March 2018 Market Report
The March 2018 Central Texas Housing Market Report is out from the Austin Board of REALTORS®. All signs point to an incredibly strong summer season for Austin area real estate. Last month, 2,714 single-family homes sold in the five Central Texas counties comprising the Austin-Round Rock MSA. That is more than any previous March on record. However, inventory remains in incredibly tight, with only 1.5 months of inventory in Austin and 2.2 months in the greater Austin area (a balanced market is 6.5 months).
Steve Crorey, 2018 president of the Austin Board of REALTORS®, said, "Historically, it’s common for some homes to be on the market for 50 days or more, even in markets with strong housing demand. Within the city of Austin and other local markets with limited inventory, homes are spending a fraction of time on the market—as little as two weeks in some areas. This is an indicator of just how competitive it’s become to purchase a home in and around Austin."
Here are basic stats on single-family home sales for March 2018 for the City of Austin and the greater Austin area:
In addition to Austin's housing supply and affordability issues, we can now include increasing mortgage interest rates to the significant forces applying downward pressure:
The Fed is anticipating three to four rate hikes in 2018. With every tick upward in interest rates, the buyer pool for real estate shrinks and buying power of those still in the market is eroded. This will eventually have some cooling effect on the housing market. However, in the immediate term, it actually spurs activity by getting people off the fence and accelerating their real estate plans before rates go higher. The Austin housing market is so strong, though, that I expect it to barrel through mostly unfazed in the more "affordable" price bands. There's still a long way to go for Austin to be anywhere near a balanced market. Some mortgage lenders are also beginning to relax lending standards.
Home builders are trying to meet the extreme demand for an "affordable" product in the Austin area. “Demand for homes priced below $250,000 is driving the emergence of new submarkets like Manor and Del Valle, where builders can construct homes at a lower cost,” Vaike O’Grady, Austin regional director for Metrostudy, said. “We’re also seeing creative land plans that provide common area open space to offset smaller lot and home sizes. Attached single-family homes are also coming to the market to meet buyer demand for more affordable housing.”
