With record low inventory and record high prices, finding your first home in Austin's red-hot market is becoming increasingly challenging. But a new analysis from Zillow identifies a key area of real estate that could afford big opportunities to those trying to break into the market for the first time.
In 2020, single-family home sales soared (both nationally and locally), but condo sales were left behind, the real estate authority says.
While single-family home inventory dropped, condo inventory recovered and rose, and the national median condo sale price rose just 7-8 percent year-over-year, compared to single-family home prices growing by 14 percent. Another bonus: condos generally are priced lower than single-family homes (in November, the median-priced U.S. condo sold for about $41,000 less than a home).
“Condos provide a unique opportunity for prospective buyers looking for a foot in the door, especially in markets where house prices have risen out of reach or where proximity to urban centers is a priority,” says Nicole Bachaud, economic data analyst at Zillow, in a release.
Notably, Austin is one of the hot U.S. markets where condo inventory was on the rise year-over-year. Local condos sold for far less than single-family homes. Here are the highlights of the Austin metro area's condo market, according to Zillow:
- In November, the median sale price for a condo was $315,667, $56,000 less than a single-family home.
- The condo sale price rose 3.6 percent year-over-year in November, compared to 16.2 percent for a single-family home.
- In December, available inventory for condos was up 20.8 percent year-over-year, while inventory for single-family homes was down 35 percent.
“In scorching-hot markets like Austin, competition for single-family homes is extreme. Prices in desirable locations may feel like they are climbing out of reach for first-time homebuyers, but condos are often an affordable alternative to large single-family homes," Bachaud says.
"Their lower prices and shared amenities, like landscaping and roof maintenance (a few items that can carry shocking price tags for new homeowners) can help a first-time buyer ease into homeownership and begin to build equity. As home values rise over time, these buyers can trade up to something bigger in just a few years."
Zillow's report shows a similar trend in other top Texas markets, especially in terms of affordability.
In Dallas-Fort Worth, the median sale price for a condo was $206,150 in November 2020, $97,183 less than that of a single-family home. And in Houston, the contrast is even more stark. There, the median condo price was $149,633 in November, a significant $117,533 less than the price of a single-family home.
Bachaud notes that mortgage rates are at near historic lows, which can help ease monthly costs, but she reminds that condos typically come with HOA fees that should be considered when calculating monthly expenses. And, while "shared amenities like a pool or gym aren’t exactly popular during the pandemic, [they] should regain their luster as the virus is contained."