AUSTIN (KXAN) — As the Austin community continues fighting the spread of COVID-19 and weathering the economic impacts that come with the pandemic, the area’s real estate market appears to show increasing demand from buyers.
At a time when many are tightening their purse strings, people continue to show interest in purchasing residential property in and around Austin, and they are increasingly willing to spend more money to do so.
Data and anecdotes from realtors show a particular desire for Austin properties in August and September.
Austin Board of Realtors released a market report for the month of August, which showed in the Austin Metropolitan Statistical Area, home sales increased 12.9% year over year and the median home price rose 11.3% to $355,000.
Across the Austin area in August, ABOR reports homes spent an average of 42 days on the market, which is 10 days less than the average in August 2019.
In a release for that report, Mark Sprague of Independence Title noted while home sales in the Austin area dipped during the spring, the August numbers reflect the “market has fully rebounded.”
In the City of Austin, the median home price in August was 14.9% higher than the year prior at $435,000—which ABOR noted is an all-time high for any month on record.
As ABOR president Romeo Manzanilla added in an interview with KXAN Thursday, “the suburbs and areas like Williamson County and Hays County are experiencing much greater growth than the City of Austin, because people are sacrificing that location for space and affordability.”
This hot real estate market in the Austin area has been felt primarily in the residential real estate market, he explained. Commercial real estate is still stunted by employers opting for remote work and downsizing their office footprint.
Manzanilla believes the top factor in these higher home prices is the lack of supply the Austin area is seeing.
Why is there a lack of supply?
Some property owners who might otherwise put their homes on the market are deciding not to because of fears related to COVID-19, Manzanilla said.
“People who don’t have to sell are saying they are going to wait it out to put their house on the market,” he added.
Some Austin realtors shared with KXAN they had heard from people waiting for a COVID-19 vaccine to list their house.
Manzanilla also noted other potential sellers may not list their homes, because they need the equity from their current home to buy a new home and are having less success making an appealing offer in this competitive market.
The end result, he explained, is the Austin area has an even smaller residential inventory than it would usually.
A seller’s market
Typically, Manzanilla explained, in Austin, if you list your home and get an offer, you would negotiate the price with the buyer and get maybe 98% of the price you’d listed for. But now, the market for buyers is so competitive that things often result in multiple-offer situations where the seller winds up getting a higher price than they listed for.
“Buyers have to come in with the mindset that they are not gonna get a deal; it’s really about getting the house that suits your needs at this time,” he advised.
Lilly Rockwell, a Realtor with Coldwell Banker Realty, has seen this play out firsthand as she’s watched “bidding wars” unfold between buyers in Austin.
“If you’ve taken the time to appropriately prep and stage your house for showings, and you are priced competitively, [it’s] guaranteed you’re going to be getting multiple offers on your home and it’s going to be selling within days,” Rockwell said. “It’s not unusual for homes to sell tens of thousands of dollars above asking price in Austin.”
Rockwell explained while Austin has been a “seller’s market” for years, she’s heard anecdotally from clients the market has been especially favorable for sellers during the pandemic.
To learn more, she’s been going through the Multiple Listing Service numbers for the Austin area for September and noticed, “in parts of our market, we’re seeing homes selling for about 20 to 30% more than they did last year.”
When thinking of words to describe these trends, Rockwell says “bonkers” and “bananas” come to mind.
“This is what I would call an extreme seller’s market. It’s like we’ve taken something on a medium setting and put it on full blast to boil,” she summarized.
Rockwell believes these kind of conditions are ripe for sellers to “strike while the iron is hot.”
The draw to Austin, the draw to be at home
Eric Bramlett, owner-Broker of Bramlett Residential, said the way COVID-19 has changed people’s work settings is spilling over into the real estate market.
With more people whose employers have allowed them to work remotely, people who had been living in more expensive areas like the San Francisco Bay Area and New York City have been increasingly looking to buy in Austin, Bramlett explained.
The trend towards working from home has also left people spending more time in their home, which Bramlett said has impacted their house hunting.
“People are spending a lot of time in their house, right?” he reasoned. “You care a lot about where you’re spending most of your time, and I think that’s what’s driving it. “
Bramlett estimates more than 90% of the buyers he works with are looking for a house where they intend to be working from home.
While ABOR hasn’t published its report on September market data (it is expected to be released soon), Bramlett ran numbers on his own from ABOR’s September data for residential properties (single-family residences, condos and townhomes but not vacant lots, commercial properties, or duplexes/triplexes/4plexes).
According to his calculations for the month of September, properties in the greater Austin area had an average sold price of $457,658—an increase of 17% over September 2019.
“I’ve never seen days on market this short, I’ve never seen supply this tight, and most importantly, I’ve never seen a year over year increase with a price this substantial in my career,” said Bramlett, who has been in real estate for 17 years.
Manzanilla acknowledged Austin’s job growth, blossoming tech sector, and comparatively low state taxes continue to make it an appealing place to live.
But he noted as the demand for Austin residential real estate increases, ABOR is concerned about affordability in the Austin area.
“We don’t want to get to a point where people are priced completely out of the market,” he said.
Manzanilla explained in the current Austin market, first-time home buyers or those buying with government-backed loans are having a harder time competing against multiple bidders.
“That’s of concern as we see these median home prices continue to rise,” he said.