The Austin housing market continues to break records. In May 2021, home sales skyrocketed — increasing 48% year over year to 3,976 sales — marking an all-time high for any month on record.
As new companies relocate to the area and the city’s popularity draws in new residents, the demand for housing has created a critical inventory shortage. Housing inventory in the Austin real estate market has dropped to an all-time low, with only 0.5 months of supply on the market (as of May 2021). There were 4,413 listings that month; but there were also 4,355 houses pending sales. And as of June 29, the Austin Board of Realtors® (ABoR) only had 1,116 houses listed.
With the average time a house spends on the market being just 16 days across the Austin-Round Rock Metropolitan Statistical Area (MSA), potential buyers wonder if they’ll be able to own a coveted piece of property in Austin.
More Housing is on the Way
Single-family housing permits are up as developers try to meet the current demand and ease the housing shortage. Homebuilders are trying to satisfy demand by building homes in the suburbs or outer city borders.
Data from the National Association of Home Builders shows Austin issued 21,653 permits for single-family homes in 2020. That put it at No. 5 among U.S. metro areas for single-family construction permits issued last year.
Even with these promising numbers, developers are still having trouble keeping up with the phenomenal demand. Another roadblock? Long wait times in the permitting process. Fortunately, the city’s permitting process will get a boost from the roughly 40 new hires approved by the Austin City Council. This will help cut down current permitting wait times for developers.
Other encouraging news is that the price of lumber is beginning to go down. COVID-19-related delays for goods and services, as well as the rising cost of lumber, drove homebuilding prices up for a period of time. Lumber prices continue to drop — down 49% from the peak.
How to Buy a Home in Such a Competitive Market
The market can seem difficult to navigate to the average consumer because it’s fast-paced, and transactions are becoming increasingly complex. That’s why it’s so important to work with an experienced Realtor® who can help you succeed in the aggressive Austin housing market.
If you’re actively seeking to purchase a home, and are willing to go the extra mile to get it, there are a few ways to go about this — whether that be financially or strategically. Strategies such as waiving certain contingencies and getting pre-approved for a mortgage can give you the advantage over other buyers.
In a traditional real estate contract, the offer to purchase a home usually includes a number of contingencies — clauses included in an offer, which states that specific conditions must be met in order for a deal to close. If the conditions in the contingency are not met, the buyer is able to break the contract without facing financial repercussions. You can improve your chances of winning a bidding war if your offer has few or no contingencies or special conditions.
Some of the most common contingencies are: inspection contingency, financing contingency, appraisal contingency, home sale contingency and title contingency.
Waiving contingencies is a risky move. Rely on the advice of a trusted real estate agent to help you determine which contingencies to waive depending on the property.
Secure Mortgage Pre-Approval
In Austin, listings are getting snatched up quickly. Being pre-approved for a mortgage gives you a fighting chance. Being pre-approved is a preliminary step that means that you have a loan already arranged, which will make you one of the best candidates when a seller is selecting among competing buyers.
Mortgage pre-approval means a loan officer reviews your finances, checks your credit, and analyzes your debt to see how much home you can afford. Once you find the home that fits your needs and budget, your mortgage pre-approval is going to let the seller know you have the funds available to purchase the home.
Look Further Outside the City
It’s still possible to find a piece of Austin property to call your own — if you move fast and know where to look.
A Realtor® can introduce you to the up-and-coming neighborhoods and areas off the beaten path that still offer the Austin experience — at a potentially lower price point.
If your hopes of buying in Austin are dwindling, don’t be discouraged. With persistence and our team on your side, your hopes of owning property in this highly competitive market can become a reality.