Austin Market Begins to Stabilize
The Austin market has been incredibly busy this year but has been the most challenging market we’ve experienced since the 2008 recession. At face value, unprecedented demand seems like a great thing, but in reality, it’s been very stressful for agents, sellers, and of course, buyers.
Because of this, we’re very happy to report that leading indicators show the Austin market is beginning to stabilize.
What are leading indicators?
While we rightfully focus a lot of time monitoring Avg Sales Price and Units Sold, these are lagging indicators. In order to get an earlier read on the direction the market is heading, we focus on leading indicators like marketing inquiries and mortgage applications. When buyers enter the market, they generally contact agents (us) first and then apply for mortgage pre-approval shortly after. Since we have access to these leading indicators, we’re able to get an earlier indication of market demand.
But First: Anecdotal Evidence
It’s natural to first notice a change in demand, and we certainly have. Roughly a month ago, we began to notice:
- A drop in the number of offers on listings.
- Monday social media posts from agents that said “My listing didn’t get offers this weekend. Bring your buyers!” Posts like these have increased.
- Buyers hitting pause on their searches due to fatigue.
- Price reductions! (What?)
We’re rightfully concerned when our listings receive less attention or when fewer people call us to help with their home purchases, so we researched further. We found that:
- Mortgage applications are at their lowest levels since February 2020. The week ending on June 11 saw a -17.2% decline in purchase applications over the previous month.
- Our own June Agent Expectations Survey shows that 61.6% of agents in Austin see the market cooling down or stabilizing.
- Our internal marketing data shows a -36.8% decrease in new inquiries from the peak in January.
Why is this happening?
Austin’s market has always been strong; Arguably the strongest in the United States. This is because of our incredibly strong economic & population growth. That hasn’t changed and it doesn’t look like it will change. What did change was increased buyer demand due to the pandemic. Beginning in mid-2020, buyers were stuck at home with lots of disposable income. One of the few things anyone could do to improve their situation was to move – to buy a nicer home. As such, buyers started looking for larger homes, many times in different metros since they could now work remotely, seemingly forever.
We’re nearing the end of the pandemic and vaccination rates have skyrocketed. Travel has opened back up. Restaurants, music venues, movie theaters, and gyms are relaxing occupancy and mask requirements. Priorities are shifting back to normal recreational activities. Folks are spending less time on real estate search portals and more time thinking about having fun with friends and family.
What does this mean?
It’s important to understand that this data does not indicate any drop in prices. In fact, we won’t be surprised if prices increase more, since sales price is a lagging indicator. Likewise, we don’t see a market shift to a buyer’s market. What we do predict is that the market will become more normal. Bear in mind that “normal” for Austin is an incredibly healthy seller’s market.
If you’re a buyer:
This is great news! If you’ve actively been making offers, there’s a good chance that you have some scrapes and bruises. Over the next few months, you will find that the buying experience will become much more pleasant. Some listings will last more than one weekend and many competitive scenarios will have a handful of offers, rather than dozens. If you’re a buyer, keep your chin up, because things are getting better.
If you’re a seller:
You are still in the best real estate market that Austin has ever seen (and that’s saying a lot!) There’s still unprecedented demand for your home and prices are up more than 50% over early 2020. However, it’s important to understand that the increase in prices is slowing and will level off. We’re already seeing overpriced listings sit, and that will ultimately work against these sellers, as buyers will generally offer the most favorable price and terms when properties first hit the market. (If you’re on the market and you haven’t sold, it’s a great time to discuss strategy.)
As always, the market is dynamic and real estate is hyperlocal. The market is shifting to different degrees in different sub-markets and price points. Certain types of properties are also affected differently. We’d absolutely love to talk with you about your specific situation, so please reach out if we can help with anything at all! We’re here to help and strategize!