Ranking It

Austin declared the No. 1 real estate market to invest in right now

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Austin is the third consecutive Texas city to top this list.

Photo courtesy of Easton Park

The hottest real estate market to invest in 2017? It's Austin, of course. That's according to the annual Emerging Trends in Real Estate report from PwC US and the Urban Land Institute, which includes interviews and surveys from more than 1,800 leading real estate experts to determine the top markets to watch.

Austin, which was No. 2 for 2016 is the third consecutive Texas city to top the list. The Capital City flip-flops with Dallas-Fort Worth, which was No. 1 for 2016 and comes in second on the new survey. Houston (No. 1 for 2015) sits at No. 40 on the latest report.

"Viewed as a fluke when it hit the study's top 10 list five years ago, Austin’s rise to the top of the list signals the durability of the city’s long-term appeal to investors," says Mitch Roschelle, PwC partner and real estate research leader, in a release. "Austin, along with many of this year’s top 10 cities, boasts attractive, niche neighborhoods and a vibrant, diverse economy."

The Capital City "has consistently ticked the majority of the top boxes related to recent real estate market attractiveness," notes the report. It has a diverse economy, only minimally affected by the global financial crisis; a growing population that boasts an educated labor force; and, of course, that "undeniable 'hip' factor."

Despite being a relatively small market for investment opportunities, Austin tops many domestic investors’ wish lists, making it highly competitive. Even so, local, regional, and national real estate participants operate in relative harmony, says the report.

Those who call Austin home may wonder about the city's growing affordability and transportation concerns. While the uptick hasn't gone unnoticed, the report notes that costs are still competitive with those seen in other top secondary markets, and the 2017 outlook for major property sectors remains good.

"The housing market, both multifamily and single-family, appears to be making adjustments to match supply with the requirements and locations desired by the changing population base," states the report. "To address transportation concerns, the market is likely to continue to see more mixed-use development not only to bring compatible uses together, but also to enhance the experiential feel of developments."

Where should investors looking outside Texas consider plunking down cash? Portland, Oregon; Seattle; and Los Angeles round out the top five.

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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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