Knock on wood—real estate professionals are saying Austin’s housing market showing signs of stabilizing as local inventory hit two months for the first time since 2019.
Austin Board of Realtors CEO Emily Chenevert said after two years of pandemic-fueled prices, “we're inching our way toward something that feels more normal,” during the 2022 Central Texas Housing Summit—which brought industry professionals and economists together—on Tuesday.
Still, housing is one of Austin’s biggest fallbacks despite a diverse local economy, growing infrastructure investments, multiple nearby universities and a healthy job market. Stable housing falls in tandem with affordability, Austin Chamber of Commerce President and CEO Laura Huffman said.
“So what could bring that all down? Affordability—the No. 1 issue in Austin,” Huffman said.
So what does the housing market look like as of June?
Listings are up, sales are down
As of June, closed sales are down 20% and pending sales are down 31% but active listings are up 217% and they’re staying on the market for about 18 days. The median sales price is still over $500,000 and housing demand is still high but ABoR President Cord Shiflet said it is good news to see the market stabilize.
“The trajectory of our market over the last two years was unsustainable and it was in no way going to last,” Shiflet said. “The Austin market is by no means balanced and it still favors sellers, but buyers have more bargaining power now than at any point since before the pandemic.”
Realtor.com senior economist George Ratiu said it will take some time for the market to reach healthy levels after such a “feverish frenzy,” adding that prices aren’t crashing, they’re going back to where they were before Austin hit an anomaly period.
“To me, this is good news. When you look at the city proper, you see the same trends, prices are a little bit higher but sales are moderating,” Ratiu said. “That's simply a reaction to this period of transition and let's not forget, things don't change overnight.
Development is particularly expensive in Austin
A report released by ABoR and the Texas A&M University Real Estate Research Center showed Austin’s per-unit fees on new development are 187% higher than Dallas, Houston, Fort Worth and San Antonio.
What that means is development is about 168.8% more expensive per infill unit and 80%, or $8,000, per suburban unit in Austin-Round Rock metropolitan area. Those high fees not only slow production, but they also get passed on to the customer.
David Glenn, senior director of government relations for the Homebuilders Association of Greater Austin, said researchers from the study weren’t able to verify what each fee went toward.
“We know that with the National Association of Homebuilders Price Index, for every $1,000 they add to the price of the home, you're pricing out 791 families in the Austin MSA,” Glenn said. “For suburban developments, 9% of that earner’s income goes toward fees, for an infill project 20% just goes to fees. That's not land, that's not labor, that’s not materials.”
Unflipping the market
Shiflet said the fix to right-sizing development fees and restrictive zoning laws, another major problem in the development sphere, is to vote for candidates who will support expanding housing.
“However it is that you're involved in our housing market, you've got to care about housing and having these conversations is so important for us,” Shiflet said. “We've got an important election coming up in November and I can assure you that our 20,000 Austin Board of Realtors members are going to really be looking at candidates and really be looking at who puts housing first.”
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Austin is one of the top metro areas where homebuyer income saw the greatest surge during the pandemic and it came at a cost to locals.
A new analysis by real estate services firm Redfin reports that affluent out-of-towers have contributed to surging home prices in metros like Austin. Due to this trend, Redfin notes, many local buyers with lower incomes have been priced out.
“For white-collar workers earning high salaries, remote work is a huge financial boon,” said Sheharyar Bokhari, Redfin senior economist. Jobs with that flexibility, Bokhari says, enable them to move from a tech hub like San Francisco to a more affordable part of the country where they can get more home for their money and even put some toward a rainy day fund.
“It can have the opposite effect on locals in those destinations–especially renters–who are watching from the sidelines as home prices skyrocket while their income stays mostly the same,” Bokhari said.
In Austin, the median homebuyer income surged 19% from 2019 to 2021, ultimately reaching $137,000. In that time, the median home price growth was 48%, just behind Boise, Idaho which was more than 50%.
But the housing market is starting to slow. Redfin says high mortgage rates and unsustainable price growth have driven demand down. In fact, Austin is among the 20 housing markets that have cooled the fastest in the first half of this year.
“People are still moving in from California and they still have enough money to buy nice homes in desirable neighborhoods, sometimes with all cash,” said Austin Redfin agent Gabriel Recio. “But the days of homes selling for 25% over asking price with multiple offers are over. Buyers are no longer as eager now that mortgage rates are up and there’s buzz in the air about the slowing housing market.”
As a result, Recio says, local and out-of-town buyers have an opportunity to buy a home at the asking price or even under.
Redfin carried out its analysis using data from the home mortgage disclosure act to review median household incomes for homebuyers who took out a mortgage, though it doesn’t include buyers who paid using all cash.
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School is back in session—do you know the latest TikTok trends?
With Austin ISD resuming session on Monday, school officials are keeping tabs on the newest TikTok trends that could pose classroom disruptions and property damage.
TikTok trends swept through Austin-area schools last year with the “Devious Lick” challenge, which encouraged students to steal from school property and reportedly caused $15,000 in damages at Round Round ISD; and the “slap a staff member” challenge.
On the distraction end, a substitute teacher was dismissed from Bowie High School in December after bringing in a karaoke machine to class and singing Britney Spears’ “Toxic” for the class on TikTok.
Officials told KXAN they are staying aware of the trends as they change during the 2022-2023 school year and the district will investigate perceived threats. Since TikTok trends vary in severity, they will also evaluate to see which trends could cause harm or not.
Finally, the school district said it does not tolerate violence or bullying and will focus its efforts on protecting students both physically and digitally.