January 2021 Austin Market Update: What's Happening Out There?

Jan 10, 2021

I hope you’re doing well and that you had a wonderful holiday season with friends and family! We certainly did, but there was one big change this year: There was absolutely no seasonal market slowdown.

Newsletter Highlights:

Home sellers are behaving normally and haven't yet started listing their homes yet.
Home buyers are behaving differently and didn't sit out over the holidays. New home buyers are entering the market much earlier than normal.
This has caused a severe inventory shortage and rapid price appreciation.
We expect appreciation to moderate this spring/summer, but prices will not go down.

Historically, like clockwork, the market has started slowing down in July and has consistently slowed down through the end of the year. Buyers start to “wake up” and enter the market in Feb/Mar, and our busy season runs until July, when it starts all over again.

line graph for austin real estate pending properties by month in 2021

This year, buyers didn’t behave (and aren’t behaving) normally. They stayed in the market and kept buying houses. As agents, we’ve heard recent stories of 90+ offers on relatively “regular” houses that historically would have taken a few weeks to sell or have had a few offers at best. These anecdotes are interesting (and somewhat frightening), but we don’t generally make decisions based on anecdotal evidence.

Earlier this week, we sent a survey to the 4000 highest producing agents in Austin and asked “What do you expect when you make offers in different price ranges?” The full set of results are segmented and can be found here. The short of it is that agent expectations are consistent with the market data. Agents expect a LOT of offers in every price range and they expect properties to always go over list, with varying degrees in varying price ranges.

What is happening in the Austin real estate market, and more importantly, what do we think will happen?

Inventory is historically low, but it’s very important to put inventory in perspective. Real estate inventory is a function of supply (units on the market) and demand (number of sales per month or number of pendings.) Low inventory can be caused by increased demand or decrease in supply. When we look at the most recent reliable market statistics, we see that supply did not decrease in any meaningful way. YTD in November showed only a ~2% drop in new listings. However, demand is up in a huge way.

Buyers stayed in the market over the holidays and new buyers have entered the market much earlier than normal. Sellers, however, are behaving as they always have - they simply haven’t listed yet.

line graph for total number of real estate listings and new real estate listings by month in 2021

Sellers historically hit the market in March and new sellers enter the market through July. Buyers are early to the party and the sellers haven’t yet brought food/drinks!

What will happen in the Austin real estate market in 2021?

While we don’t have a crystal ball, it makes sense that the insane feeding frenzy at the empty buffet table will likely not continue at its current pace. Pricing will likely not decrease, but the incredibly high appreciation we’re currently seeing will likely be short lived. We will likely see the same level of new listings hit the market in 2021 that we did in 2020. There certainly is new/more buyer demand now, but the seasonal increase in inventory will relieve the environment in a meaningful way. While we don’t predict that multiple offers will go away, we do think that it will return to the 2020 levels of 5+ offers per listing, rather than 25+.

What should I do if I'm a buyer or a seller in Austin, Texas?

If you’re a seller:

Put the property on the market at your own pace and on your own terms. If you’re ready now, go ahead and list now. If you need some time, take some time. We don’t expect pricing to change (except to go up), so time is on your side.

If you’re a buyer:

Hang in there! It certainly makes sense to make offers now, if you understand that the list price is a suggestion, and you’ll need to offer over list. Remember, we don’t expect pricing to decrease in the spring - only that prices won’t appreciate at this extreme pace. On our side, we’re monitoring the market extremely closely and we will be able to notify you if/when there’s a market shift (and we need to offer less over list to win deals.)

We knew that there would be challenges in the real estate market post-COVID. We did not expect that the challenges would be from a heated market. We are absolutely here for any support you might need, so please don’t hesitate to reach out!!!

About the Author

Last updated: 01/10/2021

2300+ Client reviews!

Christopher Penaloza

JC was very helpful during the process of buying my first home. He directed me to lenders that truly had my best interest at heart. I almost made a few bad decisions that JC was there to wave off for me. I truly appreciate JC's responsiveness to ALL of my many questions and his willingness to be a sounding board for my frustrations in the process. I still hear from JC from time to time ensuring that I am happy with my home and letting me know of up and coming business in my area that might affect my property value. I will absolutely be using JC to purchase my next home.

LanceLunsford

JC does a great job with attention to detail and ensuring he has answers to your questions as you navigate the process of a home purchase. JC understands the process of the transaction in a home purchase and makes sure the details are covered.

Christopher Dunn

Ruth helped us to view many houses and (over months) to make multiple offers in a really, really tough market for buyers. Our low bids were our own fault! Ruth's guesses are always spot on. We finally had a bid accepted last month, and Ruth helped us re-negotiate after significant problems were discovered. Ruth has gone above and beyond for us, giving us far more time during this long search than we could reasonably have expected. She even helped us look for a rental when we'd basically given up. Her advice has always been immensely valuable and brutally honest. She is the most knowledgeable agent I've met on the Central Austin market. She also handled our stress well, and believe me, buying in Austin right now is stressful!

Jerry Nash

Excellent service and follow through. Very professional!

Steve Sanders

I highly recommend Kristen for all real estate needs.

Danielle Hughes

I had a great experience working with Bramlett Residential Real Estate. Jean Holm was my agent and she & her team made the whole process very simple. She explained everything very well, was knowledgeable, had great advice, and got our home sold. Definitely reccomend!

Jeremy K

I worked with Jeremy Vandermause to buy my first home. Jeremy was so patient throughout the process (which I definitely dragged out as I gathered all the facts). He consistently sent me homes I was interested in and was eager to show them off, and on the odd occasions where I found one he hadn't already seen he always made himself available to walk through with me. He was very helpful in those walkthroughs pointing out home features I would have missed, or providing context on neighborhood. As a native Austinite, he definitely knows the history and cultural fabric of the city and each neighborhood. I started with close to zero knowledge of the home-buying process and Jeremy walked me through every step with clarity and patience. So excited about the home I now own! Plus, he's just a legit cool dude. I always really enjoyed our conversations and could tell from the start he was someone worth knowing in Austin

Jian M.

This review is about Joe Gage, their real estate agent. I'm based in Sam Francisco and was looking for investment property in Austin. I tried out three different agents based on recommendations from different sources, including Yelp. Joe clearly stands out. He's very patient and responsive. I'm not familiar with the area at all thus had a lot of questions. His email reply contains detailed information of the neighborhood, including shops nearby, schools and so on. He regularly screen houses and give recommendations once he sees a good fit for investment house offered at reasonable price. He's very knowledgeable about the area. All his recommendations comes with details around why he thinks it's a good investment and sales/rental data in the neighborhood to justify the price he thinks it's worth as well as the expected rental income. I found him to be very methodical and organized. He's not a typical sales person. Maybe this is because he used to be an accountant. Needless to say he earned our trust and we went with him to make the purchase. I was very impressed through the whole process. He's very calm and never pushy. His recommendation on the bid price was right on and he was very good at following up with various parties to push things through. The process went through very smoothly. If anyone is looking for a good real estate agent in Austin, I'd recommend Joe whole-heartedly. His professionalism and calm personality make him a real pleasure to work with.

Click Here to Read All Reviews