The price of buying a home in Austin knows no other mode than acceleration, it seems.
According to the latest numbers from the Austin Board of Realtors, homes in the city sold for a median price of $624,000 in March. That represents a record-high price, and a 22% increase in sales price over the past year.
“I’m a native Austinite so when I see these increases year over year, even though I work in this business, it’s a gut punch,” Ashley Jackson, president-elect for ABOR, told KUT.
This rapid increase in prices has been the norm since the early months of the pandemic when several factors converged to increase demand for housing and to severely limit supply.
Mortgage interest rates hit a record low, meaning homebuyers could get more for their money. At the same time, some homes stayed off the market because people feared strangers coming by, potentially increasing the spread of COVID-19.
These factors only poured gasoline on an Austin market already on fire; for years, the city has struggled to provide enough homes for people wanting to buy them.
“The story before the pandemic was there was not enough supply to meet demand so you see rapid home price growth,” Joshua Roberson, lead data analyst at the Texas Real Estate Research Center, said. “In comes the pandemic and with it mortgage rates dropped to their lowest historically and that just basically took the current situation and amplified it.”
Plus, people continue to move to Austin, increasing the competition in the for-sale housing market. According to a recent report from the Federal Reserve Bank of Dallas, Austin’s population grew more quickly in the first year of the pandemic than it had prior.
“That kind of growth is really the kind of growth that has an immediate impact on the economy, the local infrastructure,” Lila Valencia, Austin’s city demographer, said.
It’s unclear how long this surge in home sale prices will last. In 2021, after the median sales price of a home in the Austin area rose $100,000 in six months, real estate experts predicted the rate of increase would start to slow in about a year, maybe 18 months.
One reason for that slowdown, Roberson says, is that mortgage interest rates are rising; they recently eclipsed 5% for a 30-year mortgage. That may convince some would-be buyers to pause or end their home search.
But the demand likely won’t drop enough for prices to decline, meaning people who can’t afford the median home price of $624,000 will have to look elsewhere. The area is already starting to see the effects of this: The median sales price of a home in Bastrop County, east of Austin, rose nearly 47%, which is the largest jump among the counties in Central Texas.
“You’re just gonna have to go further and further out,” Roberson said.
