Q3 market update here including a condensed video format version!
For the most part Q3 has performed as expected and predicted with a few exceptions. Prices moved up a few percent bringing year-to-date appreciation to around 6%. Tier-1 homes (priced right, no major flaws and wow factor) sold within days with multiple offers and average of 3-5% over list price. Tier-2 properties (mostly a Tier-1 but with one flaw such as needing cosmetic updates) averaged 40-60 days on the market and about 3-5 % negotiability. Tier-3 (major issues or work) sat on the market 90+ days and 10% negotiability.
Averaged across all price bands/sectors, market supply is at 2.8 months which is considered a very low inventory/ high appreciating environment. For context, a 6-month supply (enough inventory to meet current rate of demand 6 months out) is an equilibrium market.
- $0-$500k We are at 2 months or less, severely undersupplied and on pace to see 7-8% appreciation this year
- $500k-$1M We’re at about a 5-month supply. Up a few months from Q2. I’m projecting 6% for the year
- $1m-$2m We’re at a 9-month supply, also up a few months from Q2. I’m projecting 4-5% appreciation for the year, tending down a bit compared to what I thought we’d see (6%)
- $2m+ Has remained undersupplied (as long as it’s highly relevant to today’s cleaner lines and transitional aesthetics), otherwise it’s sitting. I’m projecting 6% appreciation here
Significant factors in the market:
The main factors leading to the current market environment:
- Job growth – Austin’s economy on pace to add 40k net jobs for 2019, good for #12 in the country. Very strong and creates a lot of demand for housing
- Unemployment – At an incredibly low rate of 2.7% -basically full employment. Top 3 in the country. Creates a lot of confidence in the market
- Interest rates have crept down even further in Q3, further boosting activity
- Lifestyle – The population growth isn’t all due to job growth. Austin officially has become a lifestyle city which is certainly having an impact on real estate. #1 Fastest Growing Metro Population & Top 10 Foodie City per Wallet Hub as well as in Top 10 leading percentage of Creative Class in the US per CityLab
I see 2019 ending with 6-7% appreciation in values, down a bit from what I predicted last quarter but still solid. And I stand by 2019 still being the pivot year for appreciation over the next few years compared to 2017 and 2018.
4th Q will remain busy for Tier-1 properties, but I do see Tier-2 and Tier-3 properties taking longer and needing to negotiate further to sell – there will be opportunity buys there.
Core sectors up to $1.5M and above $2M will remain busy in central. Within city limits but not central or suburbs. I expect it’ll stay robust activity and demand up to $1M. In the suburbs, up to $700k will stay active.
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