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Here are the August/2021 MLS single-family statistics for Austin, TX:
More red categories popped up in our Austin single-family home sales numbers for August, our 4th month-in-a-row of this trend. This lines up with what we’ve been seeing both locally and nationally regarding a general cooling of our red-hot market seen earlier this year. However, we shouldn’t be too hasty to predict the slowdown in our market that many have been proclaiming the past few months. Sure, there is data there to support their arguments and I’ve made slowdown statements here recently, too. Let’s dig deeper into the data to see if what we are seeing is what we think it is. I added August’s numbers to the condensed chart I sent you last month and tweaked it some for clarity and it is below. The dark lines around some of the fields indicate when that category peaked this year and has been trending downward since:
Doing further analysis, we see that all 8 categories above have been trending downward for 2+ months (DOM) up to 6 months maximum (Pendings). Also, keep in mind for all of these categories as you read my analysis below: Mar-May’s numbers are compared to those months when the Covid lockdown hit last year and 2020 home sales didn’t begin to recover from that until the summer months unfolded. Therefore, Jun-Aug/2021 are compared to the same month in 2020 when we began our dramatic comeback from Covid so we should not expect the spreads in these months to be as great as those earlier in the year.
While it’s true listings have gone down for 4 months, once you squeeze all of the current homes for sale (ie-listings) for a few months and buyer demand remains high, there isn’t much left to get higher percentage numbers from. The number of listings directly affect the months of inventory, too;
Listings, Pendings, Sales & Activity Index are current indicators of a real estate market’s future strength since they are intertwined: Too many listings affect future pricing; not enough pendings directly forecasts the future direction of the market; sales is the direct indication of current activity and Activity Index is a formula of Pendings/Pendings + Listings so it is also an indicator of the future direction of a market. So, we see these having some of the most dramatic drop offs shown above, but, again, is that due to our market actually cooling off that much or just because we are comparing to an improving market the last half of 2020?
That leaves us with home prices which have taken some of the smallest drops. Median prices were even at the annual average (33%) in August so pricing has taken the smallest hit of all categories.
I will continue to monitor these stats as they come out each month to see if they develop trends that warrant greater concern. One of the most common questions I’ve received recently is “Will Austin home prices drop in the future as this market cools further?”. To answer this question, I put together the chart below which takes our August/2021 median home sales price of $480,000 and shows where it might be in future years based on different future appreciation rates.
Our median home price averaged 33% appreciation this year so far and peaked at 44%, so look in future years above at 30% and 40% and you can see the absolutely crazy prices we’d be at if we continue these rates! While not impossible, that would be extremely unlikely which is why I believe we will settle in around 10-20% in future years. Considering Austin has averaged 5%-10% annual appreciation since the Great Recession and with the Tesla announcement in Jul/2020 and the likely announcement by Samsung that they are building their new $17B plant in either NE Austin or SW Taylor, TX we will likely see our Austin metro economy continue the very strong growth we’ve seen for over a decade. Also, to answer the question, if you compare 2024’s price above ($829,440) at 20% appreciation with the 10% appreciation number of $638,880 the price is lower, but NOT when you compare the $638,880 to today’s $480,000!