AUSTIN (KXAN) — As fresh graduates four years ago, Belén Ramos and Jacob Reynolds chose Austin as their home.
“We’ve kind of gotten to a point in our lives where we’ve been thinking about the future and starting a family,” Ramos said.
So a year ago, they started looking for homes.
“We’ve been building up our savings and waiting for, you know, like the right time to make a purchase,” Ramos said. “But it’s also like, a lot of the homes and areas that we’re looking at are just starting to go up and up and up, and it’s starting to feel like a little unattainable for our salary range.”
The median home price in the Austin housing market is $5 shy of $500,000, according to the Austin Board of Realtors’ latest housing report.
It’s an all-time high, again, for the Austin-Round Rock MSA, jumping nearly 28% since February 2021 to $499,995. There were also more than 2,500 closings in February, an increase of more than 11% since February of last year, the report said.
“We have degrees, we’re pretty successful, we’re blessed that we have the jobs that we have and that we’re doing as well as we are doing, but, you know, being in your mid-20s and purchasing a $500,000 home just really isn’t in our … not feasible, not in our sights,” Reynolds said.
The median home price is even higher in the city of Austin, jumping 15% to $565,000 and $541,050 in Travis County.
“February was a very active month for our housing market as sales price records continue to be broken,” said Cord Shiflet, the 2022 board president. “We’re hearing from economists that last month’s numbers are a potential harbinger of a big year ahead even as our market continues to deal with insufficient supply compared to demand resulting in the steady cycle of home price increases.”
The report indicated housing stock across the five-county area increased slightly year-over-year, but board president-elect Ashley Jackson said as quickly as houses are being built, they’re being eaten up due to high demand.
“We need every type of housing in every price range across the entire area,” she said.
Another potential hit to low inventory: inflation.
“We do still expect pressure from inflation, which will affect especially new construction and the cost of supplies for building a home and potentially also the building timeline, how long it takes a house built in our area,” Jackson said.
The Russian invasion of Ukraine has resulted in a pause of rising interest rates, which has been good for buyers, said Mark Sprague of Independence Title.
“The uncertainty in eastern Europe has stalled rising interest rates and contributed to keeping mortgage rates domestically below 4%, which is historically low,” he explained. “Ultimately, however, the already accelerated rate of inflation is expected to rise even further — hurting renters, buyers and builders who continue to grapple with fast-rising construction costs.”
Plus, the Federal Reserve is expected to increase interest rates this week.
He also said it could have supply chain implications as well, since Ukraine sits on numerous reserves of iron ore and other materials.
“Material and labor costs are on pace to rise from 4% to 5% monthly through 2023 and potentially further,” Sprague said.
However, he said Texas is “in a better place than most globally” when it comes to keeping the market’s economic impact steady because of high demand and “Austin’s diverse economy.”
Pending sales in February went up more than 20% from last year to 2,967, and sales dollar value went up 34% from last year to $1.56 billion. The report said the jump in pending sales means March could be as strong as February from a sales standpoint.
Ramos and Reynolds are part of the creative culture in Austin. Ramos is a comedian, and Reynolds is a musician. They’re hoping they can find a new home in Austin, but even with years of savings, the couple feels their dream of buying a home is becoming unattainable.
“It’s kind of sad, because Jacob and I, we love Austin, and we’ve built a life here, and we’re both part of the community that makes it fun to live in Austin,” Ramos said.
Jackson said cities can help meet demand in the face of these challenges and alleviate price hikes.
“Pulling back some regulation on how long it takes to get permits and how long it takes to get new inventory to the market — there’s a lot that we can be working on from different angles to help ease this housing crisis,” Jackson said.
She also said it’s time to take a look at the land development code.
“The land development code, if we were to re-engage with that and add density along our transit corridors, we would find that the additional housing inventory could help temper some of the prices, potentially,” she said.
The 1980s was the last time the city rewrote its land development code. Around 10 years ago, city leaders came up with a plan known as CodeNEXT.
The plan would have shaped what kind of building can be done in the city and where it can happen. But a lawsuit from Austin homeowners put a stop to the city’s plan. It’s still moving through the courts.
Until prices come down, Ramos and Reynolds may have to stick to renting and put off starting a family.
“It doesn’t feel good whenever you feel like there needs to be a housing market crash in order to be able to afford your first house. I don’t want to wish that, you know, upon anybody, but it kind of feels like that’s the only way we’re going to be able to actually purchase a home,” said Reynolds.