Despite outbreak, Austin-area home sales roar back in July
After seemingly falling off a cliff in April and May amid the cornavirus pandemic, Central Texas home sales have bounced back in a big way.
July saw the Austin region set records for both sales volume and median sale prices, according to new data from the Austin Board of Realtors.
Sales across the five-county metro area surged by 21.5% in July, with 4,537 homes changing hands, the board said. Those properties include single-family homes, townhomes and condominiums. Half of the homes sold last month went for more than $353,000 and half sold for less, for a 10.7% increase in the median sales price, the board said. Inside Austin's city limits, sales rose by 21.4% and the median price of those sales rose 11.3% to $423,000.
The numbers are a dramatic turnaround from April and May, when stay-home orders and virus concerns hit the area housing market hard. In April, home sales had cratered 21.6%, while pending sales — an indicator of future volume — had plunged 25%.
Since then, however, the market has rebounded, bringing sales across the Austin region back to roughly where they were at the same time last year, down just 0.3% through July.
Meanwhile, some real estate agents saying they are busier than ever and that high demand and a low supply of housing continues to drive prices up.
"July was a very encouraging month for the Central Texas housing market," said Romeo Manzanilla, president of the Austin Board of Realtors. "A healthy housing marketing is vital to the overall economic recovery in the region, and with two consecutive months of positive numbers, we are growing more confident that this is sustainable and can help be the spark that gets our economy back on track."
The rebound from the dip caused by the pandemic is keeping the market tipped in favor of sellers right now, Manzanilla said.
"Extremely low level of inventory, when paired with continued demand across the region, has led to rising home prices, creating a very strong seller's market," he said.
MJ McFarland, a Realtor with Moreland Properties, said interest remains high from out-of-state buyers who are ready to trade big-city life for a single-family home in Austin.
They realize inventory is tight so they are prepared to make an offer quickly and often pay cash, he said.
That's what happened with a recent $1.63 million listing for a new house at 2101 Nickerson St. in the Travis Heights neighborhood south of downtown.
McFarland listed the house, built by Jack Boothe Construction, in early July. McFarland closed an all-cash purchase from an out-of-state buyer just two weeks later for slightly below the asking price.
"The market is definitely still hot," McFarland said. "It's the appeal of a single-family home and not having to pay a premium for it -- compared to other markets like New York or California."
Inventory is especially tight for high-end homes in desirable neighborhoods like Travis Heights, Bouldin and Zilker, which are near restaurants, shops, parks and downtown, McFarland said.
Mary Anne McMahon of Remax Posh Properties in Austin, said June and July home sales were strong in Austin and rebounded despite the COVID-19 pandemic.
"With interest rates continuing to hit historic lows, under 2.5% in some cases, active listings are moving quickly with average days on the market dropping each month to under 40 days," McMahon said.
Eric Bramlett, a real estate broker who owns Bramlett Residential, said the pandemic seems to have accelerated people moving into Austin.
"We have a number of relocation buyers who've hit pause on their move, but even more new buyers have decided to move to Austin," Bramlett said. "The new relocation buyers seem to be from bigger metro areas on either coast and they look at Austin as a safer alternative to where they currently live."
For Bramlett, "this is the hottest market that I've ever seen. We've seen pricing jump 10% or more in certain neighborhoods since June of this year. Ten percent price increases in two to three months is just insane."
Although some sellers are sitting out 2020 for safety reasons, "there's more demand than I can remember seeing in any past year," Bramlett said. "There was already a housing shortage in Austin and the inventory levels are now severely low. I personally can't remember the last property I negotiated that I wasn't in multiple offers."
Jeff Morrison, a real estate agent with JB Goodwin Realtors in Austin, also is seeing a market resurgence.
"Sure, April and May showed the effects of COVID-19 in the sales numbers," Morrison said. But recent sales increases, coupled with the desirability of the Austin market and its job growth, are keeping the market healthy, he said. Morrison cited Tesla's recent decision to build a plant in the Del Valle area as a "particularly impressive case-in-point."
With housing in short supply, buyers can expect multiple offer situations, Morrison said.
"Almost every resale home that I know of is getting multiple offers," Morrison said. "Buyers need to be prepared to move fast, and likely pay more than list price."
Morrison said buyers who are in a position to purchase can take advantage of historically low mortgage rates. Buyers also should consider the new-home market "to avoid some of the crazy competition in the resale market," Morrison said.
For the past 10 years, the 'normal' for Austin's housing market was robust job growth that translated into strong demand for new and resale homes, said Eldon Rude, a housing market expert in the Austin region.
"Seven months in, and 2020 is shaping up to be anything but normal for our housing market," said Rude, principal of 360 Real Estate Analytics, an Austin consulting firm. "Significant job losses and slowing relocations to the area should mean fewer home sales, not the supercharged market we have seen since the beginning of May."
Rude said sales are still strong amid the pandemic because people are seeking more space to live, to work and to be outside, renters want to escape the density of elevators and shared amenities — and mortgage interest rates have hit historic lows in recent months.
The new home market, Rude said, "has been a direct beneficiary" of the short supply of pre-owned homes, with 2020 likely to be a record year for new home starts in the region.
"In my meetings with my builder, developer and bank clients, the biggest question continues to be how long demand will stay this strong given the weakness in several key economic indicators," Rude said. " No one knows the answer to this question, and right now most are too busy to think about it."
Sales of newly built homes in the Austin area, and across Texas, also bounced higher last month, according to a report from HomesUSA.com.
Ben Caballero, founder and CEO of HomesUSA.com, said Austin homebuilders also reported a surge in pending sales and slightly fewer days on the market for new homes sold in July.
"Austin-area new home sales took a nice bounce up last month," Caballero said. "Coupled with a surge in pending sales in July, we can expect this strong sales trend to continue locally — and statewide."
Manzanilla said that the jobs pipeline into Austin continues to create new economic opportunities.
"A double-digit percentage gain in new listings in July, coupled with buyers continuing to take advantage of historically low interest rates, allows us to be cautiously optimistic about the remainder of 2020," Manzanilla said.