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Bill Morris
RE/MAX Capital City
13018 Research Blvd
Austin, TX 78750

Direct or Text: 512-785-3345
Email:              bmorris@remax.net

Texas Broker License # 505218

Thank you for visiting today. If this is your first visit, please take your time and look around. I have plenty of information and resources available to you. If you are a return visitor, thank you. I will welcome your comments, questions, or suggestions. I would also love to learn about your real estate needs, wants, and objectives, and I will offer my best professional advice and counsel.

My Thoughts on Central Texas Real Estate

Home Prices in Austin

It’s no secret that home prices in the Austin metropolitan area have been increasing over the past several years.  Although the pace of price appreciation has slowed (Market moving toward “normal”?), it is still a very real part of our market environment and will likely continue for at least another year or two.  As part of my look back at our real estate market, it’s worth seeing how home price distribution has changed in the Austin metro area over the past eight years:

Notice that the $150,000 to $200,000 price range fell below 10% of our market for the first time in 2018, and that even the $200,000 to $250,000 range declined slightly last year.

But look at what has happened from $250,000 to $750,000. 52% of all home sales last year were above $300,000, and even the share of homes priced above $750,000 doubled since 2012, when we began our return from the last market bottom.

On paper, median income in the area has largely kept up with those changes, but well-paid, mostly tech employees are a different population than more traditional middle class workers. Affordable workforce housing is a growing challenge. I’ll have more to say about that as the year proceeds.

Texas Economy Cools Off … Slightly

I received an update from the Real Estate Center at Texas A&M University this morning and just want to pass it on. Here are some highlights:

  • “The U.S. and Texas economies will continue to expand in 2019 but at noticeably decelerated rates.”
  • Texas employment growth should continue at almost twice the pace of U.S employment — 2.7% vs. 1.5%.
  • “The Texas housing market slowed in 2018 as sales rose 1.7 percent compared with 4.1 the previous year.”
  • “Housing permits for new single-family residential units are expected to slow to a 2.1 percent increase ….” [But permits in the Austin area are forecast to increase by almost 10%!]

If you want more details, here is the complete update report:

2019 Texas Housing and Economic Outlook

I attended another meeting today about the economic outlook for the U.S. and Austin.  More on that soon.

 

2018 Market Recap

The short version of this post is that we still don’t have enough homes for sale to meet very high buyer demand.  I’ll blame a very fast start in 2019 for my delay in writing this.  I have been very busy serving clients.

In one graph here is a snapshot that makes clear the extreme conditions in this very long market cycle:

That is a view of market velocity that clearly shows the contrast between this market cycle and almost thirty years of history in the Austin area. Since 1990 about 26% of active listings, on average, sold each month, with the typical range being between 10% and 30%. In the run-up to the peak in 2000 every month from March 1999 through October 2000 were above that range, with three months above 50%. In contrast, we have now spent 6 years with the odds above 30% of an active listing selling in each month.  The average from January 1990 through December 2012 was 22%, compared with 41% from 2013 through 2018!

The market absorption rate is a move formal view:

In that chart, the green dotted line represents “months’ supply” — how long the listing inventory each month would last at the then-current pace of sales. About six months’ inventory is considered “normal” or “balanced.” For six years the Austin metropolitan area has had between 2 and 3 months’ supply of houses, condominiums, and townhouses for sale.  We have been and remain solidly in “seller’s market” territory.

And that leads to upward price pressure:

The steady increase in average home prices is clear, and if you compare with the two earlier charts you’ll see that with a slight lag, prices fall below the long-term trend in times of higher inventory and slower absorption and move above the trend-line when inventory is lower and market velocity is higher.

2018 finished strong, and with low inventory conditions continuing 2019 looks like another fast-paced year in Austin-area real estate. I have written in recent months about increasing “days to sell” over the past few years, accompanied by a slowing pace of year-to-year price increases. I continue to believe that is what we have ahead this year, but I will keep you updated. In the meantime, I will post an updated look at price distribution in the Austin metro market soon and offer comments on housing affordability in our area — a real reason for concern.

ABR - Accredited Buyer RepresentativeChildrenCRS - Certified Residential Specialiste-PROREALTOR® certificationNAR GreenCertified Distressed Property ExpertFive Star Professional

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