By Lee Whitaker • 2018 President
In July, the Home Builders Association (HBA) of Greater Austin held its annual Mid-Year Housing Forecast at the Phillips Event Center for a sold-out crowd of more than 350 HBA members and industry partners. The program gave the HBA’s members a snapshot of how the industry is shaping up and insights on what to expect for the remainder of 2018 and into 2019. Vaike O’Grady of MetroStudy presented her analysis of the Greater Austin housing market, concluding that while the market continues the “high-demand” trend, there are just not enough lots being developed to keep up. The lack of supply will keep prices rising — pricing out more and more residents from the housing market; a trajectory that could position Austin in line with other cities already experiencing an affordability crisis.
“The median base price for new homes during the second quarter of 2018 hovered around $290,000, as it has for the previous six quarters. To contradict rising costs, developers and builders are moving further out and building smaller homes on smaller lots. For example, 60 percent of second quarter starts were on lot sizes smaller than 54-feet wide,” said O’Grady.
O’Grady said quarterly closings outpaced new home starts in all of the price segments above $300,000 as well, so the demand is not just at the lower end of the price spectrum. “This demand pressure is starting to cause challenges for builders. We simply don’t have enough lots on the ground to satisfy the market. Overall, the market is at 17.6 months of supply, well below what we consider equilibrium (20-24 months).”
Lot scarcity is adding pressure to pricing, as builders compete for lot positions. At the same time, developers are facing pressure from added costs, including costs related to delays in permitting. “The home buyer suffers because delays add cost, and those costs are going to be passed on to the customer,” said O’Grady.
O’Grady reiterated the impact of permitting delays, “The market is being held back because we’re not adding lots fast enough. Developers delivered 4,160 lots in the second quarter, down 13.4 percent from a year ago. Our annual lot delivery pace has slipped below 17,000, in a market that starts almost that many homes in one year.” O’Grady noted that almost half of the 20,000 lots currently in the development pipeline are in Williamson County where housing prices are lower.
O’Grady also attributed the growth in the top five submarkets to transportation access, all of which are situated near the 130 and 183A toll roads — primary arteries for residents to travel for work. “Along 130, Pflugerville, Manor, and Del Valle all saw more than 1,000 annual starts. The 183A toll road and employment growth in the north are behind strong numbers in Cedar Park/Leander West and Liberty Hill,” said O’Grady.
As the market continues at this pace, O’Grady stressed to meet demand, delays need to be dramatically reduced so lots and homes can be delivered more quickly and at a lower cost.
For the first time, the HBA of Greater Austin is bringing the Parade of Homes to Leander. One of the fastest growing communities in the region is home to Travisso, a stunning luxury home community with opulent views of our beautiful Central Texas Hill Country.
This year’s Parade will feature four distinctly different styles of custom homes, but that’s not all! Visitors will experience the Parade in a new way. Several informative programs and product demonstrations will be offered that will allow visitors to explore, discover and be inspired in a new way. We are excited to announce visitors can join us for “Parade After Dark” on Saturday, November 3 where we’ll be hosting Suede for an outdoor concert. You won’t want to miss it!
New Exclusive VIP REALTOR Days!
New this year, REALTORS are exclusively invited to attend on Thursdays, October 25 and November 1, when the tour will be closed to the general public. Like in past years, REALTORS will use their business card as their ticket to attend free of charge. This year, the HBA will offer REALTORS CE classes, exclusive guided tours, food, drink and prizes. The HBA is partnering with the Austin Board of REALTORS, Williamson County Association of REALTORS, Women’s Council of REALTORS, Platinum Top 50 REALTORS and others to make these new VIP REALTOR Days a huge success. The Parade of Homes will be open on REALTOR Days from 2-7 p.m. Sign up at www.ParadeofHomesAustin.com to get the latest updates and invitations.
The Parade of Homes will be open to the general public from 11 a.m. to 7 p.m. Fridays through Sundays from October 19 to November 4 . Tickets are on sale now. For more information and to buy tickets, visit www.ParadeofHomesAustin.com. RL