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Steep competition, cash offers and ‘hockey stick’ prices: On the ground of Austin’s ‘brutal’ housing market

The Austin housing market—historically a hot one—entered a new sizzling phase early this year.

Prospective buyers are likely to face dozens of competing offers, many of which are well above the list price and in cash. Realtors talk about extreme cases: winning offers $200,000 above list price and the Brushy Creek house that received 97 offers over one weekend.

The median home price in the city of Austin hit an all-time high of $566,500 in May, rising more than $142,450 year-over-year, according to the Austin Board of Realtors. And prices across the five-county Austin metro are rising at an even faster rate.

But there is room for hope. Local realtors report a small shift in the market in recent weeks, as fully vaccinated would-be buyers head out on summer vacations. "Don't give up," said Alex Gilmore, an agent at Paul Presley Realty. "Austin's only going to get more expensive."

A case study

Chris More, 44, and his wife recently purchased a new construction house in Pflugerville after a months-long search that included multiple rejections.

The couple moved from California to Round Rock in 2017, spurred by remote work options and the metro's relative affordability. Last year, midway through the pandemic when the market was hot but not scorching, they started looking for a new home with more privacy and a pool. "We were like, 'We can still catch that wave,'" he said.

Chris More and his wife faced multiple rejected offers while searching for a home earlier this year. (Chris More)

After the holidays, More noticed Zillow home prices in Round Rock, Leander and Pflugerville were rising dramatically from week to week—he described it as "hockey-stick growth"—and started to worry. Using a VA home loan thanks to his wife's time in the Air Force, the couple soon made their first offer: $75,000 over asking price on a home in the $600,000 range. They were immediately rejected but not discouraged.

The couple eventually made five more offers, one as much as $220,00 above the list price, but found sellers were only interested in cash. "We completely gave up, and it was kind of depressing," More said.

Discouraged by the resale market, they looked into new construction and found a builder who had three properties available on a first-come, first-served basis. Unbeknownst to them, they were first in line and able to purchase a home using the VA loan for under $800,000. Although higher than their initial budget of $550,000, More said, "I just got completely lucky."

Creative solutions

The market also poses challenges for realtors. Realty Austin, a brokerage firm with more than 550 agents, brought in Bay Area realtors to speak about navigating such intense competition. "All of us had to set up new expectations with our clients," said Deanna Garza, an agent with 14 years of experience.

Buyers who found they were priced out of the resale market could seek out a cash bridge loan through a program such as Homeward, which has become "almost mandatory" in the current market given sellers' preference for cash offers, said Ashley Jackson, a Realty Austin agent with nine years of experience. They could also look at new construction or the rental home market. "You have to have tenacity in this market," she added.

Jackson recently worked with a buyer who offered $50,000 above the list price for a South Austin home in the 78704 ZIP code. She later learned the seller had received multiple offers $200,000 above the list price. But her client now has a home under contract after she called the listing agent to ask for the real price—not the one listed but the one the seller would accept.

"You have to walk the line between the brutal reality of our market … and the excitement of buying a home," she said.


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