find ways to provide lower-cost housing, which is an area that is currently in need. The Austin Board of Realtor’s 2016 president Aaron Farmer explained in a July market report that “The city of Austin’s high development costs make it virtually impossible for homes under $250,000 to be built within city limits. In return, this pent-up demand is driving home prices up in surrounding areas in where lower-priced housing stock can be built. The result is a catch-22 of housing development, where the homes that can be developed are largely in price classes where both prices and inventory are higher, while the much-needed housing stock under $250,000 goes un-replenished.”
For sellers, high-demand can mean getting top dollar for properties they paid less for when they first bought in the area. In the meantime, developers continue to try and increase supply while seeing sales growth and hitting an annual lot delivery record high of 19,007 in the third quarter of 2017.