Demand still high for newly built homes in Austin, but pandemic related speed bumps continue

Business

AUSTIN (KXAN) — New homes are popping up all over Central Texas as the housing market continues to boom, but building homes has come with its challenges during the pandemic.

“We moved one family into a house six months ago and they just got their refrigerator,” said Daniel Reeves, CEO of Verde Builders Custom Homes.

Reeves says it can be harder to get appliances and it can take longer to get a sub contractor. Despite these setbacks, Verde Builders Custom Homes hasn’t slowed down.

Material prices during the pandemic increased as well: making it more expensive to build a home.

“When we create a budget for a house, we calculate every line item right down to the cabinet hardware and get prices on all that stuff. And that is how we create our budgets for our clients,” said Reeves. “If you have a 20% increase in the entire construction budget that would take a million-dollar budget up to a $1.2 million. That is impactful.”

Reeves says materials with the highest demand have seen the biggest changes, especially items like lumber and concrete.

For Reeves, it is a small price to pay in a booming industry — and there are no signs of business slowing down here in Austin.

Reeves added: “Austin has always been a beautiful amazing place to live, but I think the whole rest of the world has figured that out.”

The price of lumber increased from 400 dollars per thousand board feet in February 2020 to an all-time high of over 16-hundred dollars in early May, but over the last few months prices have continued to fall.

Overall home sales in the Austin area

Meanwhile, demand for homes — both newly built and existing — is also skyrocketing.

Citywide, the median home price reached an all-time high over the past two months, with a single home coming with an average $465,000 price tag.

In addition to pandemic-related factors, scarcity of active home listings is also stoking the flaming-hot need for housing.

The Austin Board of Realtors says May active listings fell almost 71% year-over-year to about 1,739 active listings. Overall, homes only about 16 days on the market.

“At this point, Austin does not have a lot of land to build single-family homes in the core, so we have to think about density, where it makes sense, and expanding missing middle housing options and income-restricted affordable units,” said Susan Horton, president of the Austin Board of Realtors. “The solution here is to be strategic about placing lower-priced homes and rentals in all parts of the city and urge our city’s leaders to continue making affordability a priority. Taking action now is imperative.”

According to data from real estate brokerage Redfin, over 1,500 Austin homes sold for more than $100,000 above asking price as of June — and 72 of those sold over $300,000 above the asking price.

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