Here are the August/2018 MLS single-family statistics for Austin, TX:
Overall, August was a rather mild month for our Austin home sales market with many categories changing from 0% to 3%. Sure, our days on market increased nearly 10%, but our bright spot was and continues to be our home prices. Median prices rose 7% to our 2nd highest number ever in Austin and our average home price approached $400k. That would have been our 4th time of reaching an average home selling price of $400,000 this year and over our YTD average of $393,059. Incredible. Especially when you consider our average sales price in 2013 (5 years ago) was $288,869. That represents a 36% increase in 5 years, or 7.2%/year!
Texas A&M Real Estate Center economist Jim Gaines recently reported that the 2019 Texas economy will be better than 2018. He further stated that 2020 is an election year and there has never been a recession in an election year so we should be solid for the next two years, according to him.
For homebuyers, this presents an affordability problem caused by increasing home prices and interest rates. Home prices are going up due to 2 factors: Low inventory and rising home building costs (see the “Raising Home Prices” article below). Low inventory causes higher prices in any market due to the supply and demand phenomenon. Home building costs are rising due to labor shortages and rising inflation (which has been in check, but expected to increase). A major component of inflation is the velocity of money through our economy...the higher the velocity the higher the inflation number. Most everyone feels that as our economy heats up, inflation is expected to increase as well. The Federal Reserve’s job is to keep inflation as close to 2% as possible and the main tool they have to keep it there is to raise interest rates to throttle it back. The buying power of a home buyer is reduced by 12% for every 1% increase in interest rates. So, a $300,000 home today would cost $36,000 more to buy if interest rates rise by 1%. Conversely, to keep the same mortgage payment, a home buyer would need to purchase this same home for $264,000. Clearly, home prices aren’t going down anytime soon, so we strongly encourage any home buyer to not wait any longer to purchase a home.
Contact the Thomas & Kauffman team at 512-730-1252 or info@AustinTxHomeSales.com so we can help you get into the home of your dreams today.