HOUSTON – (By Dale King, Realty News Report) — Texas home sales surged to a new high of 114,772 transactions in the second quarter of 2021, a 24.7 percent increase from the same quarter a year earlier, according to the 2021-Q2 Texas Quarterly Housing Report recently released by Texas Realtors.
The statewide median home price climbed 19.1 percent to $300,490. The Austin-Round Rock metro outpaced the state, where the median home price jumped to $470,000 — a 42.4 percent increase from Q2 2020.
The percentage gain in Austin nearly doubled the growth seen in the next-largest Texas metro, Dallas-Fort Worth-Arlington, where the second-quarter median home price rose 22.4 percent year over year.
Other major metropolitan areas also posted significant gains. The Houston-The Woodlands-Sugar Land metro recorded a median home price of $300,728, up 17.9 percent from a year earlier, effectively mirroring the statewide average. San Antonio-New Braunfels saw a median price of $280,000, a 14.8 percent increase, while El Paso’s median rose 13.5 percent to $195,000.
Covid Impact – Bigger Houses in Demand, Says Tim Surratt
Beyond rising prices, buyers in Houston are shifting toward higher-priced homes, observed Tim Surratt of Greenwood King Properties in Houston. A Realtor for more than 30 years who grew up near Austin, Surratt said the market shows a meaningful upsizing trend since the pandemic began.
“Homes sold for $750,000 and above in Houston increased 36 percent year over year,” he said. “In the $500,000 to $750,000 range, sales rose 18.9 percent.”
Surratt also noted buyers leaving Austin’s market for alternatives elsewhere. “Some people looking for upper-end houses are not happy with Austin,” he said. “In my 30 years of business, this is the first time the supply of homes in Austin has been exhausted. It’s insane.”
He shared an anecdote about a buyer who withdrew from negotiations after the seller raised a $5.6 million asking price by another $700,000 before a deal was completed.
A board member of the Houston Association of Realtors, Surratt believes COVID reshaped buyer priorities. “Prior to the pandemic, people weren’t that interested in a study or a second dining room. After COVID hit, they wanted more space — separate parlors, multiple dens and dedicated spaces for students to work at home.”
Addressing concerns that fluctuations in the oil industry might trigger a price decline in Houston, Surratt said he does not expect a drop. “Oil industry jobs are important, but Houston has diversified its workforce enough now,” he added.
Texas Realtors: “Record-Breaking Summer”
“Texas is in the middle of a record-breaking summer selling season with unprecedented demand for housing,” said Marvin Jolly, chairman of Texas Realtors. “Across the state, buyers are having to compete more than ever for houses, leading to a strong increase in home prices.”
Statewide, 30.1 percent of homes sold in Q2 were priced between $200,000 and $299,999 — the largest share among all price brackets. In Houston, 34.6 percent of sales fell into that range; in Dallas 27.3 percent; and in San Antonio 40.8 percent. In contrast, 26.5 percent of Austin buyers purchased homes priced between $500,000 and $749,999, while only 11.4 percent of Austin sales were in the $200,000 to $299,999 bracket.
El Paso buyers were the most price-conscious: 48.4 percent of purchases were in the $100,000 to $199,999 range, followed by 33.5 percent in the $200,000 to $299,999 bracket.
Nearly every Realtor cited the imbalance of supply and demand as the primary reason sales and prices have risen so sharply.
“The extremely low level of supply available is holding back sales and pushing up prices, as mortgage rates remain near 3 percent, the economy is expanding, and demographic trends continue to support housing demand,” said Luis Torres, Ph.D., research economist with the Texas Real Estate Research Center at Texas A&M University.
“The limited inventory for homes priced below $300,000 is particularly distressing and is straining housing affordability,” Torres added.
Austin’s Microscopic Inventory
Austin’s supply shortage is acute, said Bill Morris, an Austin Realtor and regional vice president for Texas Realtors. “We have about two and a half weeks of inventory… maybe a little more,” Morris said. At the Waco-Temple end of the I-35 corridor, inventory is below a month.
Morris attributed Austin’s demand to its attractive location and well-educated workforce, which have drawn major employers such as Hewlett-Packard, Google, Amazon and Tesla to the region.
Looking ahead, Morris said he does not expect demand to cool soon. “I don’t think a damper is coming — there is such strong demand.” He conceded that a supply chain disruption could slow activity, but he does not see that occurring imminently.
Out-Of-State License Plates
“I’ve been as busy as I’ve ever been,” Morris said. “I still see a lot of out-of-state license plates. I understand between 160 and 180 people a day are moving to Austin.”
Aug. 18, 2021 Realty News Report Copyright 2021
File: Texas Home Sales Up 25 Percent as Prices Surge
Photo Credit: Ralph Bivins of Realty News Report Copyright 2021
For more about Texas real estate, see the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins. Ebook and print editions are available.