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!
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 the 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.
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 on our Facebook, LinkedIn, and Instagram pages. As always, we’re happy to discuss what’s happening in your sector of town so don’t hesitate to reach out.
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