This week, on 1/12/2021, for the first time ever, there were ZERO listings for sale in Steiner Ranch & River Dance. I keep hearing people say that inventory was low throughout 2020 and is just getting worse, but is this true? Not according to the data. The numbers of new listings per month were on par with previous years. March through June were the only months with semi-significant drops in new listings, but those were the first couple of months of Covid when no one knew what was going on or what to expect. Most of the summer and fall months showed an increase in number of new listings over previous years. Why did it seem like inventory was low? MORE BUYERS!
While we had more listings come on the market compared with the same months in 2018 and 2019, the average months of inventory declined throughout 2020. We use “months of inventory” to look at the number of listings (supply) relative to the number of homes being purchased at that time. The result indicates the number of months it would take to sell all properties currently for sale at the average monthly sales pace.
With the number of new listings coming on the market remaining fairly steady compared to the same months in previous years, the huge influx of new buyers to the market has driven up demand, leading to higher sales prices from increased competition. Take a look at historical sales price to original list price ratios over time. Since June, the ratios have been consistently rising due to multiple offer situations. Why is the demand so high all of a sudden? People all over the country are reevaluating their priorities and how they work. A vast number of people will continue working remotely and are no longer tied to their locations. This is causing even more out of state buyers than usual, and people within Austin to consider moving farther out from central Austin or downtown than they ever did before.
It has been increasingly hard for contingent buyers to compete due to multiple offer situations. There are also a lot of cash buyers entering the landscape but my experience and the data below shows that cash doesn’t always win. This chart shows the percentage of closings in 78732 per month that were not financed.
These days, the question I’m hearing most often “When will there be more inventory?” The demand currently far outweighs the supply – all over Austin – not just in Steiner Ranch. I’ve heard other brokers speculate that it will be when more people have received the COVID vaccine, but I think the link between COVID-19 and the low inventory is less direct. While I’m sure there are some who aren’t listing because of their fear of exposure, the overwhelming majority of the people I’ve talked to say they aren’t listing because there’s nowhere for them to move to.
What should you do if you want to buy or sell? If you’re a seller, you can most likely dictate the terms you need – this can include a lease while you find the right property, a longer escrow, etc… If you’re an investor who has been on the fence about selling or doing a 1031 exchange, now is the perfect time to sell. If you’re a buyer – HANG IN THERE!! Make sure you are working with an excellent local lender and an agent that only knows the market like the back of their hand, but knows the contracts intricately as well. Please don’t hesitate to reach out with any questions or if you’re looking for representation.
When we look at 2020 as a whole, in comparison to 2019, the number of sales and prices all increased, while days on market decreased. The median home price increased quite a bit and as prices trend upwards, we’re seeing a lot less sales under $500,000, and more above $1,000,000 than ever before.