Austin housing market in good shape to bounce back from downturn
The Austin, Texas, area housing market had been on a 10-year roll before the coronavirus pandemic. Several market indicators nosedived as the effects began to be felt in the market in late March and continuing into April.
Last month's numbers from the Austin Board of Realtors saw the volume of both closed sales and pending contracts plunge by double-digits in the Austin area, a five-county region stretching from Georgetown to San Marcos.
In its April report, the board said sales of single-family homes, townhomes and condominiums plunged 21.6% in the five-county Central Texas region. Pending sales — an indicator of future volume — plummeted 25%.
Still, local housing market experts and real estate agents say there are promising signs the market is well positioned to withstand the impacts of the crisis.
They point to a pick-up in activity in recent weeks, fueled in part by record low mortgage rates. Another factor is continued demand coupled with low inventory in certain price ranges — particularly the bottom third of the market where the supply of available homes is extremely low, experts and agents say.
"We are very lucky to be in Austin," said Mark Sprague, a housing industry expert with Independence Title in Austin. "Other markets are not doing as well as we are."
Jonathan Boatwright, co-owner of Realty Austin, said pending home-sales contracts "fell off a cliff" in late March. But in the past four weeks, they have picked up substantially and now are higher than they were a year ago, Boatwright said in a May 21 webinar featuring Mark Dotzour, who spent 18 years as chief economist for the Texas A&M Real Estate Center.
Likewise, some real estate agents say they have seen an uptick in housing market activity coinciding with the state allowing some businesses to reopen in some capacity.
New listings also have rebounded as the weather has warmed up, Boatwright said, and he's also anticipating an increase in closed sales. In addition, he said he has seen a recent trend of people who had pulled their homes off the market re-list them again.
But inventory still remains low in some price ranges. The region as a whole has just a 2.1 months supply of housing overall, Boatwright said. Experts say 6.5 months is considered a market where supply and demand are in balance, with the market not tipped in favor of neither buyers nor sellers.
In the webinar, Dotzour said that "the further south of 6.5 months you get, the more ferocious price appreciation is. The bottom third of the price range (in Central Texas) still has way more demand than supply," and he predicts continued strong demand in that segment.
People are relocating to the Austin region and to Texas from places including California, New York, Chicago, Houston, Dallas. And Dotzour said he thinks that continuing migration will only intensify going forward.
"We like businesses here, and our cost of living is moderate," Dotzour said.
Jennifer Puryear, a real estate agent with Remax Austin Skyline in West Lake Hills, said the factors that make the Austin area a desirable place to live and work "have not changed and have kept the local real estate market strong.
"For three years running, Austin ranked No. 1 as the best place to live in the U.S. and recently as one of the hottest markets in Texas," Puryear said.
"We still see multiple offers on properties in different areas because inventory is low," Puryear said. "The market has not cooled in most areas. Some of the high-end luxury listings take a bit longer to sell, but we have not seen a significant reduction in prices. With safety precautions in place, sellers are still selling and buyers are still buying."