Tarek Morshed Q2 Market Update 2019

October 11, 2019 – 5 Minute Read

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Hello everybody, Q2 2019 market update here including a condensed video format version!
So far 2019 has continued to perform above expectation.  At the end of 2018, I predicted our next strong market cycle would begin mid to late 2019 with values rising 7-8% or so through 2021.  However, the market performed at that level of appreciation right of the gate in Q1.  The 2nd quarter has seen the same velocity and to date prices have risen 3-4% appreciation for the year. Currently: Averaged across all price bands/sectors, market supply is at 2.84 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 mths out) is an equilibrium market.
  • $0-$500k we are 3 months or less, severely undersupplied and likely will see 7-10% appreciation
  • $500k-$1M we’re at about 4-5 months supply. Up a few months from Q1.  I’m projecting 6-8% appreciation for the year
  • $1m-$2m we’re at 9 months supply, also up a few months from Q1.  I’m projecting 5-6% appreciation for the year
  • $2m+ has remained undersupplied (as long as it’s highly relevant to today’s cleaner lines and transitional aesthetics), otherwise it’s sitting.  I’m projecting 6-7% appreciation here
Significant factors in the the market:
  • #1 in in the U.S. for job growth per WSJ article recently.  Big players (Google, Oracle, Indeed, Army Incubator etc) are filling jobs this year in office space truly ready to be occupied.  We’re on pace to do 40k jobs this year, a very strong 3.5%+ job growth rate.
    • Strong movement from lifestyle buyers including international buyers.  International migration up 16% compared to last year, the highest increase year over year.  While early, I firmly believe this an unrecognized part of Austin’s general growth (including in real estate) looking 10 years out.
    • Interest rates are down when they were expected to creep up creating additional demand locally.
  • Average household income has finally seen positive gains relative to price appreciation in housing…the delta is about 25% vs 35% as it was in 2017 and 2018
Looking Ahead: I see 2019 ending with 7-8% appreciation in values and being the pivot year for appreciation over the next few years compared to 2017 and 2018. Tier 1 properties (wow factor, no major concerns or resale issues, priced correctly) will continue to see very few days on market, multiple offers and selling 3-7% over list price on average. Austin will outperform most real estate markets in the country this year Core sectors/neighborhoods will experience longer days on market compared to suburbs and the in “in-between” sectors such as Domain area due to affordability. I hope this provided valuable insight as our goal is to provide irreplaceable value, always! For more regular updates between each quarter sign up on our email list via our website and follow us via our social media handles found below.  And as always, we’re happy to discuss what’s happening in your particular sector of town so don’t hesitate to reach out. Facebook, LinkedIn, Instagram, Twitter