AUSTIN (KXAN) — While the pandemic has come with debilitating economic blows to many industries, it’s seemed to have the exact opposite effect on Austin residential real estate.
The Austin Board of Realtors’ most recent housing report shows Austin homes selling faster and at higher prices than ever before. While these figures may be welcome news to people considering selling their residential properties in Austin, housing experts warn the numbers also intensify the need to improve affordable housing options in the region.
Last week, California-based company Oracle announced its plans to move its corporate headquarters from the golden state to Austin. The Wall Street Journal published an entire report last week highlighting the growing exodus of people from other cities like New York and San Francisco to Austin over the past year, citing LinkedIn data.
The WSJ article noted the Austin Chamber of Commerce reported businesses that relocated to Austin this year are expected to create nearly 10,000 jobs—the highest figure on record for Austin in a single year. The Chamber tells KXAN it doesn’t know how many jobs Oracle will bring to Austin yet, but the Chamber is anticipating this relocation will make the record-breaking annual increase in jobs even higher.
In October 2020, ABOR reported the average house in the Austin-Round Rock Metropolitan Statistical Area spent 35 days on the market, which was 19 days fewer than houses spent on the market in October 2019. The median sale price of a home in the City of Austin set an all-time record in October, increasing 13.1% to $441,250.
Romeo Manzanilla, ABOR’s president, explained to KXAN inventory levels of housing are at an all-time low. Compared to last year, the five-county region has only 1.1 months of inventory, 1.2 months less than October 2019.
“There’s still such a huge demand for housing that anything that is on the market is really getting snatched up pretty quickly,” Manzanilla said.
“We are just seeing that we are definitely in an inventory crunch, there’s no letdown in sight, especially with announcements like this,” he added, referencing the Oracle announcement. “It just keeps the spotlight on Austin and the quality of life, it just makes the housing market uber-competitive.”
With the number of Austin houses on the market lower than usual, the demand for them continues to increase as companies and people flock to Austin.
Manzanilla added many companies have moved to Austin in hopes of tapping into the region’s talent pool and benefiting from the state’s lack of income taxes.
“When you compare the housing prices of what you can get in California versus in Texas, a lot of people can realize either their home ownership dream or can really see that they can expand their living quarters to now include multiple work spaces, and if they have children, teaching spaces and so forth,” he added.
But the demand is not just driven by out-of-state buyers, Manzanilla noted, people from other areas of Texas have also started looking for property in Austin given the jobs available.
Eric Bramlett, owner-broker at Bramlett Residential in Austin noted, “Oracle [moving to Austin] is huge right, that’s really, really big news.”
“But it’s interesting in that it’s not really that big of news for Austin, I mean we’ve had so many events like that this year alone,” Bramlett added, citing Tesla’s plans to open a gigafactory in Austin and Apple’s ongoing construction of a campus in the city.
Bramlett notes while many of his California or New York clients want to benefit from Texas’ tax environment, they find they “feel more at home in Austin than in other parts of Texas.”
KXAN spoke with Bramlett back in October. At that point he said he’d never seen the housing market as tight it was. But to his surprise, now the housing market is even tighter than it was in October.
“We expected some sort of dip in buyer demand over the holidays, because there usually is, but it certainly feels like there’s been no dip in demand whatsoever,” he said, noting he’s spoken with five people just in the past week who are not sure if they will move to Austin but are looking to buy property now to hedge out future price increases.
Molly Jensen, executive director of the Austin Tenants Council, noted tight markets (like what Austin is going through now) drive up prices, which can in turn impact affordability for lower and middle-income residents.
“It creates a situation where folks who were hoping to negotiate maybe down, that isn’t a realistic possibility” Jensen said. “It can also trap folks in housing that is substandard or maybe is a real stretch to their budget, because maybe they don’t feel like they have other options.”
While the current Austin real estate market is red hot, many Austinites are also struggling to afford their current housing situation. The pandemic and subsequent job losses have strained the finances of Austinites who have never had to seek help with housing access before, Jensen explained.
She noted Austin Tenants Council has seen an increase in middle-income individuals coming to them for assistance with housing.
“If we’re seeing an increasing volume of middle-income folks, that means there’s strain across the sector of low and middle-income folks who are trying to pay rent,” Jensen said.
But Jensen cautioned, “I want to be careful to not demonize high-tech and not to demonize folks from California or New York.”
“I don’t think that’s the answer,” she continued.
“Austin is really unique in being a really compassionate and creative city that cares about preserving our quality of life,” she said, citing city and county decisions to halt evictions during the pandemic. “That kind of creative and caring impulse is really, it probably needs to even more inform our discussions about affordable housing.”
Those are discussions she is hoping Austin’s new residents will get involved with too.