The increasingly expensive Central Texas real estate market continues to explode

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Homes are under construction at the Cross Creek development at 183A Toll in Cedar Park. (Taylor Girtman / Impact on the Community Newspaper)

Eric Bramlett has been a real estate agent in Central Texas for 18 years and said that since the end of the 2008 economic downturn, the local housing market has been robust, following consistent seasonal patterns, and has remained relatively stable in overall sales and prices.

But something happened around the middle of 2020 that realtors and economists believe led the market to take off.

Due to the increase in telecommuting caused by the COVID-19 pandemic, many recently retired employees have moved from other, more expensive cities, no longer tied to work, they said. At the local level, employees using their homes as office space thought differently about their needs. While the unemployment rate reached double digits across the country, those who kept their jobs increased their disposable income.

“We were the hottest market and we actually dumped gasoline on it,” Bramlett said.

Until July 2020, the average monthly home sales price in the Austin Round Rock metropolitan area had never reached $ 350,000. It topped $ 400,000 in March 2021, then peaked at $ 465,000 in May, data for the last month available from the Austin Board of Realtors. This is 27.4% more than in January.

According to James Gaines, research economist at the Texas Real Estate Center at Texas A&M University, such incredibly rapid price increases pose an affordability problem.

“You don’t have to have a PhD in economics to understand that if prices rise faster than income, and housing affordability depends on the relationship between income and price, then [homeownership is] is becoming less affordable, ”Gaines said.

According to ABoR President Susan Horton, the breakneck pace of price increases cannot last forever. In the end, she says, she expects the price to return to a certain level of normal, although this may take years as supply catches up with demand.

“Builders cannot build [homes] fast enough to get us where we need to be to adapt to growth in the metropolis, ”Horton said.

Seller market

As home prices rise in Travis County, buyers are turning to homes outside of Austin, pushing prices up in Williamson County.

According to an ABoR’S report, in January 2020, the median selling price in Williamson County was just under $ 280,000. As of May 2021, the average selling price reached $ 435,000.

The report also shows that homes spend less time on the market, from an average of 63 days sold in January 2020 to 10 days from May 2021.

Renee Fox, a broker and owner of Fox Realty, said that in her nine years in Central Texas, residential real estate has been a market in which sellers win over buyers.

However, she said she did not see the seller’s market come close to the current trend.

At the start of the COVID-19 pandemic, typical real estate trends, including relocation and downsizing, were put on hold, Fox said.

Usually new homes are a popular option among homebuyers who are trying to avoid competition. There are now waiting lists for new builds, as well as supply shortages, leading to longer construction times.

Fox said she and her team are looking for homes an hour and a half away from downtown Austin. Whereas previously home buyers with a budget of about $ 250,000 could afford to live in their ideal home in Williamson County, Fox now said that she had to show the same home buyers outside the area, including Burnet County, or even much further south, near San Antonio. …

Single family alternatives

Adrianne Kraft, a real estate broker licensed by Keller Williams Realty, agrees that it is really difficult for buyers to find homes.

“A year ago, I would have said that buyers could have been a little more picky about the condition of the home,” Kraft said. “A buyer may choose a home over another because there is no carpet or white cabinets. … And now customers simply have to give in in everything. “

Kraft added that every deal it has done this year has been accompanied by a plethora of bids, with homes typically selling 10-20% above the asking price. This is a situation that is often unfavorable for novice buyers, especially those looking for single-family homes, which make up the vast majority of homes on the market at any given time, she said.

One solution that officials in Austin’s major cities have been considering over the past few years includes diversifying home types.

Dan Parolek, CEO of Opticos Design, a California-based firm that helps collaborate on housing and community issues, has given numerous presentations to city officials throughout Central Texas, from New Braunfels to Austin.

Parolek’s presentations focus on a concept called absent intermediate housing. This includes homes such as duplexes and townhouses to buildings with eight apartments. They are usually within walking distance, meaning they are located close to business centers or urban centers with popular amenities.

These options, Parolek said, are more affordable for people, including first-time property buyers who cannot make cash offers to become homeowners.

“Increasing costs have greatly impacted every market, regardless of city size,” Parolek said. “It is becoming more and more difficult for entry-level households to buy houses.”

While Parolek agrees that single-family homes are the most common option for home buyers, he said his research showed they were not necessarily the most popular option. He added that by 2040, 60% of all US housing will be without mid-range housing to keep up with demand.

“I think the demand for detached single-family homes will continue. [homes]“But I think there is more and more demand that is not being met for these missing types of medium-sized housing,” he said. “I’m not saying there is no demand for single-family products, but historically that is all we provide and the industry has had a hard time adjusting and switching quickly enough to meet demand.”

Small towns have seen a lot of growth

When Robin Sheppard sold her 35-year Austin home in December, she didn’t expect to be looking for a home more than six months later.

Tax hikes, heavy traffic, and rapid growth in Austin played a key role in Sheppard’s decision to leave the capital and move to San Marcos. She says she will still be close enough to visit friends, but in a less crowded city.

“I lived in Houston for many years and left to move to Austin because Austin was much smaller and felt great,” Sheppard said. “This is not the Austin I came to.”

Within two and a half days of listing her home, Sheppard received seven offers and accepted an offer of $ 50,000 in excess of the requested amount, including unforeseen circumstances allowing her to live in her home without rent for thirty days after closing.

“I just thought, ‘Wow, this is great, now I can go and buy myself a house, and I have some extra leftover on the road,’ … but it wasn’t like that,” Sheppard said.

By June, Sheppard had placed bids for more than six properties that met her requirements for an additional living space that she plans to rent out at a low cost to an elderly friend. Despite offering $ 42,000 in excess of asking for one property, she was interrupted every time.

Many who plan to move further from the city center to one of the smaller towns along the I-35 corridor expect to find greater affordability at a lower cost than larger urban areas, said Patricia Fernandez, president of the board of directors of the Four Rivers Association in 2021. year. Realtors who cover the suburban corridor between San Antonio and Austin.

“You can choose any city in this corridor, and it’s the same story,” she said. “This whole middle market [is] only now I’m being thrown off the playing field. ” •• She added that buyers who qualify at some point for a $ 350,000 home, for example, may be forced to apply for homes listed in the $ 200,000 range, expecting to pay significantly more.

It’s the same with buyers trying to find a home north of Austin.

Imelda Rodriguez, a first-time homebuyer, said she first looked for a place to live in Williamson County before settling in a home in Burnet County.

She said the houses would cost between $ 300,000 and $ 400,000, and with her $ 260,000 budget, she knew she couldn’t afford the place she was looking for. Even finding a home in Burnet County was difficult, she said, as the property was selling well above the asking price.

Location aside, Rodriguez said she had to compromise on commuting: living in Burnet County, she would be 30 minutes from work and her family. However, she said that distance is better than waiting a year, saving money and hoping the market will change.

For first-time homebuyers last year, Fox said the normal budget in Williamson County was between $ 250,000 and $ 300,000. Now, according to her, the same houses are being sold for 375-400 thousand dollars.

Comparing this to the California housing market, Fox said she predicted that real estate in Central Texas would eventually level out, but added that it was doubtful that prices would decline.

“I expect it to be this way until the end of the year, and I think it will depend on whether builders can reopen plots and start selling homes on a regular basis, instead of having huge waiting lists,” she said. “Once they can sell a lot of homes, they will have more inventory.”

Megan Cardona contributed to this story.

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