Q3 market update here including a condensed video format version! Let’s jump right in!
Q3 ended with a slight dip in intensity compared to Q2 but put up incredibly strong numbers. Prices spiked up 4% in Q3. Inventory averaged across all price bands/areas is at an incredibly low 1.5 months – the LOWEST inventory I’ve seen in 10 years. Year-over-year- the market experienced a 31% spike in sales volume, a corresponding 44% decrease in active listings and prices are up 10%. Further stats and comparisons here.
Tier-1 homes (priced right, no major flaws and wow factor) sold within days with multiple offers and average of 5-7% over list price. In some cases, even higher. Tier-2 properties (mostly a Tier-1 but with one flaw such as needing cosmetic updates) averaged 30-45 days on the market and about 3% negotiability. Tier-3 (major issues or work) sat on the market 90+ days and 5-7% negotiability. These are all better numbers compared to Q2.
Q4 has started less aggressively but not lagging far behind at all compared to Q3. Pendings on Tier 1 homes are happening immediately and we’re seeing at times 10+ offers on those homes. Buyers are having to really stretch to beat out offers – cash, appraisal waivers, massive down payments if financing and so on.
Averaged across all price bands/sectors, market supply is at 2.5 months which is considered a very low inventory/ high appreciating environment. For context, a 6-month supply (enough inventory to meet current rate of demand 6 months out) is an equilibrium market.
- $0-$500k We are at 1 month or less supply. Ridiculous. Up 10% ytd and will likely end 12% higher than 2019 by eoy.
- $500k-$1M We’re at a 3 month supply. Down also from Q3 by 1 months. I’m projecting 7-9% for the year.
- $1m-$2m We’re at a 5 month supply. I’m projecting 6-8%+ appreciation for the year.
- $2m+ – Strongest luxury market I’ve ever seen in Austin with the even higher numbers of folks from coastal markets. 7-9% higher on prices by eoy.
Significant factors in the market (4:45):
The main factors leading to the current market environment:
- Massive Business In-migration – In August and September ALONE 24 new companies moved to Austin bringing 2300+ jobs and that number is only a portion of the actual jobs Amazon, Tesla and BAE will bring in.
- In-migration – Partially with companies flocking to Austin but mostly due to remote working and lifestyle, in-migration numbers up from last year – tracking for 60k+ people moving here this year!
- Unemployment – Bumped down even lower from 6.5% to 5% in Q2. Austin boasts the #2 lowest unemployment rate in the country creating zero falloff in market demand.
- Interest rates – A major factor given rates are at 3% or below. This is pushing new Buyers into the market.
Looking Ahead (7:24):
I see 2020 ending with 7-10% appreciation. Closer in (unless downtown) will see 10%+ and suburbs will end 7-8% up. Construction costs will rise as will building/remodel costs due to supply chain issues on materials worldwide as well as labor shortages. It is possible that we see a slight retraction in Q4/Q1 of 2021 with local businesses and start-ups struggling to hold on through pandemic, but it is unlikely; just something to keep your eye on.
Core sectors up to $5M will be extremely active in central and coveted areas such as Westlake. Within city limits (city limits but not suburbs) it’ll stay robustly active with high demand up to $1.2M. In the suburbs, up to $800k will be very healthy.
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