By: Shonda Novak
Continuing its shift into a seller’s market, the Austin metro area saw a 25 percent increase in sales of existing homes in May, while the median price rose 10 percent, according to new data from the Austin Board of Realtors.
Local real estate agents say several factors are fueling demand, including job growth, newcomers moving in, rising rents and low mortgage rates.
May was the 12th consecutive month of year-over-year sales increases, and the fourth month in a row that median home prices increased compared with the same month the previous year, the Board of Realtors said.
The 2,340 sales in May marked the highest level since August 2007, the board said. The May median home price of $215,000 — half of homes sold for more than that amount, and half for less — was the highest level since July 2010, when it was $220,000.
Using the more precise measure of price per square foot — which factors out the variable of home size — homes sold for $123 per square foot in May, up 4 percent from $118 per square foot in May 2011.
“We’re in a very strong seller’s market right now,” said Paul Smith, a real estate agent and partner at Austin-based Twelve Rivers Realty LLC.
A shrinking supply of homes for sale, combined with a rising demand, is driving the seller’s market.
Listings dwindled to 7,551, which was 23 percent fewer than in May 2011 and represents about a 4.4-month supply of available homes on the market. In May 2011, there was about a 6.8-month supply. A neutral market, tilted in favor of neither buyers nor sellers, is considered to be about a 6.5-month supply, experts say.
“The inventory of homes in the Austin area has been shrinking since this time last year while demand has remained strong, outpacing 2011 by double digits each month since last summer,” said Leonard Guerrero, chairman of the Board of Realtors. “As a result, prices are increasing as buyers compete more aggressively for available properties.”
Vanessa Nunez, an agent with Goldwasser Real Estate, knows how competitive it is. She has investor clients who are buying a home at 2107 E. 10th St. that they plan to renovate then resell.
Nunez’s clients — Kati Stevens; her fiancé, Chris Epps; and Stevens’ father Thom Heinzeroth — were the first to submit an offer, less than 24 hours after the home hit the market. Theirs was one of 12 offers, Nunez said. Her buyers made a cash offer at the $195,000 asking price.
That offer beat out one from another investor, who made a $205,000 noncash offer after Nunez’s buyers upped their offer to $200,000 at the seller’s request. Multiple offers are increasingly common for area homes, Nunez said.
“Even for investors, it’s more competitive,” she said.
Charles Heimsath, a local real estate consultant who tracks the housing market, agreed that the consistent theme of increases in sales, prices and pending sales, combined with falling inventory, points to “the beginning of a seller’s market.”
“I am also impressed by the persistence of these trends over the last few months,” he said. “This is a clear indication that, at least in Austin, the single-family market is back.”
Pending sales were up 20 percent, potentially signaling another uptick in home sales for June.
Smith said he thinks escalating rents are a big factor pushing home sales higher. With mortgage interest rates in the 3.75 percent range, in some cases, owning costs less than renting, he said.
Faith Beltz, who works at Twelve Rivers Realty, recently became a first-time homeowner. She said her mortgage and homeowner’s dues combined are $120 less than what she would have paid to rent in the Central Austin school district where she wants her daughter, Grace, 15, to attend high school.
Her mortgage for a one-bedroom condo at MoPac Boulevard and RM 2222 is $775 a month, plus $200 in homeowner’s dues. A one-bedroom apartment that she considered renting in that area was $1,095 a month, she said. Before purchasing the condo, she rented a two-bedroom apartment in South Austin for $895 a month. Now, she said, she doesn’t have to worry about rising rents pricing her out of the new school district.
“As a single mom, I didn’t realize what it would feel like to become a homeowner, and it is a really good feeling,” Beltz said.