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This type of Austin real estate is being snapped up like crazy

Land sales in Central Texas are hot.

Photo courtesy of Kuper Sotheby's International Realty

Central Texas land is being snapped up like crazy, according to the most recent Texas Small Land Sales Report. The Texas Association of Realtors combed through 2016 data from the Real Estate Center at Texas A&M University to uncover where buyers are making their next big land purchase, and Austin-Waco-Hill Country leads the pack.

In 2016, the region had 2,409 small land purchases (200 acres or less) — a whopping 21 percent hike from 2015. In total, 55,078 acres were purchased in the area, representing almost 35 percent of all Texas small land sales. In Texas as a whole, there were 6,992 small land sales in 2016, a 4.2 percent increase from 2015.

"As our state's population continues to grow and the footprints of Texas cities expand, the demand for rural land will only increase," Vicki Fullerton, chairman of the Texas Association of Realtors, says in a release. "At the same time, after consecutive years of rapid growth in real estate land prices, prices in many regions have leveled off."

Unlike the regions where land costs decreased or plateaued, the Austin-Waco-Hill Country area increased. The average price per acre in the Hill Country jumped 3.9 percent to $8,684 in 2016, much higher than the $5,647 Texas average. It's still less expensive than the $10,182 price per acre you'll find in the Gulf Coast-Bottom Brazos region, which encompasses Houston, in addition miles of coastal property.

While farming and recreation are the most common uses for acreage in the Hill Country, such a dramatic increase year-over-year is driven by development needs.

So who's buying all that property? "Small land sales activity within Central Texas is driven by buyers from Austin, as well as the Waco-Temple-Killeen, San Antonio-New Braunfels, and Dallas-Fort Worth," the report reveals.

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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.

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