AUSTIN, Texas — We all know buying and building homes in the Austin area is expensive. Austin is outpacing other Texas cities when it comes to development fees for builders, and home prices have skyrocketed.
A recent study by Florida Atlantic University ranked Austin as the second-most overvalued housing market in the country. But is that true? Ashley Jackson, president-elect of the Austin Board of Realtors (ABoR), joined KVUE Midday to dig deeper.
Watch Jackson's full interview with KVUE's Jenni Lee below or scroll to read an edited transcript of their conversation.
Jenni Lee: According to Florida Atlantic University, buyers in Austin pay just a little bit more, but 67% more than they should. So, demand for new and existing homes is there, but there's not enough supply. Is the Austin housing market overvalued?
Ashley Jackson: "No, I do not believe the Austin housing market is overvalued. That study was based just on an increase in prices. But this isn't a speculative market. This is a demand-driven market. So, the prices that we have, that buyers are having to pay for homes, was based on the demand that they have created with a lower housing inventory.
So, we have a lot of buyers competing for a small amount of homes and that is what drove up our prices. And we have a lot of buyers coming to our area because we have a lot of companies coming to our area. So, this isn't speculation. These are people just like you and me who want to buy a home in the Austin area."
Lee: Activity seems to have slowed a bit the past few weeks and months. There's more homes available to buy, and the number of days homes sit on the market has gone up. So, how hot is Austin's housing market right now?
Jackson: "It is still a hot market. So, we are getting close to our pre-pandemic levels of housing inventory available for buyers to choose from. So, it's actually a great time to buy right now. We have a little bit of increase in supply, which takes the edge off of our market. We have been in a fever pitch for the past few years, and that's just subsiding a little bit with the higher interest rates. So, buyers should have an easier time getting a home under contract. Instead of one home being available in a neighborhood for sale like we've seen for the past few years, you may have more to choose from, two to five, perhaps. So, this is actually a great time to buy. Homes are still getting multiple offers and that will vary by neighborhood. So, we do still have great demand in our area."
Lee: Have you seen any relief for buyers and sellers after having said all that, that the demand is still hot and our market is still sizzling?
Jackson: "Yes, I have seen some relief for buyers. Absolutely. There are more homes to choose from, so that makes it easier to get in the contract. One thing that we saw during the pandemic over the past few years – and this is something that was driving up our prices – we had buyers competing against each other. And so, as they were doing that, they were making higher and higher offers and including what we called the appraisal waiver, which basically guarantees to the seller that they would get the price that those buyers were offering for that. And so, that set our prices a lot higher. So, we have a little bit less of that in the marketplace.
A buyer may be able to get a home under contract without having to waive those contingencies. So, [that's] making this a really excellent time to buy, and it's also the summer. It's a little bit sluggish right now, just like it is every year. You know, there's seasonality to our market and that's true right now as well."
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Lee: We hear the term "housing bubble" being tossed around all the time. So, here's the million-dollar question: When will Austin's housing bubble pop and what happens when it does?
Jackson: "I don't think that the housing bubble is going to pop. I think our fever pitch that I mentioned earlier is subsiding just a little bit. We may see a small correction this summer and fall. Just, you know, some houses may still be priced on last spring's demand. And so, those prices might need to come down a little bit as those sellers finally have a touch of competition. But I don't think it's going to be anything palpable. And that may change over the coming few months as the market settles out and adjusts to these new interest rates and people get back into the swing of buying homes because the fall is approaching ... I don't think we're in a bubble and I don't see where there's a looming burst coming."
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