MAKING SENSE OF AUSTIN HOUSING PRICES
Today the Austin American Statesman had a front-page article describing our red-hot housing market. Quoting research from Redfin, the piece detailed how more than 1,500 homes in the Austin area sold for more than $100,000 over list during the period of January 1 to May 23. By comparison, there were only 22 such sales over the same time in 2020.
This begs the question, “Does that mean that these 1,500 plus homes were underpriced considering the market?” I do not have an answer for that, but it would seem so. However, let me tell you about a recent listing I had. Several weeks ago, I had a client list a rent house. Based on recent experience selling similar rent houses, we priced this home higher than we would have just two months ago. It immediately had quite a few showings. Unfortunately, even though the house was in a very popular neighborhood, the house had a few problems, and we received no offers . . . low or otherwise. In this market, it only takes a few days to realize the listing price is too high. We substantially reduced the price and immediately began to receive offers . . . ALL well over the list price. I find this very interesting from the perspective of trying to understand the mindset of today’s buyers.
Considering all this, it demonstrates at least two critical points. First, for whatever reason, the listings probably must be somewhat underpriced in order to create the feeding frenzy we so often hear about. This is difficult for sellers to swallow. If they are hoping for an ultimate price of $700,000, why would they willingly list it at $595,000? Well, they would not in a normal market, but this is anything but normal.
The second point this brings up is that buyers are just not in the frame of mind to offer below list. I am at a loss to explain why, but this has been my experience and others’ as well. All told, for the first time in my long real estate career, pricing a listing is less about carefully analyzed sales comps and more about some strange, new buyer psychology. We are in uncharted waters here.
Jeff Stewart, CCIM