Despite pandemic, Austin-area home sales, prices keep soaring

Central Texas’ housing market keeps defying the coronavirus pandemic, posting another strong showing in October as homes sold faster and at higher price points than ever before, the Austin Board of Realtors said Thursday.

Last month’s performance was marked by soaring sales and the highest median home-sales prices on record — both for the region as a whole and inside Austin’s city limits, the board said.

After a third consecutive month of double-digit home sales growth, median prices also hit all-time highs, the board said. For the past decade or so, strong housing demand, coupled with a low supply, has led to rapidly escalating home prices across the five-county Austin-Round Rock region.

In October, sales in the Austin metro area skyrocketed 29.4%, with 3,780 sales recorded of single-family houses, townhomes and condominiums, the board said.

Half of those homes sold for more than $365,000 and half sold for less. That median price was the highest on record, the board said, and a 13.2% increase from the previous October.

Within Austin's city limits, sales jumped 22.7% and the median sales price of $441,250 also was an all-time high, the board said. Austin’s median home-sales price was up 13.1% from October 2019.

In the five-county region from Georgetown to San Marcos, pending sales spiked 28.8%, a sign November could be another strong month for sales. Homes spent an average of 35 days on market, 19 fewer days than in October 2019.

As a challenging year defined by the global COVID-19 pandemic winds to a close, “the continued stability and strength of our market will be crucial heading into 2021,” Romeo Manzanilla, president of the Austin Board of Realtors, said in a written statement.

Taxes, home prices rising

Manzanilla said homeowners should be prepared for their property taxes to continue to increase, regardless of tax rates. That’s due to the recent passage of two transportation-related bond propositions in Austin, combined with rising home values, increasing housing demand and a limited housing supply, he said.

Laura Huffman, president and CEO of the Greater Austin Chamber of Commerce, said the outlook for the local economy and job market is positive overall.

“Our region has a lower year-over-year job loss than any other major metro, and, despite the pandemic, a record number of businesses have chosen to relocate to or expand in the region this year,” Huffman said. “We expect this growth — attributed to Texas’ business-friendly environment paired with Austin’s deep talent pool — will continue through 2021.”

However, she said concerns remain about housing affordability — an issue Manzanilla said has only worsened during the pandemic.

“The region needs to address housing affordability to help people from being priced out of the market, even as salary and job growth continues,” Huffman said.

In a recent report, Kirk Silas, a market research analyst with Austin-based Aquila Commercial, said rising home prices could be a concern for Austin’s talent pool.

“However, because many employees are relocating from far more expensive cities like Seattle and San Francisco, home prices in Austin are still vastly more affordable than what these employees are used to,” Silas said.

Citing Zillow, Silas said a typical home in Seattle today is priced at $773,508 and in San Francisco, $1.4 million. Homes in Houston are currently valued at $196,902, and Dallas at $238,156.

“While Austin may have one of the more expensive housing markets in Texas, it is still a very affordable option for employees wanting to relocate,” Silas wrote.

Silas said increased demand for housing is being driven in part by Tesla employees relocating here as the California-based electrical vehicle maker builds a $1.1 billion facility in southeastern Travis County.

“Tesla executives had already started searching for homes only weeks after Tesla announced it would be building a factory in Austin, and with an estimated 5,000 new jobs being created it’s likely that many of those employees will be participating in Austin’s residential market soon,” Silas wrote. “With numbers like these, it’s clear to see that the Austin area’s residential market has actually heated up as a result of COVID-19, at least compared to 2019.”

While the increased activity is good from a housing market perspective, from a potential employee’s perspective it might be concerning, Silas said.

“Employees currently residing in Austin aren’t significantly impacted by the lack of inventory, but employees considering moving to the area might have difficulty finding housing in the location or price range they require. If the available inventory continues to decrease, employees could start looking elsewhere and taking their potential employers with them,” he said.

'Golden moment for sellers’

Some Austin-area real estate agents said they are busier than ever.

Debbie Marett, a real estate agent with Coldwell Banker Realty, said this past summer “has probably been my most busiest summer in my career.”

"It is a golden moment for sellers,“ Marett said. "Many industries have been struggling because of the economic shutdown caused by the COVID-19 virus. Real estate is not one of them.”

Marett said not enough housing supply coupled with low mortgage interest rates have made the market even more competitive.

“Not to mention that after spending so much time at home, buyers are anxious and ready to move to the home that fits their new lifestyles,” Marett said. “Working more at home, home schooling, they can now afford to live further out since they may not be commuting to their jobs as much, etc.”

Central Texas’ allure

For Brittain Sobey, returning to Austin after a few years in Michigan “feels like a dream.”

She moved back here in September with her husband, David Sobey, their two daughters, Sabina, 5, and Juniper, who will turn 2 in February, two rescue dogs, Jake and Bella, after the of their house in Livonia, which is between Detroit and Ann Arbor.

“I keep pinching myself,” said Sobey, who said she didn’t want to live through a winter with COVID-19 in Michigan, where the couple has family.

She and her husband found a home here relatively quickly, a two-story in the Wells Branch area, south of Round Rock, in the $350,000 price range. The home has three bedrooms, two bathrooms and a patio spanning the width of the 2,000-square-foot house.

It was the first house they looked at -- virtually -- and the price had been reduced.

“When we moved to Michigan and crossed the border into Oklahoma, I burst into tears,” she said. “And when we were coming back down and crossed into Texas, I was thrilled to be back. Driving down I-35 from Dallas, it’s just so alive. That impressed me most. There were cranes everywhere. It’s a place where people really want to live.”

Housing market outlook

Silas said Austin’s residential real estate market “ is clearly holding strong despite the challenges presented by COVID-19, and may even come out of the pandemic stronger than when it went in. Its current lack of inventory and increasing prices could create some challenges for Austin’s growing talent pool, but those temporary drawbacks likely won’t dissuade employees and the companies that employ them from choosing Austin in the long run.

“As long as current and prospective homeowners continue to see Austin as one of the best cities in the country to live,work, and play, our city should have no issue continuing to attract the best talent and companies.“

But there’s a caveat, with some saying the outlook is uncertain.

Eldon Rude, a housing market consultant who has been following the market for several decades, put it this way:

“How many home buyers that purchased a home this year accelerated their plans to purchase and therefore won’t be in the market next year, and how long can housing demand remain at recent levels in the absence of meaningful job growth in the region?”