Jan Stats First Look + Pricing Difficulty
February 8 Newsletter
Hello and we hope that you’re doing well! The Austin real estate market continues to amaze and we wanted to share a first look at January statistics. We manually ran high level numbers and bound this to Travis, Hays, & Williamson Counties (our own addressable market.)
Unit volume is up 10.71% Year Over Year. Avg & Median Pricing is up 19.98% to 24.92%, depending on which metric you choose to look at. These are incredible numbers. Many people have pointed out that this is not sustainable, and we absolutely agree with that sentiment. It is not sustainable for markets to appreciate in the ~20% range long term. That said, it certainly looks like Austin’s pricing is adjusting from a long time undervalued market when compared to other markets.
Unique Pricing Challenges
Internally, this dramatic appreciation has made pricing properties for both sellers & buyers very challenging. In the past, we’ve always looked at sold comparables from the past 6-12 months in order to value properties. Because the market has appreciated so dramatically, sold comps that are more than 1-1.5 months old are not relevant (which is just an amazing phenomenon!)
Seller Pricing Strategy
When pricing for sellers, we first look at sold comparables since late December 2020. We also look to pending properties in the subject properties sub-market. Since sales price is not reported until the property closes, we reach out to the listing agent for these pending comps in order to get this information. Ideally, we’re able to find 1-3 good, very recent comps and we price using this information. If we are not able to find good data points, we then look backwards 6 months and then apply a 20-25% appreciation premium. Because the market is so tight/competitive, we are using a highly defined listing strategy that ensures that the market will bring a higher price if there is buyer appetite for it.
Buyer Offer Pricing Strategy
When pricing for buyers, we take the same approach and first look back 45 days and contact listing agents for pending property prices. We then look back 6 months to see if the listing agent used “old comps” when pricing the subject property. If that is the case, then we know that it was underpriced and that we can expect offers to be at least 20% over the list price. The difficulty when pricing for buyers is predicting if current buyer demand will drive the price up over the recent 2021 “good comps”. This requires close & efficient communication with the listing agent, which we then set to work establishing. By taking a much deeper look at comps & by communicating much more with listing agents than has been necessary in the past, we are able to successfully help our buyers put properties under contract at the current 2021 values.
Internally, we’ve begun referring to our current market as “The Post-COVID Boom”. This market has been astonishing and is presenting real and unique challenges that no one in the Austin market has seen in their careers. We will continue to update you with the most recent stats & strategies. If there is anything that we can help you with your specific property or situation, please don’t hesitate to reach out.