Texas Housing Market
What's up, Texas? You might have heard of the booming Texas real estate market, with any house that is listed getting multiple offers in a couple days. Many houses are getting tens of thousands of dollars over asking, with stories of homes in Austin selling for $100,000 above list price. So what are the facts, and what is really going on in Texas? Is the housing market in Texas an isolated event or a nationwide phenomenon due to some external factors? According to mymetrotex.com, international demand contributed more than $10 billion, and since then, the demand has been growing.
According to Redfin, home prices in the state of Texas were up 20.5% year over year in June 2021. During the same period, the number of homes sold rose by 5.5% while the number of homes on the market for sale decreased by 44.5%. As of June 2021, the median sale price of homes in Texas is $329,000. This is approximately 13% lower than the US average.
Source: Texas A&M
The chart above shows a steep increase in US median home prices. Texas has followed a similar trend, and the Texas housing market is not unique. Other factors that affect the housing market are the demand and supply of homes, the chart below shows the supply of homes in the US vs. Texas.
Source: Texas A&M and St Louis Fed
The housing supply in Texas has also followed a similar trend as the national housing supply. In fact, since the beginning of 2020, the supply of homes in the state of Texas has dropped 52.96%, which is very close to the change in the national home supply, which is a drop of 52.44%. A regional analysis of housing data might give a better view of the housing market in Texas.
Source: Texas A&M
It is clear that the Austin housing market is an outlier in the state of Texas. As of June 2021, the median home price in Austin stands at $600,000, which is 59% higher than the national average. The median price in Austin was up 41.2% year over year, compared to 26.3% nationally. This surge in Austin house prices in driven in part by a high demand for housing from people moving in from different parts of the country, especially California and New York. Moves by companies like Google, Tesla, Oracle, and many more have compounded the increase in price while at the same time decreasing the supply of housing. In June 2021, year over year, the number of homes on the market fell by an astounding 67%, while the median home price rose by over $250,000.
The housing market in Dallas has also outperformed the national market, however, only by a small margin. The Dallas market is a second choice for buyers who cannot afford a house in Austin but want to enjoy everything that Texas has to offer. As of June 2021, the median sale price in Dallas was $410,000, compared to $377,000 nationwide. The median price in Dallas was up 13.1% year over year, compared to 26.3% nationally.
Most experts believe that the combination of low interest rates, flexibility to work from home, a desire for better housing, and saving has led to a strong demand for housing. Today's housing market is supported by strong fundamentals like tight lending standards and low inventory. The ability to work remotely will lead to a normalization of home values. In California and New York, the median home prices stand at $720,000 and $795,000, respectively, while in Texas, the median home price stands at $390,000. No wonder when a buyer moving from CA or NY finds their dream home, they don't mind paying $10,000 or even $100,000 over asking as they don't want to lose the home. However, froth in the market arising from increased speculation and fear of missing out could potentially create a bubble.
Looking to buy a home in Dallas-Fort Worth? We credit the full buyer's agent commission. When a home is sold, the buyer's agent receives around 3% of the final sale price in commission. If you decide that Zerorets act as your buyer agent, you will receive a rebate of this 3% commission minus a fixed service and brokerage fee. The fee is $250 per $100,000 of the sale price.
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