2020 was another banner year for the Austin-area housing market, the Austin Board of Realtors said Thursday.
For the 10th straight year, annual home sales in Central Texas and the median price of those sales surpassed the year-before totals, with 2020's records coming despite the global coronavirus pandemic. Some monthly records for December also were set, the board said.
"This is a historical and unprecedented time for our housing market," Susan Horton, the new president of the Austin Board of Realtors, said in a statement. "The pandemic only increased demand for all types of housing across the region, pushing inventory to near-zero levels and creating the strongest sellers' market Realtors have ever seen."
And housing experts say 2021 is anticipated to shape up to be another robust year for the local market, driven in part by low mortgage interest rates and an influx of residents from more expensive states, among other factors.
In January 2020, longtime Central Texas housing industry expert Eldon Rude delivered his widely attended annual housing forecast, for the 18th year in a row.
In an email this week, Rude said "I had no idea what events were about to unfold that would result in the biggest year ever for home sales in the Austin market."
"The combination of falling interest rates, apartment dwellers fleeing density, and strong in-migration of new residents to Austin during the pandemic has led to a severe imbalance in the supply/demand for homes in our market," said Rude, principal of 360 Real Estate Analytics, an Austin-based consulting firm.
Those factors have only fanned the years-long headwind for the Austin market: low levels of supply of both new and resale homes relative to strong demand, leading to sharply rising home prices that have made affordability an ongoing concern for city leaders and others across the Austin region.
For buyers, it doesn't appear price relief is on the horizon this year, either. By mid-December, the median list price for homes in the Austin area was up 23.6% year-over-year — the largest rise among the 50 largest U.S. markets, Zillow said.
A Zillow survey this week predicts that Austin will be the nation's hottest housing market in 2021, with the Texas capital city leading a surge of "sunny and relatively affordable" Sunbelt metros as it claims the top spot in the survey for the second year running.
"The economic outlook for Austin in 2021 is strong, and projections are that home values will continue to rise," said Hope Teel, a real estate agent with Remax Posh Properties in Austin.
Rude said he expects home sales to get off to a strong start this year, "as so many prospective home buyers were unable to find the home they were looking for in 2020."
On Thursday, the latest figures from the Austin Board of Realtors showed a strong finish to a strong year. The figures cover the Austin-Round Rock region, a five-county area from Georgetown to San Marcos.
Last year's 40,165 sales were an all-time record, and an 8.4% increase from 2019, the board said.
Half of those houses sold for more than $344,000 and half for less, marking an all-time record for the region's median home-sales price. The annual median was a 9.2% increase from 2019.
Dollar volume of the more than 40,000 sales totaled about $17.6 billion.
Within Austin's city limits, annual sales totaled 12,745 — also an all-time record, and a 1.7% increase over 2019. The $420,000 median for Austin sales also was a record, and was up 12% from 2019's median.
In December, the 1,191 sales in Austin's city limits (up 16.4% over December 2019) was a record for December, though not an all-time high. However, December's $461,000 median (up 18.7%) was an all-time high for the city, the board said.
For the region as a whole, sales were up 16.2% last month, with the 3,626 closed sales setting a December record, the board said. The region's December median of $370,000 was an all-time high, and a 15.8% increase over December 2019, the board said.
Housing inventory declined to a record-low of 0.6 months for the region. A supply of six to 6.5 months is considered to be a market in balance between buyers and sellers.
Pending sales are now outpacing new listings, indicating that homes are selling faster than new ones can hit the market, the board said.
"The Central Texas housing market is incredibly competitive and moving at lightning speed right now," Horton said. "If you are ready to buy a home, now is the time to take advantage of low interest rates that boost your buying power and plant roots in Central Texas."
Jim Gaines, former chief economist for the Texas Real Estate Research Center, attributes Austin's record-high housing demand to economic growth and increased consumer buying power.
"The Austin-area real estate market is experiencing extraordinarily high demand fueled by years of high population growth and employment gains, lifestyle changes following the pandemic and record-low interest rates," Gaines said. "The pandemic fostered an environment where many families increased personal savings helping some transition from renting to ownership while others needed to 'move up' for more space while working from home. Despite a steep slowdown during shelter-in-place orders this spring, the market came roaring back in the summer with no drop-off at the end of the calendar year."
Gaines said the 2021 outlook is positive, noting that Austin's demand-driven market will continue to show strength and homes will keep selling quickly.
Local real estate agents say the Austin-area housing market broke records every month last year except April and May, when the full force of the coronavirus lockdown measures went into effect. Then the market surged back.
"Job growth remains high, people want to live here, and once people do live here, they don't want to leave,' said Jeff Morrison, a real estate agent with JB Goodwin in Austin. "I imagine 2021 will be another record-breaking year."
Chris Glynn, senior economist at Zillow, said home values in the Austin market are expected to increase faster than the U.S. average, which is currently projected at 10% for 2021.
"We also expect that low interest rates, a wave of millennials aging into peak homeownership years, and households re-evaluating their housing needs in light of COVID-19 will continue to drive strong buyer demand as they did in 2020 — meaning homes will likely sell at or above the list price and very quickly," Glynn said.
"Typical homes in Austin are selling in just nine days, which is almost three weeks faster than this time last year," Glynn said. Buyers in such a competitive market, he said, need to be realistic about their budget and timeline.
"Sellers will benefit from rising prices, and buyers with the financial ability and willingness to act quickly will still be able to purchase homes, but rapid growth in Austin will likely come at a cost for first-time buyers who might struggle to keep pace when saving for their down payment."
After No. 1-ranked Austin, Phoenix, Nashville, Tampa and Denver are expected to round out the top five markets that are most likely to outperform the nation in home value growth, according to a panel of economists and real estate experts Zillow recently surveyed.
Expensive coastal metros such as New York, San Francisco and Los Angeles are expected to fare the worst against the national average, signaling a shift from growth patterns in recent years, although Zillow said it expects growth in every market.
Key tailwinds include an improved economic outlook buoyed by progress on coronavirus vaccines, while affordability and available supply are potential drags, Zillow said.
"During the pandemic I think a lot of people spending a big portion of their paycheck on rent or mortgage in cities like New York and San Francisco started working from home and suddenly had options," said Thomas Brown, a Zillow agent in Austin and CEO of The Agency Texas. "Their dollar goes a lot further in the South, the climate is better, and Austin has a lot to offer — from the food scene to outdoor activities and live music. Those factors are going to continue drawing people into the Austin market in 2021."
