Austin’s housing market ended 2015 the way it started the year — still among the hottest in the nation.
For the fifth straight year, Austin-area home sales set a record in 2015, the Austin Board of Realtors said Thursday.
And for the fourth year in a row, the area’s median home sales price hit a new high, rising to $263,900.
With similar market conditions still in place, experts predict 2016 will be similar for the Central Texas housing market, though affordability will remain a concern as prices push higher. In addition, potential headwinds could loom for the economy that could affect the housing market, they say.
Last year ended with 29,068 sales of single-family homes, about 4.7 percent higher than 2014’s total, according to the Board of Realtors. Half the homes sold for more than $263,900 and half sold for less, an 8.8 percent jump in the annual median sales price.
Sales and the median prices also set records for the month of December, the board said. December’s 2,390 sales were up about 5.5 percent over December 2014’s volume. The median price for homes sold in December was $270,000, 9.7 percent higher than December 2014.
Home prices in Central Texas have risen sharply in the past few years as demand for housing has outstripped supply.
“House prices have increased a lot in recent years, and our own indicators (including house-price-to-income ratios) imply that the market is becoming overpriced,” said Ed Friedman, a director with Moody’s Analytics who follows the Texas economy.
Still, some real estate agents and local housing experts say the Austin market remains on solid footing.
“As long as people continue to move here, we’re going to continue with a robust economy” and home sales will stay healthy, said Grant Whittenberger, a local real estate agent. “Texas is becoming a destination for people in states facing difficult economic times.”
Amy Bernhard, an agent with Realty Austin, said she thinks the housing market “will be the same, or even a little better, than last year.”
“Everything has appreciated very organically,” Bernhard said. “I don’t think we’re in any sort of bubble.”
Local real estate agent George Vance McGee, however, said he thinks “prices are just a little too high.”
“Buyers are not paying these pie-in-the-sky prices,” McGee said. “Some of my sellers are giving me a dreamy price and hoping I may be able to perform a miracle, and I have not been performing miracles lately.”
Experts say there are several uncertainties facing the market — including possible impact from slumping oil prices.
“As long as the national economy continues to hum along, Austin can probably weather most of the energy-related storm,” said Jim Gaines, chief economist at the Texas A&M University Real Estate Center. “High tech and professional business services continue to prosper – which is good news for the Austin area. The dark cloud is probably state government funding as the lower oil price is eventually going to start playing havoc with the state budget.”
Mike Castleman Sr., a longtime housing industry analyst, said he is “very concerned about the Texas economy” and thinks it could be in for “a fairly severe setback.”
“The price of oil has collapsed, and it is expected that as many as 30 percent of the oil companies in the country will go into bankruptcy, and most of those companies are in Texas,” Castleman said.
However, the impact for Austin will be “mild to moderate,” he predicted.
Paul Peters, recruiting manager at Assurance Financial, a Louisiana-based residential mortgage lender, said the company plans to open a major regional mortgage loan production office in Austin, which is “high on our list of expansion markets.”
“We view the area as one of the strongest diversified economies and residential housing markets in the country,” Peters said. “We believe that Austin will continue to see robust appreciation in home values and that more affordable housing will surface in the area as more lot development takes place in the market.”
A&M’s Gaines said he thinks Austin’s housing market should hold up well in 2016, although he’s hesitant to project another record year.
“Affordability – the disparity in the rate of increase in home prices relative to changes in income levels — higher interest rates and a slower economic expansion could lead to a somewhat slower market, but it’ll be close,” Gaines said. “So far, most of the new jobs created have been relatively high-paying, adding to the demand for even higher priced homes.”