The hottest real estate market of 2021
The US real estate market has been “crazy” and is “still crazy” – words recently used by real estate guru Barbara Corcoran on Yahoo Finance Live. Since the emergence of COVID-19, homes have sold at a record pace and prices have skyrocketed across the country. But the frenzy is particularly magnified in a Sunbelt City.
Austin is Yahoo Finance’s 2021 hottest real estate market this year. According to nearly every real estate company that tracks home prices, however you slice the data, home prices in the Texas capital have skyrocketed, overtaking the country.
It’s also probably not a big surprise to industry watchers and at least one real estate company. Zillow predicted Austin would be the hottest city in 2021 in January. Now Zillow (Z) is to predict by the end of this year, the Austin metro area will become the least affordable major metro area for homebuyers outside of California; it has already passed Boston, Miami and New York.
“The Austin market has stood out and that’s because of the phenomenal evolution of remote working, the outperforming tech industry and the search for affordability,” said Danielle Hale, economist at Realtor.com, adding that even though prices have gone up in the market, it is still half the price of other major cities.
According to the National Association of Realtors (NAR). Of the 50 major cities tracked by Realtor.com, Austin led the pack in annual growth in median listing prices, posting a 15.9% increase. Likewise, NerdWallet found that among the nation’s largest metropolitan areas, Austin saw the largest increase in listing prices – a 29% increase in the third quarter compared to the same period last year.
Austin is “well positioned as a fairly affordable destination to buy a family-sized home in a place that has a lot of cultural flair,” said Jeff Tucker, senior economist at Zillow.
“A cool city”
Like many other subways with a warmer climate, Austin has benefited from the COVID migration. But some would say that people from all over the country and even the world were already flocking to the City of the Purple Crown (Austin shares this nickname with Athens, Greece) long before the virus arrived in the United States, and not just for South by southwest (SXSW), an annual interactive media and music festival.
“Austin was popular before COVID, it’s a cool city,” said Elizabeth Renter, data analyst at NerdWallet. “It would top the list of price increases and inventory decreases regardless of COVID, maybe not to this extreme.”
While most people arriving in Austin were from Los Angeles, San Jose and San Francisco in 2020, according to a Zillow Analysis, Tucker noted that the city is “a great place, it attracts a lot of people from all over (West Coast, Northwestern and Midwest migration).” Other US cities like Miami tend to be destinations for residents of the Northeast and Midwest, and Boise primarily attracts the attention of Californians.
“Austin is a very progressive city that offers everything, not just a panoramic perspective: rolling hills, great lakes. It has a very active lifestyle, it’s a tech-centric city, ”said Romeo Manzanilla, former chairman of the Austin Board of Realtors and CEO of Compass. “People on the east and west coasts can relate to it.”
It is home to billionaire and newly elected Personality of the Year, Elon Musk, who officially moved Tesla’s (TSLA) of California this year. Likewise, the software manufacturer Oracle (ORCL) took off to Austin, where he opened a campus in 2018, from Silicon Valley. And last month, Samsung announced plans to build a $ 17 billion semiconductor plant just outside Austin, which is expected to be operational in the second half of 2024.
Meanwhile, next year, Apple (AAPL) is expected to complete its $ 1 billion, a 133-acre campus, which will eventually house 15,000 employees in Austin. And since establishing its first office in Austin in 2007, Google (GOOG, GOOGL) has expanded its offices in the city and now have 1,100 employees. The latest wave of activity has essentially revived Silicon Hills, nickname given to Austin in the 1990s.
“Companies moving or expanding their secondary headquarters to Austin have created substantial employment opportunities and attracted people. The combination of a strong local economy with the flexibility that people don’t need to have jobs in Austin “to live there has made the market a standout, Hale said.
Job growth in Austin has been happening “for many years,” Lawrence Yun, chief economist for the National Association of Realtors, said in an email. “Based on the migration patterns of many Californians who settle there, it can be assumed that this is due to the expansion of the tech sector in the metro area.”
In the third quarter of 2021, 54% of people looking for housing in Austin were from outside Texas, including overseas home hunters, according to Hale. Forty-six percent came from other parts of the state.
It also helps that Austin is in a “tax-advantaged state (there is no income tax) so it’s more beneficial for higher income taxpayers,” she said. added.
Bay Area and Los Angeles residents “have more cash to bid [on a home] way above asking [price]”said Manzanilla.” They made our market competitive.
Even before the onset of COVID in February 2020, the median selling price of a home in Austin was $ 325,000, far cheaper than a house in San Francisco, where the median selling price was 1.4 million. dollars, according to Daryl Fairweather, chief economist at Redfin. Still, it was more expensive than the national median selling price of $ 302,000.
“It was a frustrating experience for longtime local residents. Trying to outbid new tech hires has been difficult, ”Yun said. “Any monthly savings accumulated for a down payment became irrelevant, as house prices rose even faster than the savings rate. “
But relief may be on the way, as experts note that there are early signs the Austin real estate market is cooling off. In fact, Fairweather said price growth had already peaked this year in April. As in the rest of the country, price growth will subside to single-digit rates by 2022, compared to as much as 20% in the north, according to Fairweather.
The number of homes for sale in Austin is also on the rise. According to NerdWallet, the number of homes listed for sale in Austin increased 73% in the third quarter of 2021 from the previous quarter, leading the nation’s largest metropolises in inventory growth.
This should help ease the price pressure in the city, even if the homes on the market take off. In the third quarter of 2021, homes for sale were only on the market for 24 days, compared to 40 days nationally, according to NerdWallet’s Renter.
Celebrity and Austin native Matthew McConaughey, who as minority stakeholder in the MLS Austin FC team helped the city welcomes this year its first professional sports teamSummarized why Austin is so hot in a lengthy interview with Yahoo Finance Editor-in-Chief Andy Serwer last year: “Austin was a college town, a government town, and a music town. It is now a banking city, a technological city and an international destination.
Amanda Fung is a writer at Yahoo Finance.
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