Short housing supply drives stiff competition in area real estate market

Local real estate professionals say the competitive market is driven by a lack of inventory.

Local real estate professionals say the competitive market is driven by a lack of inventory.

Many homebuyers in Round Rock, Pflugerville and Hutto have been sharing a similar experience in recent years—homes sell quickly, and sellers are receiving multiple offers.


“This definitely isn’t a looky-loo market. You have to be serious and motivated [to buy],” said Shavonne Martin, president of the Williamson County Association of Realtors. “If you see a home, you cannot sleep on it—you have to be prepared to make a decision [that day].”


Local real estate professionals say the competitive market is driven by a lack of inventory.


“There are more buyers than sellers,” said Mike Freeman, broker and owner of Mike Freeman Properties in Round Rock. “Three years ago in Round Rock West [in the summer] you’d see a minimum 18-20 homes for sale. Now there’s five or six. Anything that goes on the market, is priced properly and is a nice house sells immediately.”


Data shows home sales have climbed in Round Rock, Pflugerville and Hutto year over year, and that home prices have increased with it. Furthermore, data provided by the Williamson County Board of Realtors shows that home inventory available has decreased, further driving competition.



Driving forces


A few years ago potential buyers could negotiate the price for a house, but with sellers getting multiple offers that is not happening as much, Freeman said.


The short supply of inventory is perpetuating itself in a way because potential sellers are more reluctant to move, Freeman said. He said families that might look to upgrade in a less competitive market do not want to go through the trouble of finding a house in Central Texas they can afford, despite having an advantage in selling in such a market.


“Unless it’s a serious issue, [homeowners] aren’t saying, ‘Let’s move’ because they’re going to pay a premium [for a home],” Freeman said.


Freeman said the market uncertainty in the presidential election cycle is further disincentivizing homeowners from moving and creating more housing inventory. He said when people are unsure about what the regulatory environment will look like, it makes them less inclined to move because they want to ensure their job is stable.


“After the presidential cycle [...] we’ll know the direction we’re going in,” he said. “Right now it’s all over the map.”


Despite the low inventory, Martin said she has not encountered a buyer who simply could not afford a home in Central Texas. She said buyers need to be realistic and move quickly. She said she has worked with buyers who did not see the home before putting in an offer.


Martin said even with the rapidly escalating real estate prices, there is no chance the area is in a bubble because the market is trying to catch up to demand that already exists, not artificially creating demand like before the housing market collapse in 2008.


“We’re only supplying based on demand,” she said.



Adding to the stock


Austin-area homebuilders are helping to add to the housing stock, said Emily Lubbers, CEO of the Home Builders Association of Greater Austin, but that the Austin area has not seen enough housing units put on the ground to meet demand, especially in the city of Austin.


“What happens in one part of the MSA impacts the other part,” she said. “When there’s scarcity in one part of the market, that’s going to increase the demand in other parts.”


David Hays, senior vice president of Georgetown Title, said the Austin area has continued to be a job creator and has driven people to the area. However, he said, during the recession home builders were not creating new inventory to meet the demands of the new residents.


“During the recession banks were slow to lend on new development projects,” he said. “Coming out of the recession there was very little on the market.”


Since then the builders have built more homes and opened new subdivisions, helping the market, Hays said. He said with more new housing stock coming online, he could see a leveling off in the market coming.


The HBA heard from economists in January that the growth in the housing market will continue, but not at the pace it has been for the past couple of years, Lubbers said.


“Based on the market growth and job growth we see, it’ll continue in the upward trend,” Lubbers said.


Lubbers said there is increased interest in communities further out from the urban core as well, such as Bastrop, Jarrell and Georgetown.



Executive housing


Although builders are adding housing stock to the area, much of it is above the $250,000 price point but below the higher-end executive level of housing in the higher six figures.


Hays said for executive-level housing, the area needs “good dirt,” or undeveloped land with many trees and natural features to build near.


Hays said often people who want homes closer to the $1 million range will custom-build their homes, decreasing the need for homebuilders to build developments of such homes.


Lubbers said the reason builders are not building executive-level housing in Round Rock, Pflugerville and Hutto is because they are meeting what the market is demanding.


“They’re building what the buyers need,” she said. “That’s a big part of it.”


Round Rock Mayor Alan McGraw said the city can encourage executive-level housing through zoning measures such as allowing a community to be gated. He said the city can only encourage such projects, and it is ultimately up to the builders to build them.


Pflugerville City Manager Brandon Wade said he sees executive housing coming to Blackhawk, which is in Pflugerville’s extraterritorial jurisdiction, or land outside the city limits, and he foresees that housing coming into the city limits in about 20 years.



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