Austin Market Report - January 2024

[David Ivy]

The January 2024 market report from the Austin Board of REALTORS® shows that the median home price in the City of Austin fell by 2.8% over the past 12 months to $534,500. However, that is around 4.5% up from just last month. The greater metro area fared a bit worse with a 4.4% year-over-year decline to $430,000. Inventory rose very slightly to 3.2 months in January. While still technically in seller’s market territory, inventory is well above extreme lows seen in recent years and has held steady for quite a few months now. New and pending listings were up in the greater metro compared to this time last year. Closed sales were also up about 4.3%.

Overall, the Austin real estate market looks relatively stable with and poised to exhibit its typical seasonal behavior as we head into the traditional spring/summer selling season, where more buyers enter the market and more owners aim to list their properties.

Here are the full stats for Austin and the greater metro:

Sales prices peaked in Austin around May 2022 as sharply increasing mortgage rates cooled buyer demand. Rates peaked above 8% for 30-year fixed in Oct. 2023 before pulling back to around 6.6% just earlier this month. However, rates have ticked back up to around 7% in recent days:

This has kept many would-be sellers “locked” in their current homes and properties with much lower interest rates.

So, despite lower buyer demand in the current interest rate environment, inventory and prices have not changed as substantially as you might expect. Overall economic conditions in the Austin metro (job creation, corporate investment, unemployment, etc.) still look very robust and promising for this decade and beyond. Though plenty of buyers were pushed to the sidelines (voluntarily or involuntarily) by rising mortgage rates, Austin's economic strength still supports a healthy demand for housing.

What if I’m a buyer? In many ways, this is the best market for buyers in Austin in years. There are more listings to choose from now than any other time in nearly a decade. Prices have fallen. Multiple offers are now the exception, not the norm. Buyers have significantly more negotiating power. They can take time with their search and be more selective about a property’s location and condition. So, if interest rates are a buyer’s primary reason for staying on the sideline, I recommend seeking opportunities to negotiate a reduced interest rate from a seller or looking at new construction, where builders are offering rate reductions and other substantial incentives. Buyers should expect more competition in the spring, but conditions overall should remain favorable compared to recent years.

What if I’m a seller? Sellers should know that there is still strong demand for Austin housing and that prices are still considerably higher than just a few years ago. However, it’s important to price for today’s market conditions. Days on market are 80+ days on average, and many listings are reducing prices at least once while on the market. But properties priced appropriately can still go under contract in a matter of days, sometimes with multiple offers. Now is not the time to “test the market” with an ambitious price to “see what happens.” Since there are many more listings competing on the market than in previous years, it’s crucial to prepare a listing to stand out among the rest and work to address buyer objections prior to going on market. If you can wait to list in the spring or early summer, I recommend doing so to enhance your buyer exposure.