New home sales are up 38% in the City of Austin, providing some much-needed supply into our low-inventory housing market. Even so, demand remains high for already built homes inside Austin proper, despite much lower prices in the surrounding areas. Single-family home sales jumped 7.5 percent in October 2016, despite remaining relatively the same throughout much of early 2016.
Median sales prices continue to increase in Austin, as is to be expected with such high demand, jumping 6.5 percent year over year to $332,250. However, the median price remains much lower in areas like Hays County at $249,945 and Williamson County at $255,000. In the entire Austin-Round Rock Metropolitan Statistical Area (MSA), prices rose 9.3 percent to $279,000.
Despite the huge discount afforded to those who choose to buy outside of Austin, single-family home sales actually fell across the Austin-Round Rock MSA. Sales declined 3.1 percent year-over-year to 2,219 home sales. Sales in Hays County had relatively no change, increasing less than 1% in October 2016. The largest decrease in home sales last month was in Williamson County, where single-family home sales actually fell 12.2 percent to 744 home sales.
Don’t let WilCo’s declining sales numbers fool you; demand is still extremely high in the area. Housing inventory fell 0.1 months to 2.2 months of inventory. To give you an idea of what a balanced market is: Texas A&M’s Real Estate Center cites 6.5 months as a healthy market. In fact, Vaike O’Grady, Austin Regional Director for Metrostudy told the Austin Board of Realtors (ABoR) in an interview that, “An extraordinary number of homes are under construction in Williamson County, but nearly everything that’s going on the ground is being sold.” It seems likely that sales are declining because there simply isn’t as much inventory.
There is limited new construction in Austin proper as well, but most of it is concentrated in a few subdivisions in the South East, or in the popular Mueller community. In ABoR’s report, they analyzed this data. “Metrostudy’s recent 3Q16 survey of the Austin housing market showed that housing starts and closings throughout the Austin area are at their highest level since 2006. Builders are attempting to fill the growing affordability gap by offering smaller floor plans and fewer features as well as a greater number of condominiums and townhomes, but primarily only in areas outside the city.” New homes in the Austin area are usually priced at $400,000 or higher, which is out of the zone of affordability for many prospective homebuyers.
Austin is experiencing a bit of an affordability crisis. Everyone wants to live inside the city limits, close to their employers and all the dining and attractions the city has to offer. This demand is driving prices even higher in turn. What can solve this issue? ABoR President Aaron Farmer thinks housing development is critical.
“Housing development is at the center of solving Austin’s growing affordability crisis, but it has to be the right kind of housing being developed – a variety of housing stock at all price points and where it’s needed most,” states Farmer. “This can only happen once a new Land Development Code is put in place. The Austin Board of REALTORS® urges our city’s leaders to make reworking Austin’s Land Development Code their top priority.”