More homes sold in the Austin-area last month than in any May on record, according to a report by the Austin Board of Realtors. Their analysis of MLS Listings shows 2,991 homes were sold in May, an increase of 29 percent over the same month last year.
The increased demand sent the median home price up by eight percent to $231,500. The average home is sitting on the market for just 44 days, which is 19 days less than May last year, according to the report.
“With these numbers, it’s important that our housing inventory remain strong to meet this unprecedented demand,” Austin Board of Realtors chairperson Cathy Coneway said in a statement.
Fair enough. We thought we’d ask someone who tracks new construction to see if enough is being done to meet demand. So we called Madison Inselmann with the real estate tracking firm MetroStudy.
KUT News: Could homebuilders be doing more to increase supply?
Madison Inselman: There is enough [building] activity going on; however, with people coming in so consistently every day, that’s where our shortage comes in.
We have a growing market here on the new home side. If you’re already here and you can wait 5 to 7 months for your home to get built, then can we have a home for you.
But for those who want a home today because they’re moving from out of town, that is where we are short on the market because builders are selling them as fast as they finish them, and we’re not able to build up the stock that we had previously.
KUT News: Is there truth to anecdotes that builders have to pay more for skilled laborers and for building materials?
Inselman: That’s absolutely right. First it was the land prices, and then lumber, and now drywall is following in their footsteps.
The builders, the developers are feeling the price increases, and that’s just the way the market works. The consumer is going to feel it as well.
KUT News: If prices are rising, doesn’t that increase the incentive for builders to increase supply of new homes?
Inselman: Builders right now are building as fast as they can. Some of the limitations they have, which you hit on, labor shortages and rising prices. Also, this surge of new construction has created a permitting backlog at the city.
The third part on there would be developers being able to deliver [land] lots, because they’re having their own permitting and labor issues.
We are as active as we can be. We are just growing faster than the infrastructure that we have in place as an industry.
While we could have potential demand for 10,000 new homes this year, we’ll probably start a little less than that because of those restricting factors.
KUT News: With home prices rising so quickly, is it possible we are approaching a real estate bubble?
Inselman: I think we’re way too early in the process to say a “bubble.” Not only do we have the local economic demand – job growth is the initial indicator for new home growth – but we also have the population increase as people move into the market.
We’re filling up apartments. We’re taking resale homes off the market and boosting the new home side.
I believe that we are still trying to catch up to what you could consider pent-up demand through the recession. The population increases are just fueling that.