If you are looking to buy or sell a home in Austin, it helps to know how the local market works. The good news is Austin has an underlying story of increasing home values, even in today’s world of market fluctuations due to the pandemic. Rather than being negatively impacted by COVID-19, Austin’s overall trends are holding true and are even being taken to the extreme. Thankfully both buyers and sellers stand to benefit.
Let’s take a look at the Austin housing market for 2021.
An Extension of Recent Trends
Year over year, home supply in Austin is lower than demand, resulting in consistent increases in value. According to the Zillow Home Value Index over the past five years, the average Austin home value increased 38%.
Life in 2020 and 2021 brought unexpected changes thanks to COVID-19. Questions about the economy in 2020 led to people pulling out of the market due to unsure returns. But other than a brief dip in the market at the outset, purchasing quickly rebounded. The American Board of Realtors reported a record number of Austin homes sold in 2020 of 40,165.
As 2020 ended and 2021 began, demand has since grown further. With many new tech jobs moving into Austin last year and big announcements by tech giants at the tail end of last year, the trend in high demand for Austin property will only continue. Homes are selling as much as $70,000 above the asking price and selling 25 days faster. Much of the reason comes from the area’s growth.
A Look at Tech Growth
Austin is poised to become the tech hub of the US. Over the years, companies like Amazon, Apple, and Tesla have built offshoots here, and high tech currently makes up 31% of the Austin metro area’s total business.
There are many reasons for the growth. The biggest is the tax benefits. With no income tax and less regulation than in California, companies stand to make serious profits here, and as more tech companies move to Austin, more will likely follow.
All of Texas offers the same tax benefits, but Austin is becoming the new Silicon Valley thanks to the city itself. The city has been ranked the top city in the US to live in for three years running because of its culture, welcoming atmosphere, outdoor-friendly lifestyle, reputation as a music destination, quality schools, and overall quality of life.
Tech has already been big here, but now it is reaching a whole new level. Tesla has announced they are building a new GigaFactory that could employ 5,000 employees, and Oracle has moved their headquarters here, which could bring another 10,000 jobs.
Growth Outside of Tech
Austin steadily grows each year, partly based on job availability and the city’s other lifestyle benefits. And as more tech jobs flow in, the jobs aren’t limited to tech. More jobs mean more business opportunities across the board for people servicing the population.
Low Interest Rates
Another large factor in the demand is low interest rates. As the economy slumped during 2020, interest rates came down, bringing more buyers to the market. Today you can find rates at around 3.19% for 30-year mortgages or 2.50% for 15-year mortgages.
Growth in Demand for Residential Living
Another important factor here is the method of growth. Austin has restricted development along the riverfront and Texas hill country. This increases the value of Austin homes already zoned and pushing new growth closer to the highway.
Neighborhood.com has provided a list of the top ten Austin neighborhoods with the highest real estate appreciation rates since 2000:
- East Cesar Chavez Street / 1st Street East
- East 12th Street / Chicon Street
- Nile Street / North Pleasant Valley Road
- Govalle Avenue / Webberville Road
- East Martin Luther King Junior Boulevard / Poquito Street
- Huston-Tillotson U / East 11th Street
- Ed Bluestein Boulevard / Bolm Road
- South Pleasant Valley Road / South Lakeshore Boulevard
- East Riverside Drive / Montopolis Drive
One of the benefits of COVID-19 is that businesses are quickly adapting to remote working, and its success has led to less demand for in-person workforces. Companies are offering “remote first” or offer “partial” or “optional” remote options, opening doors to how and where employees work. With just a strong internet line, employees can stay organized and attend video meetings with optional in-person meetings to get everything done.
These benefits have led to more interest in larger homes to accommodate for home offices and less need for close proximity to the city center. In short, home prices should continue to increase in every area of Austin.
The latest results in areas in and around Austin from the Austin Board of Realtors are from January 2021, and the year-over-year numbers are impressive.
City of Austin
January residential sales jumped up 23.8% – a record for January. Sales dollar volumes jumped up 58% for a median home price increase of 19.7% to $455,000 – again another record. And, in typical Austin form, listings decreased during this time by about 7%.
Residential sales increased nearly the same amount (23.5%.) Sales dollar volume was up by 60%, and new listings declined by 12.7%. The median home price rose 22.2% to $427.750.
Residential sales here increased 11.2%. Sales dollar volume went up 28.7%, and the median home price increased by 16.4% to $322,750. New listings were down by 14.9%.
January residential sales increased 50%, and sales dollar volume was up 78.2%. The median price for homes went up 18.1% to $301,250. New listings were down 4%.
Homes sales rose 66.7%, and dollar volume rose by 81%. The median price for homes increased by 10% to $265,000, and new listings rose by 29%.
Home sales increased 45%, and sales volume increased 45.7%. The median home price went up 10.6% to $257,450. New listings fell 29.7%.
Benefits for Buyers and Sellers
For Home Sellers
This is a fantastic time to sell, and our experienced local realtors make the process easy for you. With most homes for sale collecting buyers as soon as they hit the market, our Austin real estate agents ensure your home is properly positioned. There are still fewer homes on the market than average, and demand is through the roof. And with more buyers in the market thanks to low interest rates, you can have multiple bids and experience a lightning-fast turnaround in the market.
For Home Buyers
In Austin, buyers are facing some stiff competition. It’s good to be prepared. Enlisting the help of an experienced local realtor who knows the area, local home values, and contract arrangements goes a long way to get the best deal, and Smart Austin Realty offers these services here in Austin. For added help, we have articles designed to prepare you for today’s market. (1) (2).
With today’s low interest rates and the area’s long-term business growth, you stand to benefit financially from ownership. And life may only get busier in the Austin market, so now may be a good time to land Austin property. We will help you do it right.
Benefits of Leasing and Renting
A benefit worth keeping in your back pocket is Austin is a good place to lease or rent your property. The area has an ever-increasing student population and is a nationally-recognized music destination. These traits mean owners can benefit financially from tenants. Austin is also landlord-friendly. The city doesn’t limit deposit requirements or lock you into specific timeframes before increasing rent. You can also implement early eviction if necessary (three days), and Austin doesn’t have rules in place supporting tenants who decide to withhold rent for essential services.
As an owner, you can benefit from short or long-term rentals of the property to offset the high property tax and aid in paying off your home. We often help owners lease their properties and can even advertise your listings for you.
Is All This Growth Just a Big Bubble?
The high jump in home prices may feel a bit like the bubble that popped in 2007, but thankfully they aren’t related. The trends before and during COVID are showing that growth is steady here and is coming from strong value indicators: low inventory, ongoing population growth, and booming tech.
We’re Here to Help
When it’s time to buy or sell a home here in Austin, Smart Austin Realty makes the process easy. Our experienced realtors can guide you through the local market. We maintain current listings to help with your Austin home search. And if you are new to the Austin area, our helpful local guides and articles help make the transition easy. Contact us to find out how we can help you in your next home phase.