The 2024 market is a tale of two cities

“It was the best of times, it was the worst of times.” – Charles Dickens

I never imagined myself quoting Charles Dickens in relation to the Austin real estate market, but indeed, our real estate narrative feels like a tale of two cities as we rapidly shift back and forth from a sellers’ market to a buyers’ market.  The market is evolving, but here’s what we’ve learned now that we are half-way through the year. 

HOW THE AUSTIN REAL ESTATE MARKET IS FARING IN 2024      

Once students went back to school the second week of January, Austin’s real estate market blasted off.  For those of us in the industry, this was a welcome shift after a very slow 2023.   Early in the year we enjoyed an actual seller's market.  We saw the return of multiple offers and the usual price increases that are born from competition.  What was shocking was how quickly the prices rose.

During the first six months of 2024, the median price of single-family homes in the city limits of Austin rose from $557,500 to $688,500 – a whopping 23% increase and only $41,500 below the peak pricing we saw in April 2022.  Let’s put those numbers in context.  In the 2010s Austin typically saw an appreciation rate of 8 - 8.5% whereas the rest of the nation experienced a lower 3.5 - 4% increase.  A 23% jump in prices is not normal for Austin or anywhere. Yes, we saw that kind of appreciation during the pandemic, but those increases were an outlier.  And more importantly, those kind of meteoric price hikes are not sustainable.

Fast-forward to June, and the market is softening.  There’s been a large bump in homes listed for sale, and buyers seem to have pulled back.  Homes aren’t getting as many showings, they are taking longer to sell, and sellers are reducing prices.  Basically, we have more homes than we have buyers. (In the charts below, the green line represents active homes, and the blue line represents successful sales.)  I can’t make any guarantees, but my experience tells me that in the next six months we will lose some of the price gains the Austin real estate market saw during the first half of the year.  As of now (mid-June), we are headed back to a buyers’ market.

I’ve been in this business for over 25 years, and while it’s normal to have cyclical shifts in the market that favor buyers or sellers at different times, I have never seen the swings happen so quickly or dramatically as they have since the pandemic shook up the real estate world.  If my family’s livelihood didn’t depend on the whims of the market, I might grab some popcorn and sit back and watch this volatility with some enthusiasm.  But if you are trying to actually buy or sell a home or make a living in the real estate industry, these quick volleys aren’t much fun. 

So what gives? 

WHY ARE BUYERS DRAGGING THEIR FEET? 

It is hard to say with any certainty, but my experience tells me that it’s a combination of high interest rates, the uncertainty of the election that is in front of us, and the fact that it is summer and folks are traveling and focused on other things.  Higher interest rates mean buyers have less buying power, so that one is self-explanatory.  Likewise, if people aren’t in Austin, they aren’t going to be out looking at homes.  The election, however, is a wild card, in more ways than one.

In a normal election year, people hesitate, the market may slow, but it doesn’t stop.  And we don’t always see price reversals.  I anticipate this election cycle will behave differently. Not only will there be push back against higher home prices, but our loud and crazy politics are almost certain to capture center stage.  Thankfully, the distraction should be short lived.  What’s funny about election years is that while the market may go quiet before the election storm, no matter who wins in November, there is often a real estate market rally due to delayed demand.   

ADVICE FOR BUYERS & SELLERS FOR THE SECOND HALF OF 2024

In my opinion, we are moving back into a buyer's market.  Buyers that are committed to finding a home will have their choice of properties, but it's going to be a rough summer for home sellers.  Here’s what that means if you are thinking of buying or selling a home in Austin. 

  If you are a home buyer:    When the market is unbalanced like it is now, there are opportunities to be had.  It’s a great time to make your move between now and the election. Take advantage of the larger home inventory, softer on price negotiations, and grab a house while you can.  If history repeats itself, the market will blast off a week or so after the election, regardless of who wins. This same advice holds true for any investors out there.

  If you are a home seller:    If you don’t have to sell now, then you should hold out until after the election. As always, the longer you hold, the better you will do.   

If you need or want to sell your home now, the condition of your property is essential.  Homes that are updated and “on trend” will get top dollar.  Homes that are tired or outdated will sell for a discount.  These days no one wants a project so if you haven’t updated your home in the last ten years, plan on making some improvements. 

The next few months are a great time to get your home ready to go on the market in November.  Just remember that there is a tipping point that needs to be achieved.  We often see sellers spend money updating the wrong things or making a few minor updates that don’t go quite far enough. 

We can help!  We can provide paint color suggestions, send you light fixtures ideas, or even create a design board for you.  If money is holding you back, our relationship with Compass allows us to front you 25k that you can use to update your home and maximize your sale; you just pay it back at closing or a year later, whatever comes first.

The market is shifting quickly, so I always recommend checking in and getting an update that is personal to your specific situation.  Reach out or send your friends our way.  We welcome the chance to explain what’s going on so that you can maximize the market to meet your needs.

P.S. Wondering where my sage advice comes from?  In making these recommendations, I rely on my research, data from the Austin Board of Realtors, real-world experience, and my intuition.  For those of you that like data, I’ve included the charts below.  Just remember that closings often occur 30 days after the contract date, so the data is all 30 days old. 

June 2024