Surprise, surprise, it looks like our Austin housing market is showing signs of normalization. In fact, many economists predict that our market will begin to correct itself sometime in 2017. The Austin Board of Realtors, in its monthly market statistics press release, reported another record-breaking year for Central Texas home sales in 2017, but concurred that the market is steadying.
"The Central Texas housing market is slowly beginning to align with long-term historical trends. Homes are spending more time on the market and the pace of both home sales and price growth is slowing,” said Brandy Guthrie, 2017 President of the Austin Board of REALTORS®. “This normalization does not necessarily mean a weakening housing market, but a return to less aggressive market conditions."
Now, the rate of that normalization is going to be different depending on what area of the Austin-Round Rock Metropolitan Statistical Area (MSA) we’re talking about. Let’s start with Austin proper. Single family home sales dropped 8% to 705 homes sold in December 2016. Also, the total dollar volume of homes sold dropped 3% to $312 million dollars. Homes were spending a tiny bit more time on the market with inventory rising .1 month and spending five more days on the market on average.
This is probably because home prices are continuing to rise pretty rapidly. The median price for single-family home sales rose 9% to $355,000. However, in the most desirable neighborhoods and areas closest to Downtown the average price for a single-family home is much higher. It’s not uncommon to see a downtown condo or modern south Austin home sell for upwards of one million.
Austin-Round Rock MSA
However, the Austin area as a whole, stretching up to Round Rock and Cedar Park, down to Buda and Kyle offers slightly lower prices. The median price in the Austin area rose 7% in December 2016 to $290,000. Single family home sales are still on the rise, up 2% last month to 2,373 homes. Inventory remained about the same, and homes spent two days longer on the market. The areas just outside of Austin proper including Cedar Park, Buda, and Round Rock remain amongst the most competitive areas because of their more affordable price point.
Moving even farther out, Williamson County (WilCo) communities like Leander offer the most affordable prices. Many of these areas are booming with new construction and increased amenities. The median price for single family homes in WilCo rose 5% to a more affordable $265,000, but inventory remains low and at 1.8 months. To give you an idea of how competitive this is, the Texas Real Estate Center at A&M cites 6.5 months as a balanced, healthy market. In all areas of Central Texas, we are well below this margin.
Hays County (Kyle, San Marcos) is experiencing unprecedented growth with 13% more homes sold in December 2016 than the same time last year. This isn’t surprising since these areas boast the lowest median price in the area at $253,000. New listings were up 10% and inventory hasn’t changed since last year. This means that more people are moving south to take advantage of the great deals Hays County offers.
Throughout the MSA, homes are spending slightly more time on the market which backs up ABoR’s reports of a market correction. “While the region’s job growth has slowed over the last few years, overall the Central Texas economy and housing market continue to be strong,” said Mark Sprague, State Director of Information Capital for Independence Title, in his interview with ABoR. “The 2017 housing market will likely outpace last year’s levels, but at a less robust margin. Recent increases in mortgage rates could continue the current pace of home sales growth into the first part of the year.”