Even though the dust is accumulating Austin, In Texas, after two years of soaring home prices, indicators show why sellers are optimistic about the luxury market, even as average prices drop.
Among the cities with the slowest home price declines, Austin came in first in Realtor.com’s report. The median home price in September was $558,275, down 10.3% from June, according to Realtor.com data. The percentage of sellers who lowered their list price increased by 252% in September.
“There was an initial shock that people had a little FOMO [fear of missing out] that they missed the market. So our agents reconstructed the sellers and prices to see where the market was,” said Gary Dolch, Compass founding agent and owner of Austin Luxury Group.
When it comes to pricing, Austin’s luxury sector is doing much better than the market as a whole, although there is still some turmoil.
The median price of the most expensive home in Austin (top 5%) increased 16% between June and August to $1.12 million. Realtor.com data. The price fell slightly over the next month, dropping 4% to put him just below $1.1 million in September.
But while homes in this segment continue to grow year-on-year, luxury home prices fell one tier in the top 10% of the market, down 1.2% to $746,000.
Rapid changes in home prices and activity rattled Austin’s real estate market over the summer.
Dolch said he hadn’t seen listing activity plummet in Austin since the 2009 recession devastated the market. He said he saw the most extreme changes from mid-July to September, and since the end of the summer in his office he hasn’t had more than one contract in a week. .
“Mid-August was the quietest time since the financial crisis. I didn’t.”
But he delivered a clear message to brokers and clients: Don’t panic. said it would not be resolved.
“If you start to destroy demand like that, you can’t help it. It doesn’t matter how much you set the price,” he said.
A more “normal” year?
Considered one of the fastest growing cities in the United States, Austin is a tech hub with a vibrant music scene, unique personalities and a tax system that is more attractive than the existing ones. Attracted by its status, it has attracted residents from both shores. States like California.
Overall, Austin home prices mirror trends in other cities that have become real estate hot spots during the pandemic, with buyers from more expensive parts of the country seeking more affordable homes in these areas. swept into the area of
Evan Wyloge, Data Reporter for Realtor.com, said: (Mansion Global is owned by Dow Jones. Dow Jones and Realtor.com are both owned by News Corp.)
While a combination of factors has pushed home prices down in Austin, industry experts say recent changes point to a market correction.
The 252% increase in the number of sellers who lowered their prices compared to last year has something to do with the fact that numbers are back to normal, said Adam Perdue, an economist at the Texas Real Estate Research Center at Texas A&M University. said.
2020 and 2021 were an anomaly for the Austin housing market, but 2022 is shaping up to be a more “normal” year, Perdue said.
“A lot of what we are really seeing is a return to trends that we would have expected in 2019, had it not been for the pandemic and changes in interest rates,” Perdue said.
Many of the cities that saw a surge in buyers over the last two years were in the Sun Belt. Like Austin, these cities appealed to buyers looking for snowy, wet winters in exchange for better climate and quality of life.
Wairoji noted that parts of Texas, Arizona, Georgia and Florida are particularly popular, and “it makes sense that the very high demand has pushed prices above what the market should have been.” said. “These are the areas where we see the most of these modifications.”
Especially in Austin’s luxury market, Dolch estimates that home prices were up 20% just a few months ago.
“I don’t think the market suddenly disappeared here,” Dolch said. “I think it’s a reaction to the market slowdown, and it’s pretty dramatic.”
Market seasonality, among other factors, is responsible for at least some of the decline. Dolch noted that the market generally slows down significantly around mid-July.
But this summer, that seasonal dip coincided with rising inflation and volatility in the stock market. Dolch said the housing market was more hesitant than usual ahead of November’s elections. “I think once people feel more confident, they start pulling more triggers,” he said.
Austin Economy Drives Prices
Considering that the fundamentals that attracted buyers to Austin in the first place haven’t changed, a significant price cut is unlikely going forward.
Over the next few years, Perdue predicted a slight year-on-year price decline or even a flat trend line.
“We continue to see increasing demand underpinning prices,” Perdue said. “This continues against the headwinds of rapid changes in mortgage rates.”
But Dolch was more bullish. He predicts that the Austin real estate market will rise by 30-40% over the next five to six years as there is not enough housing for the influx of immigrants to Austin and high-end rental buildings are nearing full occupancy. “I have nowhere to go,” he said.
One thing real estate experts agree on is that Austin’s booming economy will continue to support housing market prices.
Silicon Valley companies are increasing their presence in Austin, with Amazon, Google, Oracle and Tesla expanding their operations there.
What’s more, many of the people moving to Austin are from California, New York, Chicago and elsewhere, and still see value in the market, Dolch said. “They all think our pricing is very good compared to their originals. That alone will boost the market,” he said.
Despite the market’s timidity, Dolch said there was an overabundance of available housing. They just haven’t played in MLS.
The agency doesn’t want the optics of homes being piled up on the market for days while sales are sluggish. Instead, they rely on private listings, which is a big reason MLS has dried up, he said.
“Austin is famous for having a shadow market, and there are sites where brokers can browse off-market inventory that isn’t in the MLS. Many of the homes are priced at $1.5 million or more, he added.
There are other signs of life. Dolch said there was a notable increase in activity in his last two weeks in October and expects the situation to pick up after the election cycle is over.
“The phone is starting to ring again,” he said. “We might see a little pop at the end of the year.”