There are a lot of interesting aspects of Austin’s economy to comment on and be excited about. Depending on your perspective, they are extremely encouraging and possibly somewhat frustrating. Last year saw a marked shift in Austin’s real estate market. One metric I watch is called Months of Inventory which is basically how many months it would take for all currently active homes to sell if no other homes came on the market. 6-6.5 MOI is basically considered a balanced market and if that number is lower, we are trending towards a seller’s market and as it goes higher, we are trending towards a buyer’s market. Well from June of 2012 to December of 2012, that number dropped from 4.5 to 2.7 and will likely continue to drop some more. As a comparison, during the Dot Com boom of the late 90s, MOI went from 4.0 in August of 1998 to 3.0 in January of 1999 to 2.0 in January of 2000. This current drop has been a much steeper one.
What does this indicate? Well, in general, we have an extremely tight inventory of homes in a lot of areas and a fairly broad price range. It is a much tougher market for buyers to buy in with multiple offers becoming fairly commonplace and prices rising strongly into the foreseeable future. Buyers need to be prepared and have expert guidance to get the home they want. A positive aspect of this is that this new growth phase is likely still in its early stages, so you can expect prices to continue to rise more until inventories loosen up. Also, for the time being, interest rates continue to be incredibly low, offsetting some of the pain of the prices.
What are some of the causes of this boom in the Austin real estate market? There are many but some of the main factors are Austin’s strong growth. We’ve had 65,000 plus people move to town in each of the last 2 years and that trend isn’t slowing down. As a result of the recession, construction of multifamily dwellings is way behind our population growth and will take awhile to catch up. Also, new home construction is only about half of what it was back in 2006 and is slow to catch up too.
Here are some highlights of last year’s Austin real estate market:
22,496 single family homes sold which is a 19% increase from 2011
24,941 homes went pending in 2012 which was a 19% increase from 2011
2012 Median Sales Price was $205,000 which is 6% above 2011
Average Days on Market was 69, down 15 days from 2011
31,441 new listings came on the market in 2012, down 3% from 2011
$6.2 Billion in sales volume for 2012. Up 26% from 2011