We are half-way through 2023 and clearly this year has a very different feel from the last several. A few things I have heard:
- Demand for move-in ready homes is higher because the cost of construction (materials, labor, etc.) has risen so much.
- Neither buyers nor sellers are particularly motivated, looking for opportunities but not under pressure to make a decision.
- Generally, inventory is low and days on market remain historically low (less than 20 days in June), but it doesn’t feel like a seller’s market.
Here is a refresh of my analysis of shifts in price points in the Austin market.
A few observations:
- The share of homes in the sub-500K price range has increased and currently exceeds 2022 and 2021 market share, presumably as interest rates have pushed prices down and more buyers into lower priced homes.
- Homes priced 500-749K declined from 37% last year to 33% YTD
- Homes price 1-1.5M declined in share from 12% to 9% YTD
- Above 1.5M, there has been less of a shift and market shares remain consistent with last year
Months of Inventory indicate that overall, and at price points below 1.5M, it is still a seller’s market (by the traditional definition of less than 6 months of inventory). At some higher price points, in particular 2.5-3M and over 5M, it is a buyer’s market. In the 5M+ price range there is over 3 years of inventory (Central Austin) or nearly 5 years if looking at the city of Austin overall.
Median sold prices continue to track very closely with 2021. The median sold price has consistently increased every month this year since February, but prices are still lagging 2022, with median sold price in June -5% compared to June 2022 (but up ~4% vs. May 2023). The first half of 2022 is a clear outlier, and we may not return to those price levels for a while given increasing interest rates.
Pending transactions continue to slide as interest rates have risen in the last few weeks. 30-year fixed rates were reported at 6.81% on Thursday (source: Freddie Mac), though I saw a CNBC article that quoted a higher rate in the low 7’s. Higher rates put downward pressure on home prices as borrowers are faced with higher monthly payments.
A couple of graphs and a few data points here to illustrate that slowdown in the higher price points. Looking at 750K+ priced homes, year to date there are ~30% fewer transactions than in the first half of 2022.
The number of active listings, though, is well above previous years, reflecting the rapid appreciation in Austin real estate prices. The first graph below shows the trends compared to prior years. You can see the rapid increase in the 2nd half of 2022 as prices had appreciated and the market began to slow, inventory began to accumulate and homes took longer to sell. That trend has continued in 2023.
Here is another view, looking at new listings vs. active listings. New listings are the number of homes that were added to MLS in a particular month. The active listings metric offers a snapshot of the number of active listings in MLS at the end of the month.
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