Hot Housing Markets

Austin declared the best housing market to invest in this year

Another day, another list pimping out Texas’ real estate market. This time, Forbes declared five of its 20 “best buy cities,” i.e., where to invest in housing in 2015, are in Texas, including Austin at No. 1. In fact, all five Lone Star locales are in the top 10.

Behind Austin are Houston (No. 3), Dallas (No. 5), San Antonio (No. 6) and Fort Worth (No. 10). Forbes worked with Local Market Monitor, a data company that looks at home prices and economic factors in 300 housing markets across the nation, and determined that these cities are safe bets to invest — whether for rentals or first-time buyers — because of strong job and population growth, diversified economies, and relatively low housing prices.

Austin’s housing market is slightly overpriced at 8 percent, according to Local Market Monitor’s “Income Price,” which tries to capture how the average home would be priced in a market without speculation or disruptions like the housing crash and how it relates to the average income over several years. Still, the city’s booming population — which grew 8.9 percent from 2010 to 2013 — and annual job growth of 3.6 percent push it into the top spot.

Houston’s housing market is still underpriced by 7 percent, with an average home price of $214,049, and the area’s job growth is exploding at 4.1 percent annually. Dallas is underpriced by 9 percent, with an average home price of $197,159, and a slightly lower job growth of 3.8 percent.

San Antonio’s houses also are underpriced: by 12 percent, with an average home price of $189,080. San Antonio’s job growth is 2.5 percent. Of the Texas cities, Fort Worth’s market is the most underpriced at 17 percent, with an average home price of $180,312, and annual job growth of 2.6 percent.

Texas had the most cities on the list; Florida had the second most, at four. However, only No. 4 Orlando made the top 10. For the Texas cities, home prices have been growing between 7 and 12 percent, which indicates that even though flipping houses might be harder as the market continues to strengthen, the investment for long-term ownership is good in Texas.

Local Market Monitor did say that oil boom cities like Midland were bad investments, while the larger Texas cities had enough economic diversification to weather the current energy-sector storm.

Rounding out the top 10 are Provo, Utah (No. 2); Denver (No. 7); Boise, Idaho (No. 8); and Oklahoma City (No. 9).

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Homebuyers can afford to be picky as Austin housing inventory rises

Photo by Avinash Kumar on Unsplash

Housing economist Clare Losey said the most significant factor affecting home sales in Austin is high mortgage rates.

The latest real estate report from Unlock MLS and the Austin Board of Realtors (ABoR) has revealed housing inventory is still on a steady rise in the Austin-Round Rock-San Marcos MSA, creating more choices for potential homebuyers as they navigate a high interest rate market.

Residential home sales dipped by a mere 1.5 percent year-over-year from October 2023, amounting to 2,248 closed sales in the Austin-Round Rock-San Marcos MSA. Median prices have also dropped to $430,000, or 3.2 percent less than this time last year. More than 3,300 new home listings were added on the market — a 7.4 percent increase from 2023 — bringing the total number of active home listings to 11,599.

According to Unlock MLS and ABoR housing economist Clare Losey, Ph.D., October's mortgage rates stood at 6.4 percent and are showing no signs of a significant drop in the near future. Even heading into 2025, Losey says potential homebuyers who are biding their time in the hopes of seeing rates plummet "may be in for a long wait."

"In the meantime, sellers must recognize that bringing buyers to the table requires a more aggressive pricing approach," Losey said. "Even in a more balanced market, buyers with limited purchasing power are struggling to meet current price expectations."

As for the overall health of the Central Texas housing market, 2024 Unlock MLS and ABoR president Kent Redding labeled recent news reports that called Austin "ground zero" for a downturn as an "extreme over-exaggeration."

"Austin led the state and nation in record-breaking home price growth and sales activity during the pandemic," Redding said. "For three years, near-zero housing inventory, numerous offers above list price and a rapid-paced market raised home prices and left little negotiating power for buyers. During this record-setting growth, ABoR and Unlock MLS consistently emphasized the unsustainability of the rapid growth, and now, our market is working to balance those extremes."

Central Texas housing trends in October 2024

In Travis County, 979 homes were sold last month — a slight 2.5 percent increase from last year. Median prices remained flat year-over-year at $510,000. Active home listings continued growing to 5,702 homes, which is 9.4 percent more year-over-year.

In Williamson County, 807 homes were sold in October, with median prices steadily dropping to $420,000. There were 1,028 new home listings on the market, showing a 4.5 percent increase from October 2023, bringing the total number of active home listings to 3,369.

Residential home sales dropped by nearly eight percent in Hays County in October, totaling 315 sales. Median prices also fell 5.5 percent year-over-year to $359,000. Active listings rose 6.6 percent year-over-year to 1,740 homes with the addition of 534 new listings on the market.

Meanwhile, 114 homes were sold in Bastrop County last month, which is 4.4 percent more than this time last year. Median prices dropped by a single percentage point year-over-year to $355,000. There were 654 active listings on the market in October, and 152 new home listings, representing a 1.3 percent slip in new inventory when compared to last year.

Only 33 homes were sold in Caldwell County in October to reflect a near 14 percent decline year-over-year from October 2023. Median prices fell to $262,990, which was a 13.5 percent decrease from last year. There were 136 active homes on the market last month, and 40 new homes added on the market.

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