Is Austin Real Estate Overpriced? - Bramlett Residential

Is Austin Real Estate Overpriced?

Posted Jan 28, 2021

The Austin real estate market has started the year with incredible velocity and acceleration, with new demand entering the market that can only be described as incredible and unprecedented. We’ve had a lot of internal discussion over how to adjust to this new activity and one question keeps popping up: Is Austin becoming overpriced? (Words like “bubble” & “overheated” often enter the discussion.)

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There’s strong historical evidence that real estate bubbles are rare. Real estate is illiquid and the primary function of housing is, well, housing, so we don’t generally see wild swings up and down. That said, it certainly feels like (and will soon prove out) that prices are swinging up very, very quickly.

So, is Austin real estate becoming overpriced? We don’t think so.

Austin has been a boom city for decades with strong population growth fueled by job growth. Employers have historically chosen to move or grow in Austin because of our high quality of life and relatively low cost of living. When you compare how much it costs to live in the Bay Area vs Austin, that becomes readily apparent. However, employers (and relocating homeowners, many of whom can now live/work wherever they want) don’t only look at Austin when choosing where to call their new homes. Lots of other cities come up in discussion – Denver, Portland, Nashville, Charlotte, etc…

How does Austin’s real estate pricing compare with these cities?

There was a 14% YOY increase in median pricing in Austin in December 2020. The most recent reliable data we can find for other MSAs is from NAR, which was last updated for Q3 2020. This comparison is pretty conservative as a result. Looking at these numbers, Austin is (was) a relative bargain. We’re considerably cheaper than Denver & Portland, while we’re more expensive than Charlotte or Nashville.

Fine, we were cheap. Prices are jumping.

We adjusted Austin’s Dec 2020 pricing upwards by 20% and compared this hypothetical median to other major MSAs. When adding a 20% premium, we’re in a really similar comparable position to other metros. Portland & Denver are still pricier, we’re a little more expensive than Ft Lauderdale (but who wants to live full time in Florida?) and we’re pricier than Charlotte or Nashville.

Okay, but what if real estate prices keep going up?

Taking it a step further, we adjusted the December 2020 prices upwards by 30% and placed this hypothetical number in the graph. With a 30% premium, we’re roughly the same price as Portland, less expensive than Denver, and pricier than Nashville or Charlotte.

We mention Denver a lot for good reason. Denver & Austin are extremely similar. We showed these numbers early to an investor/friend who immediately concluded “This makes sense. Denver is my yardstick.” Austin would have to appreciate at roughly 40% in order to match Denver’s Q3 2020 median pricing.

Our conclusion? Austin’s housing market prices have room to grow.

In hindsight, Austin has been a bargain for many, many years. Our pricing has consistently appreciated in the 5-6% range annually, but it looks like we’ll see another jump in the double digits in 2021. We’re absolutely not immune to an overheated market, but as it sits, we’re comparatively affordable.

We’ll continue to monitor these numbers and we’ll continue to monitor this quickly changing market. The Austin market is not homogenous and it changes considerably from area to area and neighborhood to neighborhood. If we can answer any questions about any specific sub-markets (or any specific situations), please don’t hesitate to reach out!

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Jaish S.

It was such a pleasure to work with Shaun Duffenbach at Bramlett Residential Real Estate! Shaun helped me to buy an investment property in Austin, Texas. Shaun explained everything in a way that was easy to understand from making the offer, to working with the mortgage banker. This made it really easy to buy a house within a month and that too during such tough weather in Austin, Texas in the last few weeks. Shaun never left any questions unanswered and always responded promptly. He is a very professional, experienced, and helpful realtor with excellent knowledge of the local market. I would highly recommend him as well as take his help for any future investment.

