Austin Housing Market Forecast 2022

Austin is the capital of Texas and one of the largest cities in the state. It bleeds into three counties and has a massive population. It remains well-known for its booming economy and being one of the metro areas in the nation with one of the most overvalued housing markets.

The Austin housing market saw a significant boom when the pandemic hit two years ago. Massive people moved to the area, resulting in a low housing supply and a surge in the price of houses. However, this overheated market might finally be cooling off.

Austin Housing Market Prices

The activity in the Austin housing market has slowed down in recent months compared to the last two years, but that hasn’t helped prices stop climbing. They rose again in the past month, even though potential buyers are leaning more towards more affordable housing options, such as renting.

Housing prices rose 5% more than what is considered normal for the Austin housing market. Homes sell for more than the list prices as buyers snatch them up soon after they hit the market.

The median price of houses on the market rose a whopping 13%, setting a new record of approximately $537,000.

Almost every county in the area, and much of Texas, has seen an increase in housing prices. This increase continues, although it is at a much slower rate.

It’s due to several factors. The drastic increase in inflation has raised the cost of everything, including houses. Homeowners are paying more for basic things like landscaping and would like to see a return on their investment. Real estate developers have seen a drastic increase in the price of building materials, from concrete to lumbar and labor.

The booming economy of Austin, the capital of the Lonestar state, has also contributed to the increase in housing costs. The city has seen increased jobs over the past two years while many other economies plunged downward.

This contributed to a mass migration to Texas and the area of Austin. As more people continued to move to the state, the supply of houses quickly dwindled to almost nothing. Homeowners also realized that transplants had more money to spend, particularly those coming from California, where the cost of living is higher than in Texas.

All these factors have contributed to the increase in housing costs in the Austin housing market. This is just happening in Austin, Texas. The same price increase was noted in other popular cities, particularly in the Dallas housing market. 

Austin Housing Market Trends

The market is a seller’s market. A low housing supply combined with the mass migration to the Lone Star state throughout the pandemic has created chaos in the housing market, with prices soaring and homes quickly being purchased after being listed.

However, residential home sales have declined by 20% year over year. This is a significant thing to note about the Auston housing market because single-family detached homes remain the most popular option, especially for transplants.

Simultaneously, new listings on the market have increased by almost 20%. The housing supply has drastically increased from 1.5 months to 2.1 months. Although this means it’s still a seller’s market, once the housing supply is up to six months, it will become a balanced market.

Home sales in Austin have decreased almost 11% in the first half of the year compared to last year. There were a total of 5,789 sales during the first half of 2022. However, the median price still saw an increase of around 15%, leading to a median price of just over $600,000.

In Travis county, there was a similar trend. Home sales decreased by almost 11.5%, and The median price increased by approximately 21% for a price of almost $600,000.

Austin Housing Market Forecast

The slowing growth rate in the sales department indicates that the Austin housing market is working towards a market correction that will lead to market stabilization. The housing supply is slowly creeping back to pre-pandemic levels.

Right now, buyers have more power at the negotiating table than they have in two years. For buyers to be able to have more say so, the housing supply needs to be at least six months. However, that is still quite a ways off.

Right now, it is a seller’s market and will continue to be one for the next year.

Homeowners can expect the housing market to stabilize in the long run, but housing costs will not be as low as in other areas.

According to a report by the Florida Atlantic University, Austin, Texas, has the second most overvalued houses on the market. On average, buyers wind up paying more than 50% of the estimated value of a house when moving to the area.

The only area in the United States that currently costs more than Austin, Texas, is Boise, Idaho, where transplants will find themselves paying just over 80% of the actual value of a house.

Costs will also increase as more people move to the area. Tech giants like Google and the massive company of Tesla are moving into the area soon. The software company Oracle has also mentioned moving its headquarters into the area.

This will create more jobs, help the economy boom, and the area will see more migration. However, it will be slower than during the pandemic when other economies saw huge downturns. Because of this, there’s only a slim chance that the new companies will result in another housing crisis in the area.

In Conclusion

The Austin housing market has been hot for years and will continue to be hot over the next few years. However, housing prices are slowing down. If the housing supply continues to increase at the same rate that it currently is, buyers will be able to breathe a sigh of relief within a few years. Check out what’s happening in the Houston housing market for more Texas real estate news!