I hope you’re doing well and that you had a wonderful holiday season with friends and family! We certainly did, but there was one big change this year: There was absolutely no seasonal market
- Home sellers are behaving normally and haven’t yet started listing their homes yet.
- Home buyers are behaving differently and didn’t sit out over the holidays. New home buyers are entering the market much earlier than normal.
- This has caused a severe inventory shortage and rapid price appreciation.
- We expect appreciation to moderate this spring/summer, but prices will not go down.
Historically, like clockwork, the market has started slowing down in July and has consistently slowed down through the end of the year. Buyers start to “wake up” and enter the market in Feb/Mar, and our busy season runs until July, when it starts all over again.
This year, buyers didn’t behave (and aren’t behaving) normally. They stayed in the market and kept buying houses. As agents, we’ve heard recent stories of 90+ offers on relatively “regular” houses that historically would have taken a few weeks to sell or have had a few offers at best. These anecdotes are interesting (and somewhat frightening), but we don’t generally make decisions based on anecdotal evidence.
Earlier this week, we sent a survey to the 4000 highest producing agents in Austin and asked “What do you expect when you make offers in different price ranges?” The full set of results are segmented and can be found here
. The short of it is that agent expectations are consistent with the market data. Agents expect a LOT of offers in every price range and they expect properties to always go over list, with varying degrees in varying price ranges.
What is happening in the Austin real estate market, and more importantly, what do we think will happen?
Inventory is historically low, but it’s very important to put inventory in perspective. Real estate inventory
is a function of supply (units on the market) and demand (number of sales per month or number of pendings.) Low inventory can be caused by increased demand or decrease in supply. When we look at the most recent reliable market statistics
, we see that supply did not decrease in any meaningful way. YTD in November showed only a ~2% drop in new listings. However, demand is up in a huge way.
Buyers stayed in the market over the holidays and new buyers have entered the market much earlier than normal. Sellers, however, are behaving as they always have – they simply haven’t listed yet.
Sellers historically hit the market in March and new sellers enter the market through July. Buyers are early to the party and the sellers haven’t yet brought food/drinks!
What will happen in the Austin real estate market in 2021?
While we don’t have a crystal ball, it makes sense that the insane feeding frenzy at the empty buffet table will likely not continue at its current pace. Pricing will likely not decrease, but the incredibly high appreciation we’re currently seeing will likely be short lived. We will likely see the same level of new listings hit the market in 2021 that we did in 2020. There certainly is new/more buyer demand now, but the seasonal increase in inventory will relieve the environment in a meaningful way. While we don’t predict that multiple offers will go away, we do think that it will return to the 2020 levels of 5+ offers per listing, rather than 25+.
What should I do if I’m a buyer or a seller in Austin, Texas?
If you’re a seller:
Put the property on the market at your own pace and on your own terms. If you’re ready now, go ahead and list now. If you need some time, take some time. We don’t expect pricing to change (except to go up), so time is on your side.
If you’re a buyer:
Hang in there! It certainly makes sense to make offers now, if you understand that the list price is a suggestion, and you’ll need to offer over list. Remember, we don’t expect pricing to decrease in the spring – only that prices won’t appreciate at this extreme pace. On our side, we’re monitoring the market extremely closely and we will be able to notify you if/when there’s a market shift (and we need to offer less over list to win deals.)
We knew that there would be challenges in the real estate market post-COVID. We did not expect that the challenges would be from a heated market. We are absolutely here for any support you might need, so please don’t hesitate to reach out!!!