Austin-Round Rock-San Marcos

December 2024 Central Texas Housing Report

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Clare Knapp, Ph.D., housing economist for Unlock MLS and the Austin Board of REALTORS, predicts that the coming year will mirror 2024's conditions offering consistency for homebuyers and sellers.


"2025 market activity will likely look similar to trends observed in 2024 with the median sales price and closed sales hovering between a range of 5% up or down year-over-year. This stability will give homebuyers and sellers clear expectations to plan their next steps with greater confidence. Additionally, mortgage rates will likely hover between 6 and 7%, as the Federal Reserve adopts a cautious approach to potential rate cuts. This consistency will allow both buyers and sellers to benefit from a predictable lending environment. However, external factors, such as economic shifts or policy changes, could influence these trends, underscoring the importance of staying informed and adaptable to navigate the market successfully."

Knapp added that while 2024 was a better year for first time homebuyers due to the increase in supply, there is still much work to be done to tackle the region's affordability issues.

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I recently had the pleasure of helping a fellow Ag close on a home purchase earlier this January, and they got an incredible deal! While I was thrilled for my client, I couldn't help but feel for the seller, who ended up losing around $60K in equity after purchasing the home back in 2022. Unfortunately, the seller had no choice but to sell due to a job relocation. While renting the property might have been an option, it likely wouldn't have covered their mortgage payment. It's a reminder of how quickly market conditions can change and the importance of evaluating all options during transitions like this.


In terms of the Greater Austin real estate market, here's an overview of the latest trends:

• Median Sales Prices: Increased by 1.4% year-over-year (YOY) to $450,000, which now makes it 2 months in a row that we have seen an increase.
• Closed Sales: Dropped 2.5% YOY to 2,303.
• Active Listings: Increased by 10.1% YOY to 8,494.
• Pending Sales: Are up 3.1% YOY to 2,011.
• Months of Inventory: Currently at 3.8 months, down 1 month from last month but up 0.8 months YOY, reflecting a more balanced market.

Austin-Round Rock-San Marcos YTD


Austin-Round Rock-San Marcos


Bastrop County


Caldwell County


City of Austin


Hays County


Travis County


Williamson County

Thanks guys!

HOUSTON

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After two consecutive years of declining sales, the Houston housing market experienced modest growth in 2024. Homebuyers kept the resale and rental markets active despite fluctuating mortgage rates and higher home prices. As 2025 gets underway, steady demand and expanding inventory have set the stage for continued growth.

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The Facts

• Months inventory fell from 4.4 months last month to 4.0 months in December 2024 (compared to 3.3 months in December 2023). That's definitely a big move and we have been feeling it in the market. My guess is that it will continue to fall for one more month, then remain relatively flat through this spring, then start to fall again this summer.
• Mean and Median prices are up 5.0% and 1.3%, respectively, YOY.
• Total Property Sales (13.6%), Pending Sales (12.7%) and Dollar Volume (20.5%) were all up YOY.
• The next Fed meeting is 1/29/25 and the market is 99.5% sure that no adjustments will be made to the target rate.
• The 10 year Treasury Yield, which was at 4.574% as of my last post a month ago, spiked over the last month but has recently started to fall again the last few days back down to 4.587% as of this morning. That's a good sign for mortgage rates.
• Per the CME FedWatch tool, the market is currently not betting on another rate cut until mid June of this year.

My Take

• This last month was another busy one for me. I closed deals in Garden Oaks, Independence Heights, and Katy. The snowstorm pushed another commercial deal I'm doing at the NE corner of Morton Rd and Katy Hockley Rd from closing earlier this week but we should get that one closed tomorrow. I'm happy for the seller on that one but also happy for my cell phone usage as well--the number of calls I got and still get, even with "SALE PENDING" signs up is crazy. Also, the number of people who called and were very angry with me about the list price was kind of shocking to me. I've never had that happen before, and just so you know, yelling at me doesn't scare me. It usually just makes me laugh at you.
• I am definitely starting to feel the inventory squeeze coming on again. Sellers definitely have a "take it or leave it" attitude, and the remaining inventory is tough. Mean pricing is up 5% YOY. Let that sink in. That could very well be "the good old days" very soon, especially because many local banks were not funding new developments over the last couple of years.
• Independence Heights has really changed a lot in the last few years. It's been pretty cool to see it happen live, and I expect the neighborhood to continue to appreciate over the coming years. Definitely a place to look for folks who can't afford the Heights proper but want to be close to the action (and the action that's already in that neighborhood aka Barbecue Inn, Flying Saucer Pie Co, Gatlin's Fins and Feathers, B&W Meat Co, etc.). If you haven't driven that neighborhood in a while, or driven north on Shepherd past 43rd recently, it's definitely worth the trip.
• I've got a great portfolio of well performing Airbnb's for sale in Galveston if anybody wants to own some there!

Sources
https://www.har.com/content/department/newsroom?pid=2141
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html
https://www.cnbc.com/quotes/US10Y

NORTH TEXAS

Pretty interesting data coming out of North Texas for December. I think some of the data was affected by the tail end drop in rates that occurred 2 to 3 months prior but pretty strong performance given what we are seeing with mortgage rates.

In general, I am seeing inventory sit longer and not surprised to see Days on Market increase by 10 days to 84 on average. I am surprised to see continued strong pricing growth given the persistent climb in inventory (active listings up 37.4% YoY). However, Months of Inventory still relatively low at 3.2.

Buyers came out of the woodwork briefly to capitalize on the lower rates but that has since evaporated and no relief appears to be in sight.

Interestingly, investors believe home prices are overvalued by at least 10% and in some cases by up to 35% (Link). Based on affordability and monthly housing cost given debt costs I don't disagree. However, North Texas continues to drive pricing growth. I think this speaks to the general demographics of the area which benefits from a diverse industry base, continued corporate relocations, and strong population growth.

Rental rates could see a push higher given limited apartment supply in the next 2 years as a result of limited construction financing availability. This could benefit rental owners in the short term, until supply levels return to more normal levels (likely 3 years out).

As far as current listings, Buyers are being extremely picky (rightfully so) as there is no more inventory to choose from.