According to the Austin Board of REALTORS® May 2022 Central Texas Housing Market Report, active listings experienced triple-digit percentage growth year over year and inventory rose to over one month of inventory for the first time in seven months. The data indicates the market is calming as typical seasonality is returning in terms of the number of closings, even as sales dollar volume sustained a positive lift.
“The strength of our evolving housing market remains a very important part of Austin’s economy,” Cord Shiflet, 2022 ABoR president, said. “The increase in inventory that we’re seeing is helpful for buyers who have had a hard time finding a home these past two years. However, REALTORS® continue to see homes selling faster than ever before, so working with a REALTOR® is a buyer's best bet in helping navigate the opportunities in our market.”
Last month across the MSA, residential home sales declined 6.7% year over year to 3,633 closed sales as the median price rose 19.6%, maintaining the all-time record of $550,000 set in April 2022. Sales dollar volume grew 9.0% to $2,482,046,786 while new listings also increased 18.8% to 5,231 listings, and homes spent an average of 15 days on the market, a day less than May 2021. Active listings skyrocketed 146.2% to 4,173 listings, causing housing inventory to more than double to 1.2 months of inventory, up 0.7 months from last May, as pending sales declined 12.5% to 3,643 transactions.
Dr. Adam Perdue, a research economist at the Real Estate Center at Texas A&M University, offered his insight into the current state of the market.
“The Austin region saw dangerously low levels of inventory, as low as 0.4 months of inventory in January 2021, so this slight increase in inventory and active listings point to the market beginning to normalize. While year over year price increases will continue to remain high, we project them to fall slightly lower than the long-term trend we’ve monitored over the past two years.”
Perdue added that the affordability issues Austin is facing does not point to the housing market collapsing or a bubble bursting.
“The Austin housing market has experienced a multitude of factors that have influenced its current state, one of those being the high influx of companies and individuals migrating to the area both from within Texas and out-of-state, which has contributed to a strong and diverse economy attractive to people seeking opportunity. These migrations of individuals and companies will continue to happen, especially as Austin is relatively affordable compared to some out-of-state markets when it comes to owning a home and operating a business. Given this growth and continued increases in prices, the sales decline appears to be more likely a supply issue than a demand one and does not indicate a bubble bursting.”
Real estate bubbles occur when speculation overtakes a market and prices rise not because demand for housing is increasing, but because buyers believe prices will continue to rise in the near future, increasing the value of their investment and presenting the potential to flip properties quickly. That type of speculation is not what is driving housing demand or price increases in the Austin-Round Rock MSA.
“Historically Austin has not built enough housing to keep up with the demand of the market. ABoR is committed to finding solutions to the challenges our region is facing which is why we are excited to host a mid-year housing summit in July, in partnership with the Austin Chamber of Commerce. The event will cover housing perspectives in home buying and selling, development, leasing and property management and housing equity and affordability,” Shiflet said.
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