Tarek Morshed Q4 Market Update 2019
February 26, 2020 – 5 Minute Read
Hello everybody, Q4 2019 market update here including a condensed video format version! Q4 2019 ended even stronger than expected. Normally Q4 is a slower part of the year and it certainly was not the case this year. Prices moved up a strong 7%+ cumulatively for the year (I had predicted 5-7%) and inventory ended at a scant 2 months. Tier-1 homes (priced right, no major flaws and wow factor) sold within days with multiple offers and average of 3-5% over list price. In some cases higher. Tier-2 properties (mostly a Tier-1 but with one flaw such as needing cosmetic updates) averaged 40-60 days on the market and about 3-5 % negotiability. Tier-3 (major issues or work) sat on the market 90+ days and 10% negotiability. Currently (0:20): Q1 has gotten off to a blazing start. Similar to Q4, normally Q1 is a slower time of year. The velocity of pendings in Q1 has been incredibly strong; don’t be surprised if this ends up being a record January and February. Averaged across all price bands/sectors, market supply is at 1.8 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. At 1.8 months, it’s the lowest it has been in 3 years. $0-$500k We are at 2 months or less, severely undersupplied and I think we will see 8%+ appreciation this year. $500k-$1M We’re at about a 3-month supply (vs 5 mths in Q4). I’m projecting 7%+ for the year. $1m-$2m We’re at a 7-month supply (vs 9 mths in Q4). I’m projecting 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% appreciation here and current supply is at 5 mths. Significant factors in the market (3:12): The main factors leading to the current market environment: Job growth – Austin’s economy added 30k-35K net jobs last year and only a 2.5% unemployment rate along with strong lifestyle relocation figures. The combination created strong demand for housing and Austin landed #2 on the Fastest Growing Top 50 Metros. Cost of Construction and Labor Shortages – These costs went up at least 10% last year and labor alone expected to move up 2-3% a MONTH this year. This puts pressure on inventory and rising prices. Interest rates remained low and expected to remain low through 2020. Looking Ahead (4:12): I see 2020 ending with 7-10% appreciation, possibly higher. We are definitely in a momentum year in terms of appreciation and demand this year. All price bands will perform very strongly, including above $2m+. Core sectors up to $3M will be very busy in central. Within city limits (but not central or suburbs); it’ll stay robustly active with high demand up to $1M and for the first time prices reaching beyond $1M. 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 via our social media handles found below. And as always, we’re happy to discuss what’s happening in your sector of town so don’t hesitate to reach out.