Austin prices softening?

[Andrew Allen]

I have noticed a lot of price drops lately around Austin on the MLS. My realtor said there has been a spike in price drops this past month. Has anyone else noticed anything similar? Does anyone have any data around this? Thoughts?

[David Ivy]

@Andrew Allen @Stephen Stokes @Anderson Horn

You're most definitely noticing something, Andrew. I've been watching the same thing with great interest. Here's a chart of the average days on market for SFR in Austin broken down by year over the past 10 years:

Days on market bottomed out in 2014. However, the Austin real estate market continued to set new records each year for the years to come. Part of the reason days on the market increased each year since 2014 is that more homeowners have decided to sell each year. Here's a chart of the total number of active SFR listing in Austin over the past 10 years:

And the price-point of the median SFR in Austin has gone up, pricing out more and more buyers each year and sending many current homeowners (especially on the East Side) running to the suburbs (actually probably farther out) or into rentals to escape property taxes and/or cash out on the tremendous appreciation:

Now, look what's happened to the number of active SFR listings in Austin in the first half of 2017, especially compared to the first halves of the last couple years:

Moreover, check out this chart plotting the list-to-sold-price ratio for SFR in Austin over the past 10 years:

This last chart speaks most directly to your question about "softening" and price drops on the MLS. I could explain a lot more, but I think these charts do most of the explaining. However, I will say that it's normal to see a spate of price drops this time of year as the school year begins to loom on the horizon for many SFR buyers and sellers. Those with homes on the market start to feel pressure to get it done before their kids go back to school and/or a large chunk of the family-with-school-age-kids buyer pool stops their home search until next summer or at least puts it on pause until the school year hits its stride. Buyers and sellers know that the typical transaction takes 30-45 days from contract to close in Austin. So, even here in July, buyers and sellers are thinking about the middle-end of August.