Market Outlook
The Austin area is expected to remain strong in 2025, although growth may moderate slightly compared to the rapid pace of recent years. Several key factors contribute to this positive outlook.
Strengths
- Diversified Economy
- Austin’s economy is increasingly diversified, with major sectors including technology, healthcare, education, government, and tourism. This diversification helps to mitigate the impact of a downtown in any single sector.
- Tech Hub
- Austin remains a major tech hub, attracting major companies like Tesla, Apple and Amazon, as well as numerous startups. This influx of tech companies drives job growth and investment in the region.
- Population Growth
- Austin continues to experience strong population growth, driven by the economy and attractive quality of life. This population growth fuels demand for housing, goods and services.
- Strong Labor Market
- The Austin area boasts a strong labor market with low unemployment rates. This indicates a healthy economy with ample job opportunities.
Challenges
- Housing Affordability
- Rapid population growth and rising home prices have lead to affordability concerns in Austin. This could become a constraint on future growth if not addressed
- Infrastructure
- The region’s infrastructure, including transportation and utilities, may need to be expanded to keep pace with population and economic growth.
- Natural Economic Conditions
- Austin’s economy is not immune to national economic trends. A slowdown in the national economy could impact growth in the Austin area.
Despite these challenges, the overall economic outlook for the Austin area in 2025 remains positive. The region’s diversified economy, strong tech sector and continued population growth are expected to drive continued economic expansion. However, addressing issues such as housing affordability and infrastructure will be important to ensure sustainable long-term growth.
Some specific forecasts for the Austin area are; the area is expected to continue to experience job growth in 2025, the housing market should remain competitive in 2025 with continued price appreciation and the area is expected to outperform the national average in terms of economic growth in 2025.
Market Wrap Up – 2024
Market Review
The Austin real estate market in 2024 experienced a period of moderation and adjustment following rapid growth that was seen during the pandemic years. Key developments include:
- Price Trends
- The median home price reached approximately $549,000 by December 2024, reflecting a 6.8% increase from the previous year.
- Market Dynamics
- The market shifted towards more balanced conditions, with homes taking longer to sell.
- Average days on market increased to 82 days by December 2024, up from 65 days in December 2023.
- Inventory and Supply
- Housing inventory increased significantly with active listings rising by 9.3% year-over-year.
- New listings increased by 7.4%, indicating more sellers entering the market.
- The number of homes for sale reached 10,387 in 2024, higher than at any time during the pandemic
- Buyer-Seller Dynamics
- In April 2024 homes sold for 95.46% of their original asking price, the highest since 2022.
- 60.4% of properties sold below asking price, 21.1% at asking price, 18.4% above asking price in April 2024.
Despite the slowdown, the market remained competitive in certain areas, with some properties still selling quickly and above asking prices. Projections for 2025 suggest a potential stabilization, with Zillow forecasting relatively flat home values into 2025.
Market Statistics
As we conclude 2024 the one common theme in the real estate market was consistency. We have moved away from the numbers that were produced during the pandemic and had very consistent year over year numbers each month. December brought us a 1.7% sales increase from December 2023 with an average sales price of $563,459 which was a 5.3% increase from the previous year.
The numbers above represent the current market as of 1/13/25. The telling stat is the 9.3% increase in new listings and the 2.0% increase in new contracts (houses going under contract). These numbers show that there are still buyers in the Austin market looking for homes. The median days on market is now 83 days, with the main reason being that there is inventory available on the market giving the buyers choices and allowing them to make wise financial decisions in their home purchase. Interest rates have stabilized and remain in the 6.5% to 7.0% range.
Market Outlook – 2025
In summary, the Austin real estate market is expected to continue its transition to more balanced conditions.
There is an increase in the number of homes that are under contract when compared to this time of year in 2024. Buyers are entering the market and builders continue to offer incentives that include, special interest rates, price reductions, flex cash towards buyers closing costs and other incentives. If you are a seller and are getting ready to put your property on the market this is great news since we are entering the busy season, which will make strategic pricing, preparation and marketing your property crucial. If you are a buyer, be prepared and get pre-qualified so that you are well prepared to make an offer. Of course every submarket is different, some neighborhoods have less inventory than others and are more desirable because they are zoned to highly rated schools, are close to many amenities, major employers and other factors.
If you have any questions, feel free to reach out to discuss your real estate needs. We are happy to help.