Record housing demand fuels growing regional real estate market development
Brooke Daniels, broker of Hippo Realty LLC, said that for the homes she sells in Hutto, Round Rock and Cedar Park, she receives between 40 and 60 bids with a minimum of 10 bids, even for rural homes. (Claire Ricke / Community Impact Journal)
According to area real estate agents, a growing spike in home values is causing sellers in Round Rock, Pflugerville and Hutto to pocket an additional 20% or more, which equates to $ 175,000 above asking price.
Realtors are reporting some of the biggest sales of their careers, with homes being taken off the market within hours. But for buyers, rising costs and low housing stock make it difficult to find a home.
“You see things on the Internet in the hottest markets in the United States, and Austin seems to be the hottest market in the United States pretty consistently,” said Round Rock broker Walter Rock of Rock Properties Realty. “Some of the houses I looked at are on the market for 12 hours and then they stop getting offers.”
The volume of sales to Hutto and Pflugerville also demonstrates the increase in demand in the markets. At Hutto, total home sales rose from $ 181.5 million in 2019 to $ 201.1 million in 2020, which equates to an increase of $ 19.6 million, according to Texas A&M University Texas Real Estate Research Center. In the town of Pflugerville, home sales volume increased from $ 269.3 million in 2019 to $ 326.7 million in 2020, marking an increase of $ 57.4 million.
Sales volumes for the Austin-Round Rock metropolitan area ended 2020 by shattering records as housing demand continues to climb, according to the Austin Board of Realtors. The Year-End Central Texas Housing Market Report, released in January by ABoR, reported a total of 40,165 homes sold for a total of $ 17.58 billion in total sales in 2020 Comparing the 2020 report to 2019, the sales volume increased by over $ 4.4 billion.
“This is a historic and unprecedented time for our housing market,” ABoR President Susan Horton said in the report. “The pandemic has only increased demand for all types of housing in the area, pushing inventory to near zero levels and creating the strongest seller’s market that real estate agents have ever seen.”
Local real estate agent Ken Lopez said that at the start of the pandemic, he saw a slowdown in home sales in Pflugerville as interest rates were high. As soon as rates came down, Lopez said buyer interest peaked, creating huge demand in an already tight inventory market.
“From the beginning of May 2020 [sales] were more standardized and then they really took off, ”Lopez said. “We were already in a seller’s market before this huge demand. Now, with a huge demand from buyers, it has become more and more.
Number of pending auctions
As the demand for housing continues to grow, the number of offers for each home is reaching figures that realtors say they have never seen before. For Lopez, around this time last year, it was common to get between three and five bids per house; now he says he gets up to 26 offers within two days of putting a home on the market.
“At this time last year it wasn’t too bad. It was probably three to five offers, quite common. Since everything has accelerated, two days on the market and we get 26 offers submitted in the lower price of $ 300,000, ”Lopez said. “I have spoken to other agents, and they tell me they have over 75 offers.”
Brooke Daniels, broker of Hippo Realty LLC, said that for the homes she sells in Hutto, Round Rock and Cedar Park, she receives between 40 and 60 bids with a minimum of 10 bids, even for rural homes.
“We put houses on the market and we have deals the same day pretty much every time,” Daniels said. “With a minimum of 10 offers per day, even in rural areas.
According to Rock, some homes are only on the market for 12 hours before sellers are up to the bids. He said many of his properties are only on the market for a few hours before sifting through many offers.
Rock also pointed out that the number of remote workers and corporate headquarters, such as Tesla and Oracle, relocating to the region was a potential cause for the increase in demand. He said he was seeing many people leaving California after their jobs moved away due to the pandemic, allowing them to leave the state and travel to Texas where prices seem much cheaper than in California. .
“There are more mobile workers now. People working from home can move here and keep their jobs in California, ”said Rock.
Sarah and Oscar Garza, who sell their home to Hutto through Daniels, said they expected some offers to exceed their home’s selling price, but the number of offers they have received was well beyond their expectations.
“We put the house up for sale on Friday afternoon, 30 bids had been submitted by 10 a.m. on Monday, all above the sale price, with many offers 20% above the sale price,” said Sarah Garza , who plans to relocate to southwest Austin. “It’s the ultimate seller’s market right now. “
Low housing inventory
As more people move to Round Rock, Pflugerville and Hutto, the demand for housing is increasing dramatically and inventory is very low. For the three cities, the housing inventory fell sharply from August. Housing stock is defined as the time it would take for all active homes on the market to sell.
According to ABoR, the Austin-Round Rock metropolitan area has a limited market inventory that is down 50%. The month’s inventory for Round Rock and Hutto from the Texas Real Estate Research Center shows a drop to 0.2 months in January, marking one of the lowest inventory numbers in the past six years. Pflugerville plunged even lower with 0.1 month supply in inventory in January.
With people working from home during the pandemic, Daniels said many families wanted to modernize their homes to find one with a home office or bedroom for their children to learn virtually. People living in smaller houses or apartments suddenly needed more space as they realized that working from home was going to be long term, flooding the market with potential buyers.
“Seeing that people no longer need to live near their work because they are working remotely, people have chosen to move to the suburbs or to the city because it doesn’t matter where they live now,” Daniels said.
Along with strong demand, one of the reasons for low inventories is the lag behind builders, Rock said. Inventory at Round Rock is close to zero as supply tries to keep up with demand.
In addition to the backlog, builders face a shortage of lumber, Daniels said. Previously, they could build 20 to 30 houses in a month, but now can only produce about five houses per month. Faced with rising costs, once the homes are completed, builders auction the homes to the highest bidder, which goes up to 20% above the listing price.
“Real estate is like everything else; it is supply and demand. If you’re going out to buy a house these days, there’s nothing available, ”Rock said.
Exit the market
While rising home values are good news for sellers, it makes it harder for first-time homebuyers or anyone with a government-guaranteed loan to enter the market, according to Lopez. Most of the buyers Lopez sees buy in cash and use the properties as investments.
Many sellers cannot afford another home in the market after selling their home. With limited options, realtors in the area said sellers are now renting apartments or townhouses in the hopes that home values will eventually drop and they can afford a home.
“The people want to buy houses, but they can’t. Their price was taken off the market, ”said Rock. “It’s a good time to sell, but if you are a buyer, now is not a good time to buy.”
As supply remains low and demand remains high, home prices will continue to push north over the next 12 months, according to Area Realtors. The most recent forecast shows that home values in the Austin-Round Rock MSA will rise 7.9% by December.
Daniels said the rest of the year is difficult to predict for realtors, but she believes current trends will continue through the summer and subside at the end of the year.
“Manufacturers are starting to catch up a bit; the hope is that builders will catch up with demand. Hopefully by the end of this year it will get better, ”Daniels said.
The Garzas said their experience was like no other and wanted to share some tips for vendors in the area.
“It’s hard to describe how quickly things are moving in today’s market,” Oscar Garza said. “If you are planning to sell, be prepared to go faster than you expected, as many buyers are ready to make offers as soon as the ad goes out.”