This is an unprecedented market for Austin. How long will it last? Could it possibly crash?
Is there a real estate crash coming to Austin, Texas? That’s a question I’m hearing a lot from both buyers and sellers in our Austin market.
Consider this:
- The median home price in the city of Austin is up 42.8% since this time last year
- The median price in our tri-county area (Travis, Hays, Williamson) is up 43.9%
- The Median price in Cedar Park is up 44.7%
- The median days on market is 4
This is an unprecedented market for Austin. How long will it last? Could it possibly crash?
I was a real estate broker in Florida when we experienced the crash of 2007-2008. I saw home values drop nearly 50%. My own business was wiped out. Foreclosures were rampant. People lost their jobs and their homes.
How likely is it that Austin might experience real estate crash?
Not likely, in my opinion. Here’s 5 reasons we are unlikely to see a real estate crash in Austin.
- Low Inventory. We have a 1.2 month supply of inventory in our Austin MLS. A normal market has a 5 month supply. We have only a 2 week supply in Cedar Park. This is a big driver of our rising prices. During the pandemic too many seller’s took their home off the market and that’s fueled this extreme seller’s market.
- Slow Building Pace of New Construction. Builders were not prepared for the extra demand they face here in 2020. The ran out of homes and lots to sell in January 2021. Since then, they have been scrambling to build more homes. It may be next year before we see enough new construction inventory.
- Low Mortage Rates. Although mortgage rates have ticked up a bit, it’s still possible to get a rate as low at 3.125%. Buyers are taking advantage of this opportunity.
- Austin’s Population Growth. Austin has seen a 30% population growth in the last decade. Cedar Park has seen a 44% population growth in the last ten years. As long as people keep moving here at this pace, we will continue to see prices rise.
- Strict Lending Standards. Whereas, the real estate market crash in 2007 was fueled by mortgage fraud, today’s lending standards are strict. New laws were put into place to make sure the banks behaved. Appraisal guidelines tightened. So, today, only those with good credit and decent income to debt ratios can get a mortgage.
There you have it. I could be wrong, but I doubt it.
