Real Estate Report

Scorching Austin real estate market poised for another record-breaking year

Housing demand in Austin continues to drive sales upward.

Photo courtesy of Keller Williams

Austin is on track for yet another record-breaking year in real estate. That’s according to the June and Midyear 2016 Central Texas Housing Market Report released by the Austin Board of Realtors (ABoR), which details the city’s scorching housing market and our steadily increasing home sales.

“Despite the ongoing housing shortage and affordability challenges impacting our region, population growth and housing demand continue to drive home sales upward,” said Aaron Farmer, ABoR president, in a release. “The Austin-Round Rock housing market is on track to outpace 2015 market levels, which was a record-breaking year for home sales.”

Single-family home sales in the Austin-Round Rock area grew 6.1 percent year-over-year in the first half of 2016, while median home price rose 7 percent, to $282,000. In Austin proper, home sales have risen 3.4 percent in 2016 so far, with the median home price rising 5.6 percent, to $339,652. Active listings have also grown by 20.1 percent this year.

For June specifically, Austin home sales increased 2.6 percent, while median home price increased 2.9 percent to $350,000. Monthly housing inventory increased from 0.3 months to 2.1 months, which means we're getting closer to the six-month inventory mark (a balanced housing market), but supply still remains a major concern.

“The Central Texas housing market is performing very well, but extreme housing shortages across the region continue to be a challenge,” said Jim Gaines, chief economist at Texas A&M's Real Estate Center. “Homes under $300,000 have less than two months of inventory in the Austin-Round Rock MSA, which means that housing at these price ranges is essentially nonexistent. The growing ‘doughnut effect’ of homes sales activity as homebuyers move outside Austin city limits in search of more affordable housing is on pace to continue in the near future."

Williamson and Hays counties might be more affordable options for those looking to buy, but with Austin blazing ahead, our neighboring suburbs are starting to follow suit.

“It’s important that we think of the growing housing affordability crisis not just as an Austin issue, but also as a regional challenge,” said Farmer. “Housing supply shortages have reached critical levels throughout the region and areas with affordably priced homes are becoming smaller and farther away from jobs. Some homebuyers are now looking at homes an hour or more outside of Austin to find a home that they can afford."

Rental Rumblings

Cramped? Austin renters feel the squeeze in more ways than one.

Algarita Apartments/Facebook

Austin renters have less space than they did in 2009.

Feeling cramped? There's a reason. In a recent study, real estate website Trulia found that renters — especially those with children — have less space than they did several years ago.

Trulia looked at U.S. Census Bureau's 2014 American Community Survey data to determine the number of needed bedrooms based on children and married couples in the family. Married couples together only need one bedroom, while non-married adults as well as children were assumed to each need one bedroom. Households with fewer bedrooms than non-married adults or children are considered to suffer the “space crunch.”

In the nation’s biggest metro areas, 14.7 percent of households had fewer bedrooms than family members, an increase of half-a-percentage point since 2009. The study showed that renters with kids are especially cramped, and the larger and pricier the metro, the more likely renters are tight on space. Trulia found that just 8.1 percent of nationwide homeowners are tight on space, versus 26.4 percent of households who rent.

Contrary to the national trend, a few major Texas metros, including Houston and Dallas, posted a bigger drop among space-crunched renters compared to homeowners. Austin, Fort Worth, and San Antonio, on the other hand, are consistent with the national trend, where more renting households are sharing bedrooms than they did in 2009.

In the Austin-Round Rock metro area, 13.2 percent of residents face the space crunch. The bunk-bed wave hit just 7.3 percent of Austin homeowners in 2014, down .6 percentage points over a five-year period. In comparison, 22.8 percent of renting households have fewer bedrooms than they need, up 2.4 percentage points since 2009 — the highest increase in Texas by far.

While space is seemingly getting worse for renters in Austin, as well as Fort Worth and San Antonio, the share of cramped renters in Houston and Dallas has dropped more significantly between 2009 and 2014 than the share of cramped homeowners. Still, 28.8 percent of Houston-area renters are bunking up. In Dallas, the figure is over 27 percent.

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