Austin Updates - Where Austin Ranks at the Top (and Bottom)

Summary

Austin remains one of the fastest-growing cities in the U.S., with a 26% population increase over the past 14 years. However, the city's housing market faces challenges, particularly with affordability due to high property taxes and skyrocketing home prices. In the third quarter of 2024, home sales dropped by 25%, with properties taking longer to sell and a decrease in the success rate of listings. Despite these hurdles, the city's economic growth continues, and while mortgage rates hover around 7%, buyers may find opportunities in the slower market ahead of the holidays.

Takeaways

• 😀 Austin continues to be one of the fastest-growing cities in America, with a population increase of over 25% in the last 14 years.
• 😀 The Austin-Round Rock metro area is ranked top for job growth, wage growth, and economic performance by the Milken Institute.
• 😀 Austin has been named the second healthiest city in the U.S. by Forbes, thanks to a generally favorable economic and health environment.
• 😀 The University of Texas, located in the heart of Austin, has contributed to the city's ranking as America's best college town for 2025.
• 🏡 Despite Austin's economic success, it ranks poorly for the cost of homeownership. Buying a home is 95% more expensive than renting a single-family home.
• 💰 High property taxes are a major factor contributing to Austin's high cost of living, with taxes making up nearly 20% of monthly housing costs.
• 📉 The real estate market in Austin has slowed significantly, with home sales down nearly 25% since the peak of 2021.
• ⏳ The average days to sell a home in Austin have increased, currently sitting above 60 days, compared to the 10-year average of around 39 days.
• 🏠 Only 70% of homes listed in Austin are selling, which is a significant drop from the 90% success rate during the pandemic.
• 💵 Despite lower sales volume, the dollar value of homes being sold in Austin is up by 40-50% compared to five years ago.
• 📉 The median home price in Austin peaked at $455,000 in April 2024 but has since fallen to around $425,000 in September, with a slight uptick in October due to lower interest rates.
• 🔮 Interest rates have remained volatile, hovering around 7%, with uncertainty in the market due to upcoming political events and Fed announcements.

Q & A

What is the current population of Austin in 2024?

As of 2024, the city of Austin has just under 1 million people, while the greater metro area is nearing 2.3 million.

How much has the Austin metro population grown since 2010?

Since 2010, the Austin metro area has grown by approximately 26%, increasing from 1.72 million to 2.23 million.

Why is Austin ranked as one of the top cities for economic performance?

Austin ranks highly due to strong job creation, wage growth, and a business-friendly climate, contributing to its rapid economic performance.

What is the affordability issue affecting Austin's real estate market?

The affordability issue stems from the large gap between the cost to buy a home and rent one. In Austin, purchasing a home is 95% more expensive than renting a comparable single-family home.

How have property taxes in Austin impacted homeowners?

Property taxes in Austin have significantly increased, now making up nearly 20% of homeowners' monthly bills, which is higher than most other cities in Texas.

What recent trend in Austin’s real estate market is causing concern for sellers?

The success rate for selling homes has dropped below 70%, meaning fewer homes are selling at their listed price, and some sellers are having to wait longer to find buyers.

What is the current state of interest rates in the Austin housing market?

Interest rates are currently above 7%, a significant increase from earlier in 2024, which is creating uncertainty in the housing market and making it harder for buyers to secure affordable loans.

What impact have interest rates had on real estate activity in Austin?

High interest rates have caused a slowdown in buyer activity. As a result, the number of homes sold has decreased, and properties are taking longer to sell compared to previous years.

What is the forecast for home prices in Austin for the remainder of 2024?

Home prices are expected to decline further by the end of 2024. While there was a slight uptick in prices in October, it is predicted that the median home prices will fall to or below the levels seen in September.

How has the bond market influenced mortgage rates in Austin?

Uncertainty in the bond market, driven by inflation concerns and political factors, has led to higher mortgage rates. This affects homebuyers, as the cost of securing a mortgage has risen due to the bond market's demands for higher returns.