December 2021 proved to be another record-breaking month for Austin’s housing market, putting a fitting cap on a year of unprecedented prices and demand for residential real estate in the Texas capital.
Throughout 2021, home sales in the metro area added up to more than $23 billion, more than 30% higher than in 2020, according to new data from the Austin Board of Realtors. This was partly due to a record-high number of homes sold — 41,316 total, 2.5% more than the previous year — but rising prices can take most of the credit or blame.
Median prices rose 31% percent in 2021, for an annual average of $450,000. In December, the median price in the metro reached $476,700. In the Austin city limits, the median price hit $555,000, up 19.4% year over year.
The uptick in home sales may surprise some, as the metro has seen persistently low supply. The Austin metro had only 0.6 months of housing inventory in December 2021, compared to a healthy market’s six months. At the same time, builders met countless hurdles in getting new homes off the ground — including rising material prices and an outdated land development code. But the data show the number of new listings on the market was actually higher than ever.
“In short, new listings were higher than we’ve ever seen because people saw opportunity," said 2022 ABOR President Cord Shiflet. "A market like this, that’s demand driven and boosted by companies like Tesla and Amazon creating so many jobs in Austin, have led folks to list their homes because they saw an opportunity to enjoy such a great return on their investment."
At the same time, developers, despite their hurdles, have been busy building new housing units — single family, single family for rent, condos and apartments — across the metro in response to the growing need.
When homes did hit the market, they went fast. On average, a home was only listed for 20 days in the Austin area before it was scooped up by a buyer, less than half the amount of time houses spent on the market in 2020.
“Even though more homes are being built, listed and sold than ever before, our region is still nowhere close to having a comfortable amount of supply to meet the demand, which is why home prices continue to rise steadily,” said Mark Sprague, state director of information capital at Independence Title, in an announcement.
The demand is being driven by numerous factors — pandemic-related work-from-anywhere policies and massive company relocations among the biggest. New job creation was up almost 21% in the Austin metro in 2021. According to data from the Greater Austin Chamber of Commerce, companies announced 26,697 jobs across the metro last year, a record for the region.
What naturally followed was an increase in sales throughout Central Texas. The number of home sales increased in all five counties, with Bastrop showing the largest annual increase — up 15.4% to 1,567 sales — and Travis County showing the highest raw number of sales, 20,586. All five counties, too, experienced prices rising at least 20% in 2021.
“It's a wonderful thing, that all eyes are on Austin,” Shiflet said. “Austin has this awesome appeal, and it's kind of like our little secret is out. … It’s wonderful what’s happening in Central Texas, but it's going to also come with a lot of change.”
Compass Realtor Lara Pavanelli said international buyers, which make up about three-quarters of her business, initially cooled during the pandemic due to travel restrictions, but now demand has picked back up. Investor clients, too, have shown increased interest in the Austin market.
But, as with many other Austin-area Realtors, the lack of supply has made it difficult to sate the growing demand.
“There have been many, many instances where clients could not find what they were looking for, or they could not find anything in their price point, or they got outbid by people that have deeper pockets,” Pavanelli said.
High taxes and rising interest rates are adding fuel to the fire, Pavanelli said. They’re discouraging investors who balk at the high rents that would be necessary to recoup their investment. However, she expects the high taxes to have another effect on the market in the coming year. She said the market might see an influx of sellers when people received their property tax bills this year, due to the massive appreciation in the past year.
*article take from Austin Business Journal