February Austin Housing Market Report

February saw the median home price for the Austin-Round Rock area come in just $5 shy of hitting $500,000. At $499,995, this is a new record median price and a 27.9% increase since this time last year. This isn’t the only number that keeps climbing. Closed listings rose 11.3%, and interest rates went over 4% for the first time since 2019. Keep reading to learn how February’s numbers point to another big year for the 2022 housing market. 

“We saw another record-breaking month in February,” says Realty Austin Head of Sales Jolene Weinstein. “The increasing median sale price and closed listing percentages point to another big year for the Austin real estate market, despite the fact that buyer demand continues to outpace available inventory.” 

While there were plenty of highs for the market, real estate can be impacted by world events. February was a turbulent month for many reasons, and they’ve all begun to trickle down to impact buyers and sellers. With rising interest rates, inflation, lower inventory, and the beginning of the Russian-Ukrainian conflict, buyers and sellers should expect the unexpected. 

Additionally, instant buyers, known as iBuyers, like Opendoor, Offerpad, and Zillow are impacting the market. These platforms allow sellers to skip some of the traditional steps, like working with an agent, in an attempt to be faster and more convenient. But this comes at a price to the seller, and it also hurts future buyers. IBuyers cost home sellers around 13% to 15% of the home’s sale price, while working with an experienced agent costs just 5% to 7%, according to a research report from the real estate data firm Collateral Analytics. 

While the unpredictability of the stock market, the pandemic, interest rates, inflation, and global conflicts could leave buyers and sellers feeling unsure of what to do, it’s also creating more savvy buyers and sellers than ever before. Compared to previous generations, younger people are realizing the value of investing in real estate by purchasing a home. 

According to The National Association of Realtors, Millennials have been the largest share of buyers since 2014. With a bit of research, preparation, and the right expert by your side, you can make smart real estate decisions as the market heats up in 2022. 

February set the tone for an equally strong March according to a jump in pending sales and an increase in dollar volume. Across the Austin area, sales dollar volume increased 34% year over year to $1,564,737,417 while new listings increased 10.4% to 2,834. At the same time, active listings decreased 4.1% year over year to 1,240 listings, while pending sales increased 20.3% to 2,967 across the MSA. 

In such a hot market, sellers sometimes find themselves waiting to ensure they get the most for their home, which is an understandable financial goal. With the record-breaking median sales prices, now is the perfect time to receive an estimate on your home’s worth. 

According to LendingTree, late spring is the best time to sell your home. That means now is the perfect time to start the process. Additionally, you can buy before you sell, which will give you more security and control over the process. 

If you want to sell your home and don’t know where to start, reach out to one of our talented agents and get the ball rolling. 

Though inventory continues to be an issue, developers in the Austin area are working to create more residential spaces. In fact, some of the most popular neighborhoods in the city are relatively new master-planned communities.

Buyers should be aware of rising rates, though. According to Reuters, the most popular home loan, the 30-year, fixed-rate mortgage, climbed higher than 4% for the first time since 2019. Additionally, buyers that plan to live in the home they purchase are up against iBuyers. The New York Times referred to them as “institutional house flippers.”

According to CBS News, “most (not all) iBuyers sell a portion of their inventory to institutional investors that rent the homes out.” This can make the goal of homeownership harder and force more people to continue renting. 

And renting is getting increasingly less affordable in Austin. Fox 7 Austin reported that as of February 2022, the average price for a one-bedroom apartment in Austin is up by 45% in the last year.

For potential buyers hesitant to make any big changes in the current global climate, now is actually a great time to start your home search. 

Mark Sprague, state director of information capital at Independence Title, had insight into how Russia’s invasion of Ukraine could impact real estate. 

“The uncertainty in eastern Europe has stalled rising interest rates,” said Sprague. “Material and labor costs are on pace to rise from 4% to 5% monthly through 2023 and potentially further."

“Although the possibility that housing inventory will continue to fall is now even more likely,” Sprague continued, “strong housing demand and Austin’s diverse economy will ensure the housing market’s economic impact remains steady. This places our region in a better place than most globally.”

It should be noted that the Federal Reserve raised interest rates 0.25% on March 16, 2022. Now is the time to act, because according to Forbes, the Federal Reserve may hike interest rates 6 more times this year. 

No matter where you are in the home buying or selling journey, working with an experienced agent can be the key to understanding market changes and ensuring you meet your real estate goals.