Austin Real Estate Market 2020 – Home Buying and the CoronaVirus
May 20, 2020 | Front Porch Realty
Austin-area home sales declined in April as the impacts of the COVID-19 virus unfold across the city of Austin and the broader Travis County. The pandemic and the local shelter-in place orders have left their mark on the Austin real estate market, shows new reports from the Austin Board of Realtors.
Home sale price in Austin has actually increased 3.2% to $325,000 and homes have spent an average of only 43 days on the market
Yet even as sales sharply decline the median home sale price in Austin has actually increased 3.2% to $325,000 and homes have spent an average of only 43 days on the market. With nearly a 20% decrease from last years housing market average of 52 days. Showing a continuing demand for homes in the Austin area even as a global pandemic has slowed real estate purchases to a near halt in similar markets across the country.
Excluding townhomes and condos, sales of single family homes in Central Texas were down 19% last month compared to April 2019, and pending Austin area home sales dropped 21%. The median single family home price was up 3% to $328,000
Within Austin city limits, sales of single family homes fell over 30% and the median home sale price rose 10% climbing to $431,223.
The April Sales figures are the steepest decline by percentage based on the housing market data available dating back 2011.
No one is denying that the spread of coronavirus has had a profound impact on buyer confidence in the real estate industry. However, a new study by OJO Labs shows just how widespread that impact has been. Read on below to gain insight on how buyer’s are coping in this new climate.
The study found that 80% of would-be-buyers have either delayed their housing search or stopped it altogether
In all, the reasoning behind these delays is pretty unsurprising. 60% of those surveyed cited concerns over their future employment prospects and 54% talked about the inability to see homes in person as a main driver for their hesitance to buy in this market.
When asked what may need to happen in order for buyers to regain confidence in their ability to purchase a home, Chris Heller, Chief Real Estate Officer at OJO Labs had this to say:
“Those who did pause typically did either because they had an unforeseen circumstance, like job loss or furlough, or are halting their search due to a general fear of the unknown. Once consumers’ situations change, and we return to a semblance of normal, they’ll be ready to move forward again.”
On the other hand, 20% of buyers reported actually expediting their home-buying timeline in light of the virus, citing low interest rates and the potential to get a good deal on a home as their main motivation. Though, notably, a vast majority (74%) of those speeding up the process are repeat buyers.
To those buyers, Heller advises finding an experienced real estate agent, who can help guide them through this unprecedented climate.
As for how coronavirus has changed buyer expectations, the study finds that buyers are putting new emphasis on searching for better common spaces
Buyers reported that the following aspects held more important to them in light of the virus:
- Extra bedrooms (43.5%)
- Open floor plan (45.7%)
- Good lighting (45.7%)
- Kitchen style (50%)
On these changes, Heller says:
“Criteria that they once considered “wants” –– like a home office –– may turn into “needs” as a result of COVID-19. As the remote work trend continues beyond COVID-19, home location, and commute times, which are a driving force for buyers, will play a less important role in the home search for some buyers. Instead, they’ll prioritize different preferences like neighborhoods, communities, and lifestyle.”
Overall, there’s no denying that it will take some time to see just how severely this virus will impact buyers. However, this study seems to make one thing clear. Though, buyers are being cautious, the drive to own a home is still alive and well.
Even with the impact on home sales, homes still spent less time on the market and sold at higher prices than last April
“We anticipated a sharp decline in April home sales activity, as it directly correlates with the decline in listings activity recorded in March due to government stay-at-home orders,” Romeo Manzanilla, president of the Austin Board of Realtors, said in a statement. “Even with the impact on home sales, homes still spent less time on the market and sold at higher prices than last April. Austin’s housing demand is undeterred, and possibly strengthened by declining inventory.”
A 7.3% decline in active listings ( 6,349 listings) drove already low housing inventory down further, to a supply of 2.1 months, 0.2 months lower than this time last year. New listings — a leading indicator of sales volume –declined 21.1% to 3,516 listings.
Continued declines in listing activity could mean a second consecutive month of declining home sales, the board said.
The lack of inventory, however, ” is still driving the prices up, now more than ever, because people are in a holding pattern and waiting to see what will happen next,” said Ilona Toole, an agent with RE/MAX Posh Properties who mostly focuses on luxury real estate. “I’ve had several closings during the pandemic, and some of my clients have even experienced bidding wars and sold for over asking price.”
Homes in certain areas and price ranges are still selling well, agents say
Despite the double-digit drop in home sales, local real estate agents say there are reasons for optimism. While there are people who are waiting on the sidelines to buy or sell, others are taking advantage of low mortgage interest rates to buy a home. And homes in certain areas and price ranges are still selling well, agents say, and sometimes with multiple offers.
Lawrence Yun, chief economist and senior vice president of research at the National Association of Realtors, said that while Central Texas has not been more negatively impacted than the U.S. housing market at large, he anticipates improvement in the local market.
“As the economy steadily reopens, expect more listings to pop up, which will help ease the housing shortage,” Yun said in a statement with the board’s release. “By the end of this year, home sales could be at levels comparable to 2019. The local economy will also get an additional boost from more home construction that is needed for improving the market going into the next year.”
Manzanilla said that efforts to recognize real estate as an essential business helped lessen the negative impact of the pandemic during April, noting that listing and showing activity are already on the rise again.
“We’re hopeful this growth will continue in the coming weeks and months,” Manzanilla said.
Eldon Rude, a local housing expert, said that although the April sales show the beginning of the statistical evidence of the slowdown in the market from the coronavirus outbreak, he expects the May numbers also will be down sharply from a year ago. He said the May figures will reflect contracts signed mostly in April, when the shutdown was in full force.
“Considering the events of the last few months related to the pandemic, the fact we still had over 2,400 closings in April speaks to how much pent-up demand for housing remains in the region after so many years of robust job and population growth,” said Rude, principal of 360° Real Estate Analytics, an Austin-based consulting firm.
However, Rude said that “with job losses in the region sure to spread from service industries to higher wage professional categories in the coming months, I do think we have a ways to go before we see the full impacts of the outbreak on our economy and the housing market.”
Grant Gold, a real estate broker and co-owner of All Streets Realty, said that while the higher end of the market has slowed, the entry-level to move-up market is “a completely different story.”
Gold said one of his listings in Circle C in Southwest Austin that hit the market in April, before Easter, had just one showing in three weeks. However, since May, the house has had four showings a week, and is now under contract. The four-bedroom, 2,700-square-foot home is priced in the mid-$500,000 range.
Homes priced below $400,000 inside Austin’s city limits, is a “very active”
“Since the end of April to now, the market has awakened,” Gold said, noting that the pickup in activity has coincided with the state’s reopening efforts. Gold said Circle C is one of the hot areas of the market now. In addition, homes priced below $400,000 inside Austin’s city limits, is a “very active” segment of the market, he said.
Brad Pauly with Pauly Presley Realty said there are fewer transactions because there are fewer buyers in the market, and most sellers aren’t selling unless they need to sell.
“There are less buyers overall, but our market was so hot going into the pandemic that many buyers continued to buy,” Pauly said. “Before the pandemic there were 10 offers when a property hit the market; now there are only three offers.”
Still, Pauly said, the market overall remains strong.
“Austin, Texas was and is the hottest real estate market in the country,” Pauly said. “I predict that not only will prices hold value during this stressful time, but some areas will continue to appreciate.”
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