The Austin metro area suffers from a persistently low housing stock — a problem exacerbated by the influx of new residents and the heightened desire for homeownership caused by the Covid-19 pandemic.
That’s despite a housing permit rate that was among the highest in the nation over the past decade.
A little more than 135,000 new housing permits were filed in the metro from 2011 to 2020, the fifth-highest rate in the country, according to the National Association of Home Builders. The Houston metro area topped the list, with 363,067 new permits, and the Dallas metro followed closely behind, with 292,219. Houston and Dallas, however, are significantly larger than Austin — both have metro populations more than three times that of Austin
Behind Dallas, the Atlanta and Phoenix metros received 196,745 and 179,479 permits, respectively. After Austin, the Charlotte, Washington D.C., Orlando, Nashville, and Tampa metro areas rounded out the top 10.
The time frame studied captured the era between a nationwide home construction slowdown spurred by the Great Recession and the massive spike in new permits during the Covid-19 pandemic.
Data from 2021 shows homebuilders are still rushing to get houses on the ground during the ongoing crunch.
Between January and August, 17,375 single family home permits were filed in the Austin metro, according to NAHB. That was a 29% increase over the same timeframe in 2020. Homebuilding did pick up considerably in the latter half of 2020 — by year’s end, 23,134 single family housing permits had been filed in the Austin metro.
Even still, this homebuilding pace has not resulted in a significant increase in housing inventory in Austin, in large part because of insatiable demand. Once houses hit the market, they’re typically scooped up in a matter of weeks, if not days. In September, the median amount of time a home was on the market in the Austin metro was down to 17 days, according to the Austin Board of Realtors.
A healthy housing market has about six months of inventory at any time, meaning if no new homes hit the market, those currently for sale would take about half a year to run out. In the Austin metro, there has consistently been less than two months’ worth of inventory since May 2020. Inventory bottomed out at 0.4 months, where it stayed between January and March of this year.
The extremely low supply helps explain part of the sharp rise in metro Austin housing prices. ABOR reported the median home price across the five-county metro was $450,000 last month, up 28.5% from a year prior. That was a slight decline from a peak of more than $480,000 in June.
For comparison, Dallas-Fort Worth had a median home price of $351,049 in September, up 17.2% year-over-year, according to data from RE/MAX. The Houston Association of Realtors reported a median single-family price of $300,000 in September, up 13.3% year over year.
The single-family market has some new forces stimulating growth. Build-to-rent communities — single-family developments with homes that are only available for rent, not purchase — have been cropping up around Central Texas in the past year. Darwin Homes, Aspen Heights and Taylor Morrison are just some the companies that have invested in the market in recent months.
The Urban Land Institute also clocked the single-family rental market as a powerful nationwide trend. The organization’s ULI Emerging Trends in Real Estate 2022 survey stated these rental properties “could permanently alter the calculus of lifetime homeownership trends among adults.”
For some, building single-family homes is not the answer to the city’s lack of inventory. Instead, housing advocates call for denser options — like apartments condos — and infill housing in areas like downtown.
According to the NAHB, 111,636 multifamily permits were filed in Austin between 2011-20, eighth-most in the U.S. The New York metro topped the list.
Austin’s multifamily pipeline is fairly robust. According an October report from ApartmentData.com, 52 apartment communities were under construction in the Austin metro, with another 125 proposed. Combined those would bring 51,457 new units to the market.
Publication: Austin Business Journal