Homebuyers continue to gain negotiating power in the Austin area, a welcome change of pace in a market that has been defined for much of the past two years by blistering conditions.
The latest numbers from the Austin Board of Realtors convey good — or at least better — news for this home-starved market and people struggling to find a home. They also signal a comforting trend that would help Austin avoid a housing crash after years of phenomenal appreciation.
Housing inventory increased in July for the second straight month, to 2.7 months for the region and 2.4 months for Austin city limits, according to ABOR. Instead of a summer outlier, this now seems to point to a trend of decreasing demand, especially in light of rising mortgage rates, combined with homebuilders rallying to bring new homes to the landscape.
It's important to note those inventory levels are still far below what's considered a balanced market. Many experts consider six months of inventory necessary to showcase an equilibrium between supply and demand.
But rising inventory and slowing appreciation show the market is normalizing, said Cord Shiflet, 2022 ABOR president and a top-selling agent with Moreland Properties.
"On top of rising housing inventory, home price growth is much closer to the 4-5% annual growth that is typical for a healthy market," Shiflet stated. "In addition, homes sold slightly below list price for the first time since December 2020, proving that buyers are gaining negotiating power in the market."
Sellers need to reset expectations as this is not the same frenzied market of a few months ago, said Ryan Leahy, regional president for mortgage company HomeTown Texas, formerly known as Leahy Lending.
"The Austin real estate market's inventory and mortgage interest rates have returned to pre-pandemic levels in recent months," Leahy said. "For the first time in a long time, buyers have more flexibility and leverage in the transaction."
Lindsay Neuren, a Realtor at the Speed Neuren Group at Compass Realty, said that while we’re still not in a buyers market, the simple fact that there’s more time to buy a home is beneficial for shoppers.
“We’re definitely not in a buyer’s market,” she said. “However, buyers have a lot more choices. They can take their time. They don’t have to go bid against 20 other people.”
There are still bidding wars taking place for homes, but buyers have been able to translate homes staying on the market longer into an ability to negotiate offers down and avoid “crazy terms” that became more common during the Covid-19 pandemic.
Buyers aren't negotiating $100,000 off a home's price, she said, it’s becoming more common to negotiate $20,000-$30,000 off.
While buyers may have regained some leverage, one recent study found that Austin remains one of the friendliest places in the country for sellers.
The study, conducted by California-based luxury home brokerage RubyHome, ranked the Austin-Round Rock metro the No. 8 easiest place to sell a home out of 93 metros. That was the highest ranking in Texas, with Dallas-Fort Worth not far behind at No. 11.
That study looked at the difference between sale and listing prices, average number of days to close, average number of new monthly listings per 100,000 residents and average percentage of homes with a price cut each month.
Austin ranked No. 33 in the first category, with homes selling for $56,990 less than the listed price on average; No. 4 in average number of days to close at 24; No. 67 in average number of new monthly listings per 100,000 residents; and No. 8 in average percentage of homes with a price cut each month at 5.5%.
July's 2.7 months of inventory was the highest level in the Austin area since November 2018. In June, inventory hit 2.1 months.
At the start of the year, inventory for the metro was just 0.4 months, and even less in some highly desirable locations.
Even with the slower price growth and rising inventory levels, Shiflet warned policymakers to not back away from prioritizing housing efforts.
"Our position at the Austin Board of Realtors hasn't changed: there is a lot of work to be done to address both the present and future of housing in our region," he stated. "We need elected officials who will prioritize housing, and our community needs to work together to find solutions so that anyone that wants to buy a home in Austin can do so within their budget."
In addition to the rising inventory, the 2,849 home sales in July represented a 28% drop from the same month in 2021 and a 20% fall from June 2022.
The median sales price also continued to fall from the the record $550,000 it hit in April and May, hitting $515,000 in July. That was still an 8% increase from $480,000 in July 2021.
As both sales closed and median sales prices decreased, so too did the total sales dollar volume. In June, $2.3 billion worth of homes were sold, while just $1.8 billion worth of homes were sold in July, and that’s down 21% from $2.4 billion in July 2021.
Source: Austin Business Journal
Leave A Comment