Central Texas Real Estate Market Update

MARKET UPDATE: CENTRAL TEXAS HOUSING MARKET CONTINUES TO SOAR DESPITE LOW INVENTORY

According to the latest (September) Central Texas Housing Market Report released by the Austin Board of REALTORS® (ABoR), the Central Texas housing market continues to exhibit strength despite economic challenges and shrinking housing inventory. In September, home sales across the Austin-Round Rock Metropolitan Statistical Area (MSA) soared 31.5% year-over-year to 3,892 sales. Historically, this time of year home sales are lower, but because of decreased activity during the shelter-in-place orders due to the pandemic, the summer selling season extended into September.

A majority of the real estate projects we finance are in the Austin area, so we think you will find the September year-over-year statistics in the Austin MSA below encouraging.

Austin MSA September 2020 Year-Over-Year Statistics 
Sales Dollar VolumeUp 51%$1.77 billion
ClosingsUp 31%3,892 closings
Avg. Sales PriceUp 12%$355,000
Avg. Days on MarketDown 14 days37 days
New ListingsUp 5%3,539
Pending SalesUp 28%3,767
Months of InventoryDown 1.3monthsto 1.2 months

These statistics are simply amazing, especially the increase in closings (up 31%) and drops in days on market and months of investory.  Vaike O’Grady, Austin regional director for Zonda (formerly Metrostudy), said the city of Austin has a limited number of residential lots. This is forcing developers to move to the suburbs where land is more available and less expensive.When it comes to construction in suburban markets, homes simply can’t be put on the ground fast enough to meet demand.

“The housing market is pumping billions of dollars into our region’s economy at a time it’s greatly needed, but we also need to be cognizant of the impact such rapid activity is having on record-low inventory levels and rising home prices,”Romeo Manzanilla, 2020 ABoR president said. “Austin’s suburban markets have historically offered housing stock at lower price points that created opportunity for people when buying or renting inside Austin city limits was not an option. Now, these markets are showing the same gains in prices and declines in inventory as we’re used to seeing inside Austin, putting pressure on the market as a whole.”

In summary, we are blessed to be doing business and investing in Texas and, in particular, the central Texas region.

Texas is #1…of course it is!

TEXAS RANKED NO. 1 IN THREE CATEGORIES BY AREA DEVELOPMENT

In addition to securing three No. 1 spots, Texas finished among the top-10 states in eight categories.

Texas earned No. 1 rankings in Overall Cost of Doing Business, Corporate Tax Environment and Competitive Labor Environment. The Lone Star state’s unmatched economic strength, paired with the second-largest civilian workforce in America, makes it an ideal state to do business.

Among Texas’ most notable top-10 finishes were: No. 2 in Best State for Business Overall, No. 2 in Access to Capital & Project Funding and No. 3 in Most Improved Economic Development Policies.

Source: Area Development

 

 

Amazon’s New Minimum Wage

Amazon will hire fewer people, not spend more on higher wages

So says David Bahnsen, wealth manager and founder of The Bahnsen Group.

“Through time, they are going towards an automation process that’s going to be hiring less people. They will not end up spending more in wages. They will end up hiring less people,” Bahnsen said on CNBC’s Closing Bell. Hear more of his thoughts here at CNBC.

bahnsen

 

Buy Now? Buy Now!

From Mark Sprague’s Texas Market Update:

I would suggest that with increasing costs of building, labor and development and higher lending rates, why wait?  Every time rates go up 1% you lose 12% buying power. 90% of all builders are experiencing framing and finishing carpentry issues, and 85+% are experiencing plumbing shortages.   Builders are seeing a 20+% annual labor and materials cost increase, which in turn increases values.  The home/apartment you look at today will be gone tomorrow, and more expensive.

one percentOne key point that must be stressed is that interest rates are rising. Everyone agrees that we can expect 3 rate hikes in the next year – not big hikes, but hikes nonetheless. And as Mark noted, “Every time rates go up 1% you lose 12% buying power.”

What does that look like in real life? There are two ways to look at it. First, it means if you wait one year, and the rates have gone up as expected, a property that would cost you $300,000 today will cost you $336,000 next year. Or to look at it another way, your ability to purchase $300,000 today will mean purchasing $264,000 in 12 months.

It is not a gimmick to say, “Buy now!” Waiting in this market will cost you.

Read the rest of Mark’s update here: Texas Market Update

Is the local housing market slowing?

By Mark Sprague, State Director of Information Capital at Independence Title

Is the local housing market slowing?

          Independence Title

Locally, regionally, and nationally, that seems to be a common question / theme. Locally, I can tell you that most of the Texas metros have been on a sustained, positive run, with Austin’s being the longest at over 9 years (6 years being the longest previously).

First, what is happening in the market presently appears to be more of a seasonal slowing, prior to school starting. Second, two months is NOT a trend.

To see if the market is slowing, what are the signs? You need to look for lack of GDP growth, lack of job growth, easy mortgage financing (requiring little to no down and easy qualifying), new and resale inventory increasing, other real estate channels showing signs of overbuilding or slowing of values, etc. There are no indications of any of this happening. Quite the opposite, in fact.

So, why the pessimism? Read Mark’s Complete Monthly Texas Market Update Here.