By Sahar Chmais
As the second-fastest growing county in the U.S., Hays County cannot keep up with the housing supply for its growing demand – only a lucky few are able to squeeze into the home lottery.
Yes, buying a new home in Central Texas feels like winning the lottery. Even some of the most skilled realtors are pushed out of the market. Elle-Klein Garrison, a Realty Austin realtor who earned a Diamond Club award for selling $11.5 million worth of inventory in 2020, is unable to buy a home. She and her husband set sights on a $500,000 house in Dripping Springs but could not compete with the winning offer of $642,000.
The housing market in Hays County is at the highest experts have ever seen it, and in some ways it is likened to the 2007 pre-recession market, said Luis Bernardo Torres Ruiz, a real estate research economist at Texas A&M University. The only difference is that the bubble burst and tighter mortgage loan regulations took place; this time around, Ruiz does not foresee the bubble bursting. But homebuyers looking in Hays County can take some solace in this expert’s future predictions.
Price increases and bidding wars were caused by a storm that has been brewing for years. New home construction was affected after the 2008 recession with less home construction permits being allotted. Then the pandemic hit, and once again, construction slowed due to COVID-19 lockdowns in March and April, Ruiz said.
Another contributor has been people working from home and suddenly realizing they need a bigger space with an office, Ruiz added. People were also reluctant to place their home on the market, uncertain if they will lose their jobs and what will become of their future.
Texas has also attracted many Californians due to the state’s no income tax and cheaper homes with more space, Ruiz told the Hays Free Press/News-Dispatch.
Rising mortgage rates should slow down somewhat, Ruiz said. When the prices slow down, they will not return to pre-2021 rates, he added.
For example, in February and March, it was common for a home in Austin and Hays County to receive more than 20 offers, but things are slowing down a little, Garrison said. Usually more houses hit the market in the spring and summer time, so more supply will be available.
Vaccines will be another factor helping the buyer. Many homeowners did not want to sell during the pandemic because they were still living in their homes and did not want to invite strangers in, Garrison explained. With more people prepared to sell after getting a vaccination and allowing viewing of their homes, buyers can have a few more options.
House availability is at a historical low with less than half a month worth of inventory on the market, according to data from the Texas Real Estate Research Center. A normal market has six months of inventory.
The thin margin of supply caused bidding wars, where on average, houses in Hays County get 7.5% over asking price, but Garrison said some clients have gone up to 46.2% over-asking. The median sales price in the county is $350,000; add on the average over asking bid, and the price of that home becomes $376,250.
Those selling a home will ultimately earn money from the sale, but another question is posed; where will they move to with such a low number of houses for sale?
While sellers are earning money on their sales and potentially reinvesting in another house, this boxes new home buyers even further out of the market because they are coming in with little money compared to someone who sold their home, Ruiz said.
The pendulum is bound to swing in the other direction, but it could take some time, Garrison said.
“It’s hard to say when the pendulum will swing, but it will happen,” Garrison told the Hays Free Press/News-Dispatch. Prices will not come down, but the market will balance out… The main thing to remember in this market is it takes resilience, stamina and a creative and skilled agent.”