Austin is expected to be the sixth-hottest U.S. housing market this year, according to Zillow's Austin real estate market forecast for 2018. Of the country's 50 largest metros, Austin's housing market has picked up more than any other, post-Great Recession—in other words, it has seen the steepest price hikes nationwide. Austin is an appealing, welcoming, newcomer-friendly city with an abundance of job opportunities, which, of course, is also contributing to the steady rise in home prices. The price hikes are great from an investment standpoint but make the climate a little more challenging for buyers, as homes become less affordable and some residents are forced to leave due to rising property taxes.
Supply and demand in the Austin real estate market
The forecast for 2018 is showing growth in Austin slowing to some degree, but far from stopping. Austin’s popularity creates a climate in which new homes are in high demand as inventory remains scarce. Housing inventory levels continued to edge upward across the five-county MSA in October, increasing from 0.2 months to 2.8 months of inventory. In the city of Austin, single-family housing inventory increased 0.1 months to 2.3 months of inventory. According to Qualified Mortgage, five years ago, Austin had a 5.2-month supply of new homes available compared with the 2.3-month supply as of mid-2017.
Given the Real Estate Center at Texas A&M University’s estimation of 6-6.5 months of inventory as an indication of a balanced housing market, current housing inventory levels across the region continue to fall well within what would be defined as a seller’s market. The real estate market forecast for Austin in 2018 indicates that the supply of new homes will continue to be tight, and the ones already on the market will sell fast, so buyers may have to move quickly once they find a home they like.
Austin real estate market forecast for 2018: buy a home sooner than later
While real estate market forecast for Austin in 2018 points to housing prices continuing to rise, albeit not at the frenzied rate they have over the last couple of years, the 2018 Emerging Trends in Real Estate report dubbed Austin the country’s #2 real estate market to keep an eye on, pointing to a slowdown in rising home prices—reflective of a trend occurring across the nation. Home prices are forecast to increase by about 3% this year—an annual growth rate some would call normal. Given that prices rose over 7% during the last 12 months, 2018 is looking better for buyers than it has in a while. Of course, prices are still on the rise even if by less, so those on the market for a home would do better to purchase sooner than later.
Renting an apartment in Austin will also cost more in 2018 than it did last year. The city has some of the highest rent prices in the US, and according to a recent report, rent in the area is set to rise by approximately 11% between 2017 and 2020—not the best news for renters. Rising rents are therefore an added incentive for Austin residents to make the transition into owning a home over the next few years.
Single-family home sales
Single-family home sales in the Austin-Round Rock MSA rose by 2.2% year-over-year to 2,292 home sales in October 2017, while single-family home sales in the city of Austin decreased 1.7% to 699 home sales at the same time, indicating that as prices rise in the city centre, people are moving to outlying areas where prices are still more affordable. The average price for a single-family home increased 4.3% to $286,742 across the Austin-Round Rock MSA and by 9.1% to $360,000 in the city of Austin during October. [image]
Housing inventory levels on the slow rise—and at a high
In spite of rising rents and home prices in Austin, thanks to strong housing development throughout much of the region, there have nonetheless been gains in the city’s housing inventory throughout 2017. The Q3-2017 Austin Housing Report by Metrostudy reported that for the period from September 2016 to September 2017, housing starts are at a 10-year high. The Austin real estate market forecast for 2018 is therefore ever-evolving, and in spite of the current seller’s market, it’s not a bad time to be a buyer in the grand scheme of things.