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The price of buying a home in Austin, it seems, knows no mode other than acceleration.
Homes in the city sold for an average price of $624,000 in March, according to the latest figures from the Austin Board of Realtors. That’s a record price and a 22% increase in selling price over the past year.
“I’m an Austinite native, so when I see these increases year after year despite working in this business, it’s a gut punch,” ABOR President-Elect Ashley Jackson told KUT.
This rapid increase in prices has been the norm since the early months of the pandemic, when multiple factors converged to increase demand for housing and severely limit supply.
Mortgage rates hit record lows, meaning homebuyers could get more bang for their buck. At the same time, some homes stayed away from the market over fears of strangers dropping by, potentially increasing the spread of COVID-19.
These factors only poured gas into an already burning Austin market; For years, the city has struggled to provide enough housing for people to buy it.
“The story before the pandemic was that there wasn’t enough supply to meet demand, so you see rapid growth in house prices,” said Joshua Roberson, senior data analyst at the Texas Real Estate Research Center. “Here comes the pandemic and with it mortgage rates that have fallen to their lowest levels in history and that’s basically taken the current situation and made it worse.”
Also, people continue to move to Austin, which increases competition in the home for sale market. Austin’s population grew faster than before during the first year of the pandemic, according to a recent report from the Federal Reserve Bank of Dallas.
“That kind of growth is really the kind of growth that has a direct impact on the economy and local infrastructure,” said Lila Valencia, Austin city demographer.
It is unclear how long this increase in home selling prices will continue. In 2021, after the average selling price of a home in the Austin area increased by $100,000 in six months, real estate experts predicted the rate of increase would slow in about a year, maybe 18 months.
One reason for this slowdown, Roberson says, is that mortgage rates are rising; They recently eclipsed 5% on a 30-year mortgage. That could convince some potential buyers to put their apartment hunting on hold or end it.
But demand likely won’t drop enough for prices to drop, meaning people who can’t afford the average home price of $624,000 will have to look elsewhere. The area is already starting to see the impact: The median selling price of a home in Bastrop County, east of Austin, rose nearly 47%, the largest jump among central Texas counties.
“You just have to keep getting out there,” Roberson said.