Broken record

Median home prices in Austin shoot past $400,000 for first time ever

Austin's median home price climbed to $407,400 in May.

iStock

Home prices inside Austin’s city limits broke a record in May that no homebuyer ever wants to see shattered.

The Austin Board of Realtors’ May 2019 Central Texas housing report shows the median price of a single-family home within Austin’s city limits soared to an all-time high of $407,400 last month, up 5.8 percent compared with May 2018. It’s the first time the city’s median home price has shot past $400,000.

In May 2018, the median price was $389,000. This April, the median home price within the city of Austin had already crept up to $394,450, according to ABOR.

Median home price refers to the midway point where half of the homes are listed above a certain price and half of them below it. Average home price is tallied by totaling all of the home prices in a given area and dividing that by the number of sales.

This most recent price spike is yet another indicator of the housing affordability crunch that has plagued the Austin area for several years, sparking fears that Central Texas is heading toward the same level of housing unaffordability that San Francisco and Silicon Valley are encountering.

In tandem with the latest surge in median home prices, home sales in the city of Austin fell 3.4 percent last month compared with May 2018, ABOR says. However, home sales jumped in Travis County (2.9 percent) as a whole, as well as in Bastrop (18.3 percent), Caldwell (21.7 percent), Hays (10.2 percent), and Williamson (8.4 percent) counties.

“A lack of middle-market housing in the city of Austin is driving demand to the suburbs,” Kevin Scanlan, 2019 ABOR president, says in a release. “While the Central Texas housing market is healthy and thriving, Austin continues to struggle with housing options that are affordable for first-time homebuyers as the median price surpasses $400,000.”

The release quoted Reyne Telles, executive director of communications and community engagement for Austin Independent School District, as saying the escalation in home prices within Austin, coupled with a rise in apartment construction, have impacted the district’s growth.

“As more families move outside the district’s boundaries, we’re taking the appropriate steps to mitigate this trend,” Telles says. “In order to adapt to this new reality and work towards increasing our student population, the school district now allows students who reside outside of AISD’s boundaries to transfer into our schools.”

Across the entire five-county Austin metro area, the median price of a single-family home hit $335,095 in May, up 4.2 percent from the same time in 2018, the board says.

By comparison, the median price of a single-family home increased in May to:

$275,000 across a nine-county swath of Dallas-Fort Worth, up 3 percent from the same period a year earlier.
$249,993 in the Houston metro area, up 2.4 percent from the same period a year earlier.
$238,800 in the San Antonio metro area, up 3 percent from the same period a year earlier.

Travis County, anchored by Austin, saw the median price of a single-family home climb in May to $400,000, up a whopping 8.1 percent compared with the same time last year, according to the May report.

Meanwhile, bargain-hunting homebuyers helped drive up the median home price in Caldwell County by 23.2 percent from last May to this May. The median price there now stands at $209,500. Bastrop County also witnessed a healthy boost in the median home price, jumping 7.6 percent this May to $240,000 compared with last May.

Williamson and Hays counties registered more moderate increases in median home prices in May. In Williamson County, the median price ticked up by 1.1 percent to $303,323 compared with the same time last year, the board says. Hays County experienced the region’s smallest rise in median home prices, inching up just 0.4 percent to $275,969 versus May 2018.

home-for-sale

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