Real Estate Rumblings

Austin home values continue meteoric climb with double-digit price increase

January is traditionally the height of the slow selling season, but not in Austin.

Photo by Phillip Spears/Getty Images

January was another banner month for local home sales, according to the Austin Board of Realtors. Last month — traditionally the height of the slow selling season — the city of Austin saw a double-digit increase (13.5 percent over last year) in the median sales price, which climbed to $384,750.

It's also worth noting that with the new year comes a new way of measuring home sales by ABOR. In the past, the board only used single-family homes sales to measure the local real estate market. Beginning this month, that will change to include all residential properties: single-family homes, condos, and townhomes.

"Austin's competitive housing market is changing the landscape of traditional homeownership. We're seeing more homebuyers purchase condos and townhomes in an effort to live closer to the urban core or stay within their budget," Romeo Manzanilla, 2020 ABoR president, said in a release. “Focusing only on single-family housing leaves out half of the story, especially in the city of Austin where multi-family housing options are not only desired but greatly needed.”

Along with that 13.5 percent climb in the median price, new listings in Austin decreased 10.6 percent to 960 listings, while active listings dropped 32.5 percent. Because of this, inventory inside the city limits dropped to 1.1 months, a continued sign of an unbalanced market. (A balanced market has an inventory between three and six months.)

Of course, January's climbing numbers reflect years of upward growth for the local real estate market — growth that shows no signs of slowing down.

“Austin’s engine of job and population growth is not projected to slow down anytime soon,” says Lawrence Yun, chief economist and senior vice president of research at the National Association of Realtors. “Looking at other metro areas across the U.S. that have faced similar circumstances, this level of rapid, positive growth will not be sustainable without a continued influx of a variety of housing types and careful transportation planning.”

Last month, residential home sales in the Austin-Round Rock metro area increased 8.5 percent over January 2019. During the same period, however, new listings decreased 14.3 percent while active listings decreased 24.1 percent. Like the city, the metro also saw a slump in monthly inventory, which dropped to 1.6 months.

Sales in Travis County reflected more of January's traditional slower pace, with only a 2.9 percent increase in residential sales. Median prices, of course, did not reflect any sort of slowdown, climbing 7.8 percent year over year to $351,000.

Williamson, Hays, Bastrop, and Caldwell counties continued their meteoric rise, with Caldwell leading with a 50 percent increase in sales over last January. Caldwell County's median home price dramatically increased 62.1 percent year over year to $232,807.

Williamson remained (relatively speaking) stable, clocking in an 11.6 percent increase in residential home sales and just a 2 percent rise in the median home price to $279,990. Home sales in Hays climbed 22.8 percent while the median home price actually dropped 2.6 percent to $255,000. Bastrop saw a similar rise in home sales (22.2 percent) and a median sales price of $241,000.

home-for-sale reports

real estate report

How Austin fits into Zillow's predicted housing market growth in 2025

Photo by Justin Wallace on Unsplash

Potential homebuyers in Austin may see improving mortgage rates and home prices in 2025, according to Zillow.

It looks like a few more people are about to turn their online home shopping daydreams into reality in 2025. Zillow, the famous real estate listings website, says in a press release that next year will likely bring "a gradual but bumpy decline in rates, impacting sales and price growth."

It attributes the forecast to "erratic and dramatic mortgage rate movements" throughout 2024, which will continue to affect the market. The website's housing market predictions report estimates that 2025 will see about 100,000 more sales than 2024, that home value growth will be "low and slow" at 2.2 percent, and that inventory and new listings will continue recovering from pandemic weakness.

On a local scale, Zillow's latest data shows Austin has already experienced a 3.4 percent drop in annual average home values from 2023 to 2024, which will continue fluctuating in 2025.

As of November, Zillow's home value index says the average home in the Austin metro is worth $443,995. That figure is greater than the Austin Board of Realtors' median home sales price in Austin-Round Rock-San Marcos, which came out to $435,000 last month, reflecting an estimated 2.4 percent increase for just the month of November year-over-year from 2023.

Pick the right season to buy
Potential buyers may see better opportunities for purchasing a home during the fall and winter, which is a typically slow season for home sales. Across 36 out of the 50 biggest U.S. metro areas, Zillow's heat market index showed a drop in competition from October to November.

"There's a strong sense of déjà vu on tap for 2025. We are once again expecting mortgage rates to get better gradually, and opportunities for buyers should follow, but be prepared for plenty of bumps on that path," said Zillow chief economist Skylar Olsen in the release. "Those shopping this winter have plenty of time to choose and a relatively strong position in negotiations."

Zillow suggests buyers may have the ability to negotiate "from a position of safety" during the slow winter months. This is especially true for Austin-area buyers, who only saw 10.4 percent of homes sell for more than their listing price in October. The website says buyers can take advantage of opportunities to buy contingent on inspections or repairs, and they may avoid bidding wars during this time.

"While the number of options available to shoppers today are lower than they will likely see in the spring, there's also less competition in the field," the report says. "The [national] share of homes that sold for more than list price was below 28 percent in October (the latest data available), continuing a downward trend that began in July."

Buyers will head to the Southwest
Eyes are also turning to the American Southwest as the top region for homebuyers in 2025, as 13 major metro areas – including Austin and San Antonio – are now considered “buyer’s markets” where buyers have more negotiating power than sellers.

However, this prediction depends on the gravity of falling mortgage rates. Homebuyers should also keep a close eye on mortgage rates in 2025, which could drop unpredictably like they have been for the last three weeks in a row. If the rates dip further than expected, that doesn’t bode as well for buyers.

“It is anticipated that a significant mortgage rate dip would bring more buyers than sellers back to the market, increasing competition and tilting negotiating power in favor of sellers,” Zillow says.

Small-home living is gaining traction
As Austin and other major cities are battling for more high density housing, buying trends are also leaning towards smaller (and more affordable) homes.

Zillow even goes as far to say that the “pandemic-era need” for large houses is officially a thing of the past.

"The term 'cozy' is appearing in more listing descriptions — 35 percent more in 2024 compared to 2023 — reflecting current design trends that have shifted away from cavernous open floor plans, toward contained spaces that have their own style and purpose," the report says.

housing market zillow