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We recently purchased a home and used Bramlett. Katie was fabulous! She was hard working, very friendly, and communicative! We were moving from out of state, so Katie would go see listings that we were interested in and take videos. They were extremely helpful for us to help make a decision. She always kept us updated! We couldn’t have asked for a better experience! Thanks so much Katie and Bramlett

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We worked with Lauren Yoder to purchase our new home in the Austin area. We could not have been happier with the work that Lauren did for us. Lauren was referred by a friend of ours and we are glad we gave her a call! She listened and understood our goals to ensure the homes we viewed fit our parameters and finances. Much of our home buying process was done virtually and Lauren did everything possible to make it easy for us and worked out better than we could have wanted. Lauren works extremely hard for her clients, she is thorough, responsive, and knows her stuff. Give her a call for your real estate needs, you’ll be glad you did!

Katie H.

Lauren came recommended by two completely separate friends to me and my fiancé when searching for our first home and we are so thankful that we got set up with her! Lauren was phenomenal to work with. She did all of the things you would hope for from a realtor in terms of timeliness and organization; AND she went ABOVE AND BEYOND for everything else! When we walked through houses Lauren was able to use her expertise to guide us to a house that would be within our budget, a smart investment, and a house that does not cause us an insurmountable amount of work.
Lauren was able to guide us through the incredibly competitive offer process to get a house.  She was able to get us moving quickly to see the house and put in an offer quickly. Even more importantly she was able to make sure we offered a competitive offer not only with knowing the market and prices but also by changing up our contract creatively to get the seller’s attention.
After the offer process Lauren was even more helpful by making sure we were coordinated with all of the folks we were working with and that we knew all of the tasks that we needed to get done.
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Steven Primm

Overall the transaction went great, but Lauren was the main reason it went well especially since we were out of state.  There were many follow ups and walk throughs for a new build and she was instrumental in helping with those. Lauren did everything well, but especially just owning the whole process and being persistent with the builder.  She had great insight to anything we asked and brought up things that we hadn’t considered and she clearly had our best interests in mind.  We’ve used many agents in the past and Lauren is above and beyond the best we’ve used.  She was a referral from a friend of a friend and I’m glad it worked out!

Jill Jeranko Primm

Lauren was over and beyond our expectations and was by far the best real estate agent we have had. Her detail to everything was amazing, especially since we were out of state. She is smart and knowledgeable and would highly recommend her to anyone.

Matt McDonnell

Lauren was superlative as always.  There’s a reason I’ve worked with her on a dozen transactions or so and will continue to do so.

Melissa Brierley

The transaction was easy as could be. Lauren is amazing and makes transactions so easy. She goes above and beyond to make sure everything runs smoothly and even helps to coordinate inspections, repairs ect. We have now bought two homes and sold one with Lauren and all three transactions have been a breeze. Not to mention that both purchases were highly competitive and she was great at strategizing and we got them both. Since working with Lauren we have also bought and sold homes in other states and both times we had to do so much more and it was a much bigger hassle. We often talk about how we need a Lauren in the other states we own in. We actually had a conversation recently about how we may as well keep investing in Austin because Lauren makes it so easy.

Zdenek Suda

We were in Austin in December 2020 for home leave from my assignment overseas, and had been planning to buy our retirement home in the summer of 2021 and just look around in the week before Christmas. I reached out to Bramlett – having had a very good experience working with them in the summer of 2016 (Tara McGuire was out agent then) to buy our first house (also in Austin). Our agent, Craig McGuire, did thorough research that he shared with us, and advised us – without pressuring us – to consider buying then, given that what we wanted would be well beyond our price point by the summer because of the conditions in the Austin market for the foreseeable future. Observing all the correct COVID-19 protocols, he showed us houses that fit what we were looking for, and once we saw one that we really wanted, gave us the advice needed to help us to win a bidding contest without breaking the bank. This was really important, as after putting in our bid we had to leave Austin and do everything at a distance. Craig was key to making that possible. He found us a good mortgage company that qualified us quickly and, thanks to all his efforts and consistent support, we were able to close in a little over a month – in the time of COVID, doing everything very long-distance, and in a crazy Austin housing market. We’re very happy with our home purchase, and with Craig!