May 2022 Austin Market Report
Active listings experienced triple-digit percentage growth year over year and inventory rose to over one month of inventory for the first time in seven months. The data indicates the market is calming as typical seasonality is returning in terms of the number of closings, even as sales dollar volume sustained a positive lift.
“The increase in inventory that we’re seeing is helpful for buyers who have had a hard time finding a home these past two years. However, REALTORS® continue to see homes selling faster than ever before, so working with a REALTOR® is a buyer’s best bet in helping navigate the opportunities in our market.” Cord Shiflet, 2022 ABoR president
“The Austin region saw dangerously low levels of inventory, as low as 0.4 months of inventory in January 2021, so this slight increase in inventory and active listings point to the market beginning to normalize. While year over year price increases will continue to remain high, we project them to fall slightly lower than the long-term trend we’ve monitored over the past two years.” Dr. Adam Perdue, a research economist at the Real Estate Center at Texas A&M University
Perdue added that the affordability issues Austin is facing does not point to the housing market collapsing or a bubble bursting. Real estate bubbles occur when speculation overtakes a market and prices rise not because demand for housing is increasing, but because buyers believe prices will continue to rise in the near future, increasing the value of their investment and presenting the potential to flip properties quickly. That type of speculation is not what is driving housing demand or price increases in the Austin-Round Rock MSA.
“The Austin housing market has experienced a multitude of factors that have influenced its current state, one of those being the high influx of companies and individuals migrating to the area both from within Texas and out-of-state, which has contributed to a strong and diverse economy attractive to people seeking opportunity. These migrations of individuals and companies will continue to happen, especially as Austin is relatively affordable compared to some out-of-state markets when it comes to owning a home and operating a business. Given this growth and continued increases in prices, the sales decline appears to be more likely a supply issue than a demand one and does not indicate a bubble bursting.”