Summer in Austin is heating up, and so is the real estate market! Q1 of 2021 had many asking how long Austin’s market could sustain the rapid pace of rising home values. We’re now well into the year and the answer is beginning to take shape.
TLDR; pricing is expected to continue to rise in Austin, and we may not see a break in tight housing supply for another 3-5 years.
The longer version is that a perfect storm of different circumstances occurred at the same time all around the nation. The result? A housing shortage in multiple US markets.
• Millenials (who make up 22% of the US population) have reached homebuying age, flooding the market with buyers.
• Lumber, labor, and a variety of other construction supplies are facing shortages due largely to the supply chain bottleneck hangover from the pandemic. This has slowed the pace at which new homes can be built.
• Older homeowners are staying in their homes longer, resulting in fewer homes being released back onto the market.
• A number of notable companies are relocating to Austin, bringing with them thousands of jobs and homebuyers.
• The federal pandemic-related moratorium on foreclosures is still in place.
So what does all this mean?
A) Home prices will not be able to decrease as long as the price of lumber, materials, and labor stays as high as it is now. Builders need to earn a profit on the homes they build which is currently very difficult for them to do.
B) Regardless of inventory and materials shifts, the likelihood of Austin’s pricing decreasing over time is slim. With incredible job growth and a population boom, home prices are expected to continue to rise for the foreseeable future.
C) Inventory will likely remain tight for the next few years even if the US supply chain issues are resolved. Buying/selling demographics typically take years to shift, meaning millennials are likely to continue buying homes and creating more competition while older generations stay in their homes longer.
If you are planning to buy a home in the Austin area in the next 1-5 years, the best thing you can do right now is:
A) Save, save, save, and
B) Reach out so we can get you pre-approved with a lender! Waiting in this market will very likely cost you more money in the long run.
If you’re a current homeowner who does not plan to leave Austin, consider upgrading your outdoor space or converting interior space to an office area. These two items are trending on buyer wish lists and can net you more money when you do sell!
I’d love to be your resource for all things real estate, so please reach out any time!
June 16, 2021